GAO Sees Gloomy Fiscal Outlook without Health Reform

As the U.S. Supreme Court decides the fate of the Patient Protection and Affordable Care Act, a new report from the Government Accountability Office says that healthcare costs could soar if the law is overturned, further adding to the long-term challenge posed by the federal deficits and debt.

In its latest update of the federal government’s long-term fiscal outlook, the GAO makes projections based on two models, one baseline model that generally reflects current law, and another alternative model that assumes cost-containment mechanisms are not sustained over the long term. Even with the Affordable Care Act implemented as intended, the “structural gap between revenues and spending driven by rising healthcare costs and demographics” would not be closed, according to the GAO.
But spending on healthcare would grow “much more rapidly” in the alternative scenario, causing spending on Medicare and Medicaid to grow to more than 8 percent of GDP by 2030 from 5 percent of GDP in 2010. The baseline model finds Medicare and Medicaid growing to 7 percent under the baseline simulation, it says.

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