Farragut Square Group Warns Sequester is Just the Start of A Long, Protracted Battle over Health Care Spending

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Feb 11, 2013, 09:54 ET

WASHINGTON, Feb. 11, 2013 /PRNewswire/ -- As Washington wrangles over the $1.2 trillion budget sequester - which includes a 2% cut to Medicare - one of nation's leading health policy advisers warns this is just the opening act in a long, protracted battle over health care spending.

"The reality is high debt and deficits are going to put more pressure on federal health spending for a long time. With the baby boomer retirement era and the ACA making health care spending the primary drivers of budget shortfalls, health spending will continue to be a prime target for budget savings," said FSG President Brian Fortune.

In an analysis of latest Congressional Budget Office fiscal estimates, FSG warns:

Deficit Spending is on an Unsustainable Path. CBO forecasts federal budget deficits will continue to approach 4% of GDP into the next decade, well above the level the White House and many economists consider sustainable in the long term. That means more big budget battles for many years to come.
Health Spending Will Face Greater Pressure. Even if the sequester is resolved and a big budget deal is reached this year, federal health spending will continue to face enormous pressure in the future as it begins to exceed both Social Security and domestic discretionary spending as a share of GDP.
Medicare Will Continue to Be a Prime Budget Target. Medicare spending is projected to double over the next decade. Medicare's growing share of the budget means it's "where the money is" when policymakers are looking for budget savings. Medicare spending is clearly going to grow dramatically during the baby boomer retirement era, and therefore both providers and beneficiaries will be the focus of cost containment efforts.
Medicaid's True Fiscal Cost is Unclear. Medicaid will continue to grow, but the extent of state ACA Medicaid expansion is uncertain and the ACA's extension of Medicaid to childless adults will certainly be debated as state and federal budgets tighten.
The ACA Will Add More Fiscal Pressures. CBO estimates major health care programs will "grow rapidly" over the next decade as the ACA dramatically increases the number of people receiving public assistance for their health care.