The story the chart is pulled from can be found here. Here's the basic point the study makes:
The latest CBO report, which takes into account three consecutive years of dramatically slower health care cost increases, should serve as a warning (and a reminder) that it is misleading to say the problem with the federal budget “is just a health care problem.”
If one only looks at the two CBO updates over the last six months, projected 10-year Medicare spending has been revised downward by $306 billion. Projected Medicaid spending has been revised downward by $273 billion (not counting revised estimates of lower Medicaid enrollment due to the Supreme Court’s ruling on Medicaid expansion in the Affordable Care Act (ACA)).
Yet even under that “better case scenario,” federal outlays for health care will soon be greater than outlays for Social Security -- placing it at the top of all federal budgetary commitments. Over the 10-year budget window, health care spending will experience growth of 1.2 percent of GDP, second fastest only to net interest.
The reason is simply that the “health care problem” actually reflects the large increase in the number of people who will become eligible for Medicare due to the retirement of the baby-boom generation. Over the next 10 years, 18 million new beneficiaries are expected to sign up for Medicare.
Nearly three-quarters of the spending increases in Medicare over the next two decades can be attributed to aging alone. And, as I will explain, the remaining increase in costs due to health care inflation will be very difficult to avoid because even that amount of projected growth is lower than anyone realistically believes we can sustainably achieve. Thus, the major problem in Medicare really is one of an aging population. In this case, the Medicare problem is no different than the Social Security problem.
