United States Government Accountability Office
GAO The Federal Government’s
Long-Term Fiscal Outlook
Spring 2012 Update
GAO’s Long-Term Fiscal Federal deficits and debt have reached historic highs in recent years.
Simulations Congress has taken action to address the fiscal imbalance, but longer-
Since 1992, GAO has published term challenges remain. The Budget Control Act (BCA) of 2011 limits
long-term fiscal simulations spending over the next decade and leads to an improved fiscal outlook.
showing federal deficits and debt The act targets discretionary spending, and under both of GAO’s
under different sets of policy simulations, discretionary spending as a share of the economy would be
assumptions. GAO developed its
long-term model in response to a
lower in 2022 than at any point in the last 50 years. Further, as the
bipartisan request from members economy recovers, revenue increases and spending decreases. While
of Congress concerned about the the BCA improved the outlook, it did not eliminate the longer-term
long-term effects of fiscal policy. challenge, in part because it did not focus on the fundamental drivers of
GAO’s simulations provide context the government’s future fiscal imbalances—a structural gap between
for consideration of policy options. revenues and spending driven by rising health care costs and
They are not intended to suggest
demographics. As our 2011 simulations showed, if the Patient Protection
particular policy choices or to
predict the economic impact of any and Affordable Care Act (PPACA) is implemented as intended it would
set of choices but to help facilitate have a major effect on the gap but would not eliminate it. The aging of the
a dialogue on this important issue. population and rising health care costs will continue putting upward
GAO regularly updates its pressure on spending. Assuming revenue in the long term returns to the
simulations as new data become 40-year historical average and remains stable at that share of GDP, the
available from the Congressional imbalance between spending and revenues increases, resulting in
Budget Office (CBO) and the increasing levels of debt held by the public. A continuing increase in debt
Social Security and Medicare
as a share of GDP means the federal government is on an unsustainable
Trustees (Trustees). This update
incorporates CBO’s January 2012 long-term fiscal path and underscores the need for policymakers to act to
budget and economic projections. change the path. See figure 1.
As in the past, GAO shows two
simulations:
Figure 1: Debt Held by the Public under Two Fiscal Policy Simulations
The Baseline Extended
simulation follows CBO’s January
2012 baseline, which generally
reflects current law, for the first 10
years. The baseline includes the
effects from the discretionary
spending caps and automatic
enforcement procedures put in
place by the Budget Control Act
(BCA). After the first 10 years,
this fiscal constraint is
maintained; revenue and
spending other than interest on
the debt and large entitlement
programs (Social Security,
Medicare, and Medicaid) are held
constant as a share of gross
domestic product (GDP). Over the
long term, revenue as a share of
GDP is higher and discretionary
spending lower than historical
averages.
Note: Data are from GAO’s Spring 2012 simulations based on the Trustees’ assumptions for Social
Security and the Trustees’ and the CMS Actuary’s assumptions for Medicare.
GAO-12-521SP
In the Alternative simulation, The pace at which deficits grow and the resulting debt buildup vary
expiring tax provisions are depending on the assumptions used: deficits and debt grow less rapidly in
extended to 2022 2022,and andthethe
the Baseline Extended simulation than under the Alternative simulation,
alternative minimum tax (AMT)
exemption amount is indexed to which has both lower revenues and higher spending levels than the
inflation through 2022. 2022; For revenues
the Baseline Extended simulation. Under the Baseline Extended simulation,
are then
first 10 years,
brought discretionary
back to the debt held by the public would exceed its post–World War II historical high
historical average
spending reflects the as aoriginal
share caps
of of 109 percent of GDP by 2048; under the Alternative simulation it would
GDP.
set by For
the theBCA first
but10 notyears,
the lower cross this threshold by 2026.
discretionary
caps triggeredspending
by the automatic
reflects
the original caps
enforcement procedures.
set by the Over
BCA
but long
the not theterm,
lowerdiscretionary
caps triggered
The growing fiscal imbalance is driven on the spending side by rising
by the automatic
spending and revenueenforcement
are held at health care costs and the aging of the population. The oldest members of
procedures.
historical averages.
Over the long term, the baby-boom generation are already eligible for Social Security
discretionary spending and retirement benefits and for Medicare. The Social Security program, which
The Baseline Extended simulation
revenue are held at historical historically ran large cash surpluses that helped reduce the need to
follows the Trustees’ 2011
averages. borrow from the public to finance other programs, is now projected to pay
intermediate projections for Social
The Baseline
Security Extendedand
and Medicare simulation
CBO’s more in benefits than it receives in tax income each year into the future. 1
follows
June the long-term
2011 Trustees’ 2011 projections Although health care spending growth recently slowed, it has been
intermediate
for projections
Medicaid adjusted for Social
to reflect growing faster than the overall economy and is expected to continue to
Securitycost
excess andgrowth
Medicare and CBO’s
consistent with
June
the 2011 long-term
Trustees’ projections.projections
In the
grow at an increased rate as more members of the baby-boom generation
for Medicaidsimulation,
Alternative adjusted to reflect
Medicare become eligible for federal health programs. As shown in figure 2, the
excess cost
spending growthon
is based consistent
the Centers with number of baby boomers turning 65 is projected to grow in coming years,
the Medicare
for Trustees’ &Medicare
Medicaidprojections.
Services averaging about 7,600 per day in 2011, and about 11,400 per day by
In the Alternative
Office of the Actuary’s simulation,
(CMS 2029.
Medicarealternative
Actuary) spending is based on that
projections the
Centers for
assume Medicare
reductions in & Medicaid
Medicare
Services Office
physician rates do of the
not Actuary’s
occur as
(CMS Actuary)
scheduled under alternative
current law and
projections
that certain thatcost-assume
containment reductions
in Medicare physician
mechanisms intended rates to slow dothe
not
occur as
growth ofscheduled
health careunder cost current
are not
law and that
sustained overcertain
the longcost- term. GAO
containment
also shows the mechanisms
outlook using intended
to slow long-term
CBO’s the growthprojections
of health care for
cost are
Social not sustained
Security and theover major the
long term.
health GAO alsothe
entitlements; showsresultstheare
outlook using
consistent withCBO’s
GAO’slong-term
simulations
projections
based largely foron
Social Security and
the Trustees.
the major health entitlements; the
results are consistent with the
Additional information on the fiscal
other simulations.
outlook and federal debt is available at
Additional information on the fiscal
www.gao.gov/special.pubs/longterm/.
outlook and federal debt is available at
For more information, contact Susan J.
www.gao.gov/special.pubs/longterm/.
Irving at (202) 512-6806 or 1
For more information, contactJ.Susan J. Social Security trust fund assets and reserves are used to make up the annual cash
irvings@gao.gov or Thomas McCool,
Irving at 512-2642
at (202) (202) 512-6806 or
or mccoolt@gao.gov. deficit. The Trustees project that trust fund reserves will be exhausted by 2036. See the
irvings@gao.gov or Thomas J. McCool, Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability
at (202) 512-2642 or mccoolt@gao.gov. Insurance Trust Funds, The 2011 Annual Report of the Board of Trustees of the Federal
Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
(Washington, D.C.: May 13, 2011).
Page 2 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
Figure 2: Daily Average Number of People Turning 65 Each Year
Note: Data are from the U.S. Census Bureau’s National Population Projections. For this analysis, we
used data from the low net international migration series.
Several provisions of PPACA were designed to control the growth of
health care costs. The full implementation and effectiveness of these
cost-control provisions, which are reflected in the Baseline Extended
simulation, would slow the growth in federal health care spending over
the long term. Under the Baseline Extended simulation, spending on
Medicare and Medicaid grows from 5 percent of GDP in 2010 to over 7
percent by 2030.There are, however, significant uncertainties surrounding
the growth of health care costs. Spending is influenced not only by
policies and laws, but also by future demographic and economic trends,
development and deployment of medical technology, the cost and
availability of insurance, and the responses of health care providers,
consumers, and policymakers to these trends. The Trustees, CBO, and
the CMS Actuary have expressed concerns about the sustainability of
certain health care cost-control measures over the long term. For
example, they note that reductions in physician payment rates scheduled
to occur under current law have routinely been overridden.
They have also questioned whether a provision in PPACA that would
restrain spending growth by reducing the payment rates for certain
Medicare services based on productivity gains observed throughout the
economy is sustainable over the long term. According to CMS, health
care productivity gains have historically been small, and may be difficult
Page 3 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
to achieve in the future due to several factors, including the labor-
intensive nature of the industry and the individual customization of
treatments in many cases. These concerns are reflected in our Alternative
simulation, which, consistent with CBO’s and the CMS Actuary’s
alternative scenarios, assumes that certain cost-containment
mechanisms are not sustained over the long term. 2 Spending on health
care grows much more rapidly under this more pessimistic set of
assumptions. Absent changes to these programs, spending on Medicare
and Medicaid under the Alternative simulation grows to over 8 percent of
GDP by 2030.
Under either set of assumptions about health care cost growth, spending
for the major health and retirement programs will increase, putting greater
pressure on the rest of the federal budget. In 2010, about 47 cents of
every federal dollar spent went to Social Security, Medicare, Medicaid,
and interest on the federal debt. Figures 3 and 4 below show revenue and
the composition of spending under the Baseline Extended and Alternative
simulations moving forward.
2
While both CBO and the CMS Actuary assume that certain cost-containment
mechanisms are not sustained, they make different assumptions that affect spending on
health care. For example, CBO’s assumes that physician payment rates are maintained at
2011 levels. In the CMS Actuary’s alternative scenario, physician payment rates grow with
inflation (using the Medicare Economic Index), which results in higher spending than
under CBO’s assumption.
Page 4 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
Under the Baseline Extended simulation, revenues as a share of the
economy are higher and discretionary spending is lower than historical
averages. As figure 3 shows, spending on Social Security, Medicare,
Medicaid, and interest would grow to about 70 cents of every dollar spent
by 2040. By this time, there is little room for “all other spending,” which
includes not only national defense, homeland security, veteran’s health
care, and investment in highways and mass transit, but also smaller
entitlement programs such as farm price supports and student loans.
Figure 3: Potential Fiscal Outcomes under the Baseline Extended Simulation:
Revenues and Composition of Spending
Notes: Data are from GAO’s Spring 2012 simulations based on the Trustees’ assumptions for Social
Security and the Trustees’ and the CMS Actuary’s assumptions for Medicare.
a
This also includes spending for insurance exchange subsidies and the Children’s Health Insurance
Program.
Page 5 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
In the Alternative simulation, revenue and discretionary spending are at
their historical averages over the long term. In this simulation, spending
on Social Security, Medicare, Medicaid, and interest exceeds revenues
by 2030 and by 2040, 73 cents of every federal dollar spent would go to
these categories. Overall, our simulations illustrate the difficult trade-offs
that policymakers will have to consider in order to rebalance the federal
government’s fiscal position.
Figure 4: Potential Fiscal Outcomes under the Alternative Simulation: Revenues
and Composition of Spending
Notes: Data are from GAO’s Spring 2012 simulations based on the Trustees’ assumptions for Social
Security and the Trustees’ and the CMS Actuary’s assumptions for Medicare.
a
This also includes spending for insurance exchange subsidies and the Children’s Health Insurance
Program.
Page 6 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
When considering action to address the longer-term fiscal challenge, it is
Balancing Near-Term important to balance the near-term effects. One tool used to measure the
and Long-Term challenge over the long term is the “fiscal gap.” The fiscal gap represents
the difference, or gap, between revenue and noninterest spending in
Considerations present value terms over a certain period, such as 75 years, that would
need to be closed in order to achieve a specified debt level (e.g., today’s
debt to GDP ratio) at the end of the period. From the fiscal gap, one can
calculate the size of action needed—in terms of tax increases, spending
reductions, or, more likely, some combination of the two—to close the
gap.
For example, under our Alternative simulation, the fiscal gap is 8.2
percent of GDP (see table 1). This means that, on average over the next
75 years, revenue would have to increase by more than 45 percent or
noninterest spending would have to be reduced by about 32 percent (or
some combination of the two) to keep debt held by the public at the end
of the period from exceeding its level at the beginning of 2012 (roughly 68
percent of GDP). Even-more significant changes would be needed to
reduce debt to lower levels.
Table 1: Federal Fiscal Gap under GAO’s Simulations
Average percentage change required to close gap
If action is delayed until
If action is taken today 2022
Solely Solely
Fiscal gap through through
Solely decreases Solely decreases
2012–2086
through in through in
(percent of increases noninterest increases noninterest
Simulation GDP) in revenue spending in revenue spending
Baseline 1.8 8.4 8.0 9.9 9.4
Extended
Alternative 8.2 45.7 32.2 54.3 37.0
Source: GAO.
Note: Data are from GAO’s Spring 2012 simulations based on the Trustees’ assumptions for Social
Security and the Trustees’ and CMS Actuary’s assumptions for Medicare.
While immediate action would reduce the size of the changes necessary
to close the fiscal gap, the risk to near-term economic growth is also a
factor. With this in mind, policy changes could be designed to phase in
over time allowing for the economy to fully recover and for people to
adjust to the changes. Table 1 illustrates how much greater fiscal policy
changes would have to be if no actions were taken for the next decade.
Such a delay would increase the risk that the eventual changes will be
disruptive and destabilizing. Under our Alternative simulation, waiting 10
years would increase the fiscal gap to nearly 10 percent of GDP—
Page 7 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
meaning a revenue increase of about 54 percent or a noninterest
spending cut of 37 percent or some combination of the two would be
required to bring debt held by the public back to today’s level by 2086.
The economy continues to recover from the nation’s most severe
Concluding recession since the end of World War II, and while there are calls for
Observations continued federal action to support the economy, these must be balanced
with the need to act soon to develop a plan for addressing the long-term
fiscal imbalance. Absent policy changes, increasingly significant changes
will be needed to close the fiscal gap. However, action taken to address
the fiscal outlook needs to be balanced with the importance of sustaining
economic growth in the near term. If policy changes designed to correct
the federal government’s fiscal path are too sharp, they could stifle the
pace of the recovery in the near term. Conversely, changes in policy
designed to encourage near-term recovery could worsen the long-term
outlook and increase the size of necessary changes in the long run.
Our simulations show deficits declining over the next several years, but
this trend reverses before the decade is over under the assumptions in
our simulations. Despite limits on discretionary spending that would bring
discretionary spending to levels not seen in recent history, our simulations
show total federal spending continuing to exceed revenues and feeding
an unsustainable growth in debt. The policy actions required to close the
fiscal gap are significant, and changing the long-term outlook will likely
require difficult decisions about both federal spending and revenue.
Page 8 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
This update incorporates CBO’s January 2012 baseline projections that
Changes since the follow current law at that time. 3 A key change from CBO’s prior baseline
Last Update estimates—and our prior long-term fiscal outlook update—was the
treatment of deficit reduction related to the BCA. At the time of our last
update in fall 2011, it was not known whether lawmakers would enact
legislation originating from the Joint Select Committee on Deficit
Reduction, and thus whether such legislation or the Budget Control Act’s
automatic enforcement procedures would be implemented. Therefore, we
assumed that deficit reduction resulting from the act would take effect
under both the Baseline Extended and the Alternative simulations, but did
not make assumptions about the allocation between spending and
revenues. Because no such legislation was enacted, CBO’s January
2012 baseline reflects the act’s automatic procedures—cuts among
discretionary, Medicare, and other mandatory spending—that go into
effect under current law. Consistent with CBO’s baseline, our Baseline
Extended simulation also reflects the changes to discretionary and
mandatory spending under the automatic enforcement procedures.
However, we do not apply the effects of the automatic enforcement
procedures to the Alternative simulation in this update. In this regard, our
Alternative simulation is consistent with the alternative scenario CBO
described in its January 2012 update.
Table 2 lists the key assumptions incorporated in the Baseline Extended
Key Assumptions in and Alternative simulations based on the Trustees’ assumptions for
Our Federal Social Security and the Trustees’ and CMS Actuary’s assumptions for
Medicare.
Simulations
3
The CBO report is available at www.cbo.gov. When CBO analyzes the President’s
budget proposals, usually in March, it also updates its baseline. This year CBO’s update
includes the effects of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L.
No. 112-96) that was enacted on February 22, 2012 and extended the payroll tax
reduction and emergency unemployment insurance benefits through the end of December
2012 and prevented scheduled cuts in reimbursement rates to physicians. Consistent with
past practice, we use the January baseline and so do not include the effects of that
legislation. Doing so would have only minimal effect on the longer-term fiscal outlook.
Page 9 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
Table 2: Assumptions for Baseline Extended and Alternative Simulations
Model inputs Baseline Extended simulation Alternative simulation
Revenue CBO’s January 2012 baseline that assumes tax cuts CBO’s estimates assuming expiring tax provisions other
will expire as scheduled under current law and that an than the temporary Social Security payroll tax reduction
increasing share of taxpayers will be subject to higher are extended through 2022, and the 2011 alternative
tax rates through 2022; thereafter remains constant at minimum tax (AMT) exemption amount is indexed to
a
21.0 percent of GDP (CBO’s projection in 2022) inflation for years 2012–2022; thereafter is phased into
the 40-year historical average of 17.9 percent of GDP
Social Security CBO’s January 2012 baseline through 2022; Same as Baseline Extended
spending thereafter based on 2011 Social Security Trustees’
intermediate projections
Medicare CBO’s January 2012 baseline through 2022 that Based on CMS Actuary’s alternative scenario that
spending assumes cuts in physician payment rates will occur assumes that physician payment rates grow with
b d
as scheduled under current law at the time and that inflation (using the Medicare Economic Index) in all
the implementation of the Budget Control Act’s future years, that spending reductions under the BCA do
automatic enforcement procedures reduces not occur, and policies that would restrain spending
c
spending; thereafter 2011 Medicare Trustees’ growth are applied fully through 2019 but begin to phase
intermediate projections out thereafter
Medicaid, the CBO’s January 2012 baseline through 2022; CBO’s January 2012 baseline through 2022; thereafter
Children’s thereafter CBO’s June 2011 long-term projections CBO’s 2011 long-term projections adjusted to reflect
Health adjusted to reflect excess cost growth consistent with excess cost growth consistent with CMS Actuary’s
Insurance the 2011 Medicare Trustees’ intermediate projections alternative scenario and CBO’s alternative assumption
Program, and that a policy that would slow the growth of subsidies for
exchange health insurance coverage is not in effect
subsidies
spending
Other CBO’s January 2012 baseline through 2022, which Baseline Extended adjusted for extension of certain tax
mandatory incorporates the reductions in spending scheduled to credits and to exclude the effects of the Budget Control
spending occur under the Budget Control Act’s automatic Act’s automatic enforcement procedures through 2022;
enforcement procedures; thereafter remains constant thereafter is phased back to 2.3 percent of GDP by
as a share of GDP at 2.3 percent of GDP (implied by 2025 (same as Baseline Extended)
CBO’s projection in 2022)
Discretionary CBO’s January 2012 baseline through 2022, which Follows the original caps set by the Budget Control Act
spending reflects the original caps set by the Budget Control but not the lower caps triggered by the act’s automatic
Act, as well as the lower caps triggered by the enforcement procedures; after 2022 it gradually phases
automatic enforcement procedures; thereafter to 7.5 percent of GDP (the 20-year historical average)
remains constant at 5.6 percent of GDP (CBO’s
projection in 2022)
Source: GAO.
Notes: CBO’s projections are from The Budget and Economic Outlook: Fiscal Years 2012 to 2022
(January 2012) and CBO’s 2011 Long-Term Budget Outlook (June 2011). Trustees projections are
from The 2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds and The 2011 Annual Report of the Boards
of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds, which were both issued on May 13, 2011. Projections from the CMS Actuary are based on
Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to
Medicare Providers (May 13, 2011). We assume that Social Security and Medicare benefits are paid
in full regardless of the amounts available in the trust funds.
Page 10 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
a
Both simulations assume that the temporary Social Security payroll tax reduction would expire at the
end of February 2012. However, the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L.
No. 112-96) extended the reduction through the end of December 2012. The act did not offset the
cost of the extended reduction, but we expect that the change would have a minimal effect on the
overall outlook.
b
The Middle Class Tax Relief and Job Creation Act prevented scheduled cuts in reimbursement rates
to physicians for 2012 that were assumed to occur under CBO’s January 2012 baseline projections.
We did not incorporate the effects of this override into the Baseline Extended simulation. Because the
act included provisions to offset the costs of the extension, it would have a minimal effect on the
longer-term fiscal outlook.
c
The Budget Control Act established limits on discretionary budget authority for 2013 through 2021. In
addition, it specified additional limits on discretionary spending and automatic reductions in
mandatory spending, including Medicare, that would take effect if lawmakers did not enact legislation
originating from the Joint Select Committee on Deficit Reduction that would reduce projected deficits
by at least $1.2 trillion. Because no such legislation was enacted, those procedures are now
scheduled to go into effect.
d
Since 2003, Congress took a series of legislative actions to prevent scheduled reductions in
physician payment rates that would otherwise occur under law. Physician fee updates set by
Congress have averaged 0.9 percent per year over this period. Growth in the Medicare Economic
Index is projected to average 1.9 percent from 2012 to 2020. Thus, the assumption used by CMS,
and in our Alternative simulation, implies physician payment rates will grow almost two times faster
than they have since 2003.
Table 3 shows the key economic assumptions that underlie all of our
simulations. GDP is held constant across simulations and does not
respond to changes in fiscal policy. Also, the implied interest rate on
federal debt held by the public in our simulations is held constant over the
long term even when deficits climb. With large budget deficits, there could
be a rise in the rate of interest and a more rapid increase in federal
interest payments than our simulations display.
Table 3: Key Economic Assumptions Underlying All of GAO’s Long-Term Federal Simulations
Model inputs All simulations
Real GDP Growth CBO’s January 2012 baseline through 2022; thereafter averages 2.1 percent based on the intermediate
assumptions of the 2011 Social Security and Medicare Trustees reports
Inflation (percentage CBO’s January 2012 baseline through 2022; 2.0 percent thereafter (CBO’s projection in 2022)
change in GDP price
index)
Interest rate (on Rate implied by CBO’s January 2012 baseline net interest payment projections through 2022; phasing to
publicly held debt) 5.2 percent in 2025 and then constant thereafter (CBO’s June 2011 long-term projection)
Source: GAO.
A more detailed description of the federal model and key assumptions
can be found at
www.gao.gov/special.pubs/longterm/fed/aboutlongterm.html.
The simulation results depend largely on what is assumed about growth
in large entitlement programs. As in previous updates, we also show the
Baseline Extended simulation using CBO estimates for long-term
spending on Social Security and major health entitlement programs
Page 11 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
(Medicare, Medicaid, and others). In addition, we show the Alternative
simulation using different assumptions about certain health care cost-
containment provisions based on CBO alternative projections. As figure 5
shows, the results are similar to our simulations using the Trustees and
CMS Actuary’s projections.
Figure 5: Debt Held by the Public under Fiscal Policy Simulations with Different Assumptions for Major Entitlement Programs
Note: The two Alternative simulations are so close that their separate lines are not visible on this
graph.
Table 4 shows the CBO assumptions incorporated into the simulations
that were used in the comparison shown in figure 5.
Page 12 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
Table 4: Key Assumptions Underlying GAO’s Simulations Using CBO’s Spending Projections for Major Entitlement Programs
Model inputs Baseline Extended simulation Alternative simulation
Social Security CBO’s January 2012 baseline through 2022; Same as Baseline Extended
spending thereafter based on CBO’s June 2011 long-term
projections for Social Security
Medicare CBO’s January 2012 baseline through 2022; Based on CBO’s projections under its alternative fiscal
spending thereafter based on CBO’s June 2011 long-term scenario that assume physician payment rates are
projections under its extended-baseline scenario maintained at 2011 levels through 2022 and that
policies to restrain growth are not in effect after 2021
Medicaid, the CBO’s January 2012 baseline through 2022; CBO’s January 2012 baseline through 2022; thereafter
Children’s Health thereafter based on CBO’s June 2011 long-term CBO’s June 2011 projections under its alternative fiscal
Insurance projections under its extended-baseline scenario scenario in which a policy that would slow the growth of
Program, and per-participant subsidies for health insurance coverage
exchange is assumed not to be in effect and eligibility
subsidies thresholds are assumed to be modified to maintain the
spending share of the population eligible for subsidies
Source: GAO.
Notes: CBO’s projections are from CBO’s 2011 Long-Term Budget Outlook (June 2011). CBO
assumes that full benefits are paid regardless of the amounts available in the trust funds.
This product is part of a body of work on federal debt and the long-term
fiscal challenge. Related products can be found at
www.gao.gov/special.pubs/longterm/past/.
We conducted our work from January 2012 to April 2012 in accordance
with all sections of GAO’s Quality Assurance Framework that are relevant
to our objectives. The framework requires that we plan and perform the
engagement to obtain sufficient and appropriate evidence to meet our
stated objectives and to discuss any limitations in our work. We believe
that the information and data obtained, and the analysis conducted,
provide a reasonable basis for any findings and conclusions in this
product.
(450961) Page 13 GAO-12-521SP Long-Term Fiscal Outlook Spring 2012
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The Federal Government's Long-Term Fiscal Outlook: Spring 2012 Update
Published by the Government Accountability Office on 2012-04-02.
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