Chart: The Coming Budget Pressure from Medicaid and Obamacare
In a report for the Mercatus Center on the Medicaid expansion under the Affordable Care Act, Charles Blahous produces a simple chart that shows the pressure that government health care spending is going to put on the budget in the years ahead:
This chart shows that, if Obamacare comes online as planned (a significant "if," especially in the case of the state-level Medicaid expansions) spending on Medicaid, the Children's Health Insurance Program, and subsidies for the health insurance exchanges will just about double in the next 10 years, with no sign of letting up in the out-years.
The key to understanding this chart is the y-axis values: percentage of GDP. That means that government spending on Medicaid and the exchanges alone -- setting aside Medicare and other forms of government health care spending -- will take up 1.5 percentage points more of federal spending in 2022 than they do now. Not 1.5 percentage points more of the budget, but of the entire economic output of the U.S.
That's a lot, even just on paper. Of course, the added spending on Medicaid and on the exchanges was also paid for, on paper, by other provisions of Obamacare, mostly tax increases and cuts to Medicare. But it's a useful reminder of how much health care spending is set to pressure the federal government's (and the states') finances in the medium term.