Caring for an entire population is expensive—caring for an aging population even more so. This is the conundrum facing the U.S. government over the coming decades, with the number of people age 65 and older projected to increase to 82 million by 2050—a 42% increase compared with the early 2020s.
In 2030, the U.S. government will spend the equivalent of 6% of the nation’s GDP on major health care programs, according to the latest reporting from the Congressional Budget Office (CBO), and the equivalent of 5.6% of GDP on Social Security initiatives.
And these major, mandatory expenses will also contribute to growing deficits in the U.S. The CBO report shows that, come 2030, the annual deficit will be worth roughly 5.9% of GDP, on par with provisions set aside for health and Social Security programs, and well ahead of calls to reduce deficits to 3% of GDP.
Unsurprisingly, the costs racked up by the government, and the damage to its bottom line, move up in tandem. The new budget outlook, released yesterday, shows health care spending (Medicaid, Medicare, the Children’s Health Insurance Program, and premium tax credits for health insurance established under the Affordable Care Act) will stay roughly the same until the end of the decade, then steadily creep up until it reaches 8% of GDP by 2050. Social Security payments follow a similar, but less steep trajectory, increasing from 5.2% of GDP in 2025 to 5.8% by 2050.
