Medicare spending will get so out of control over the next decade that the federal government will either have to cut spending or raise taxes, a new report finds.
The nonpartisan Congressional Budget Office projected that Medicare spending will rise from 2.9 percent of gross domestic product in 2014 to 3.6 percent in 2025 and increase further in later years, according to a report released Monday.
Part of the reason is the aging of baby boomers as they become Medicare-eligible, the agency said. Another is increased life expectancy at age 65, when people can start getting Medicare benefits.
From 2015 to 2040, the agency projects that the share of the U.S. population age 65 or older will grow from almost 15 percent to more than 21 percent, the report said.
The budget office said it looked at Medicare data from 1999 to 2012 and examined how per-beneficiary Medicare spending varied by age and the type of service.
Spending in Medicare won’t be the only budget item to rise, as other federal programs such as Medicaid will feel the pinch.
The agency projects that aging will account for about two-fifths of the projected growth in federal spending for major healthcare programs from 2015 to 2040.
The report suggested that cuts to other federal programs, raising taxes or a combination of the two will be necessary to sustain Medicare.
