[Danzig]

Outlays for Medicare, Medicaid, and Social Security

Over the past 50 years, federal spending has increased as a percentage of GDP, and its composition has changed dramatically. Spending for mandatory programs has grown from about 30 percent of noninterest outlays in the early 1960s to about 60 percent in recent years. Most of that growth has been concentrated in the three largest entitlement programs: Medicare, Medicaid, and Social Security. Together, federal outlays for those three programs have accounted for roughly 45 percent of primary federal spending over the past 10 years, up from 25 percent in 1975.

In the future, projected growth in entitlement spending explains almost all of the projected growth in total noninterest spending—and the two big government health care programs largely drive that increase. Medicare and Medicaid are responsible for 80 percent of the growth in spending on the three largest entitlements over the next 25 years and for 90 percent of that growth by 2080 (see Table 1-3). CBO projects that net federal spending on Medicare and Medicaid will rise from about 5 percent of GDP in fiscal year 2009 to about 10 percent in 2035 and over 17 percent in 2080.5 Spending on Social Security is projected to rise at a much slower pace, from almost 5 percent of GDP in 2009 to about 6 percent in later years.