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Alzheimer’s Disease and Dementia:

The Federal Budget & Health Care Policy

G. William Hoagland
Sr. Vice President
Bipartisan Policy Center

May 1, 2019
Federal Budget: Current Landscape
Total Budget Surplus/Deficit
FY 1965-2025

Total Budget Surplus/Deficit


Deficit Estimates Post Tax Reform Legislation
Dollars in Billions

400
Actual Projections
200 Surplus

0
Deficit
-200
-400
Trend
-600
-800
-1000
-1200
-1400
-1600 Recession as
announced by
National Bureau
-1800 of Economic
Research
-2000

Year
Source: Budget and Economic Outlook: Fiscal Years 2019 to 2029. Congressional Budget Office; January 2019.

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Budget Outlook
FY 2012 – 2028
(In Billions of Dollars – % of GDP)
% ∆ annual
2012 2017 2018
2019 2020 …2029 2019-2029
Actual Actual Actual

Receipts
2,450 3,316 3,329 3,515 3,686 5,672 + 4.9%

Spending 3,537 3,982 4,108 4,412 4,589 7,042 + 4.8%

Deficits 1,087 665 779 897 903 1,370 +4.3%


% of GDP 6.8% 3.5% 3.9% 4.2% 4.1% 4.4% NA

Public Debt 11,281 14,665 15,751 16,636 17,601 28,739 + 5.6%


% GDP 73% 77% 78% 78% 79% 93%
16,027 20,209 21,475 22,408 33,681
Debt Subject Limit 23,538 +4.1%
100% 105% 106% 105% 109%
% GDP 106%

CBO estimate of nominal GDP growth increase 3.8% annually 2019-2029.


Source: Congressional Budget Office, Budget and Economic Outlook 2019-2029. January 2019.
Federal Spending Projected for 2029

$7,042 billion

Medicaid
Medicare $702 B Social Security
(10%) $1,856B
$1,292B
(26%)
(18%) Other
Other Health
Health Programs
Programs
$102
$102 B
B (2%)
(2%)

Other Mandatory Spending


Net $ 616 B (9%)
Defense Interest Domestic Discretionary
$771B $ 928 B $759 B (11%)
Agriculture
Agriculture
(11%) (13%) $16
$16 B
B (0.2%)
(0.2%)

“Other Health Programs” includes: Health insurance subsidies, exchanges, and related spending; Department of Defense Medicare-
Eligible Retiree Health Care Fund (including TRICARE for Life); Children’s Health Insurance Program, and other programs.

Source: The Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2019 to 2029, January 2029.
Federal Health Care Programs:
Fastest Growing (Non-Interest) Spending in Budget
Health Care Grows Faster than the Economy
($ in billions)

2018 2019 2029 Avg. Annual


Actu Growth
2019-2029
al

Medicare 728 768 1,580 7.5%


Medicare Offsetting -123 -136 -288
Receipts
7.8%
Medicaid 389 406 702 5.6%
Health Insurance
Subsidies
49 58 83 3.6%
Children’s Health
Insurance Program
17 18 19 0.5 % Nominal GDP
projected to
Total Major Health 1,060 1,114 2,095 6.5% increase 3.8%
Care annually over
the decade.
Total Federal 2,560 2,695 4,669 5.6%
Mandatory Spending

Health Care as % Total


Mandatory
41% 41% 45% ---
Source: Congressional Budget Office Budget and Economic, January 2019.
When will the Government Default?
Medicare Funding Warning: 45% Test

Medicare Sources of Income as a % of Total Non-Interest Income


CY Payroll Tax on Premiums Drug Fees State General
Taxes Benefits Transfers Revenues

2000 59.8 3.6 9.1 -- -- 27.6


2010 38.9 2.9 13.3 -- 0.9 44.0
2015 38.1 3.2 13.6 0.5 1.4 43.2
2016 36.3 3.3 12.8 0.4 1.4 45.7
2017 37.7 3.5 14.6 0.6 1.6 42.0
2018 36.0 3.2 15.2 0.5 1.6 43.4
2019 est 36.5 3.1 15.2 0.4 1.6 43.3
2020 est 35.0 3.2 15.5 0.3 1.5 44.4
2030 est 28.8 4.5 16.9 0.2 1.7 48.0

Source: 2019 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds; April 23, 2019
Limits on Discretionary Budget Authority*
Under Budget Control Act of 2011 FY 2018 to 2021
(Billions of dollars)

Caps 2018 2019 2020 2021

Defense 629 647 576 590


Nondefense 578 597 543 556

Total 1,207 1,224 1,119 1,146

• * The Budget Control Act (BCA) of 2011 specified that if lawmakers did not enact legislation from the Joint
Committee on Deficit Reduction that would reduce projected deficits by at least $1.2 trillion, automatic procedures
would go into effect to reduce spending during the period 2013-2021. Spending not constrained by these caps
(e.g. overseas contingency operations, emergencies, disaster relief and certain program integrity initiatives are
not included in these numbers.
• The Bipartisan Budget Act of 2018 adjusted the BCA 2011 caps for FY 2018 and FY 2019, increasing both
defense and nondefense caps.

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Trust Funds Cannot Fully Fund Scheduled Benefits

OASI:
2034 Early Retirement Impact Today 49
2052 Full Retirement Impact Today
54

HI:
Impact Today
57
Health Policy
Distribution of Spending for Health Care, 2018

Total Health Care Spending: $3.6 Trillion


17.8% GDP

$1,237 $379
$750 Billion $595 Billion $243 Billion
Billion $442
Billion Consumers Billion
Payments by
Other Private Out-of-
Medicare a Medicaid Public Pocket Other
Health
Spending Spending
Insurers
20.6% 16.3% 8.0% 10.4% 11.6%
33.9%

Public Spending: $1.6 Trillion, 43.5% Private Spending: $1.6 Trillion, 56.4%

Source: National Health Expenditures data from the Centers for Medicare and Medicaid Services (Forecast Summary, February
2019).
Gross spending for Medicare refers to all of the program’s spending not counting offsetting receipts (from premium payments
made by beneficiaries to the government and amounts paid by states from savings on Medicaid’s prescription drug costs) that
are credited to the program. Includes federal and state spending.

Total does not include the cost to the federal government of the tax exclusion for employment-based health insurance.
Relative Contributions to NHE 2017
Distribution of Medicare Fee-for-Service Beneficiaries
&

Medicare Spending by Number of Chronic Conditions: 2015

36% of
Beneficiarie 76% of
s Spending
with 4 or
more CCCs

Source: CMS 2015

15
Factors accounting for growth in per capita
national health expenditures (NHE)

5.8%

5.0%
4.4%
4.0%

3.0% 3.2%

2.1%
1.1%

1.3 1.6%
%

Source: Center for Medicare and Medicaid Services, Health Affairs January 2019
Public’s Priorities in Health Care Policy

Sour e: KFF Health Tracking Poll (January 9-14, 2019)


The Future of Health Care Policy
(Reformed Health Insurance)

Option Example Pro: Supporter Con: Non-Supporter


• Operational today • Affordability – Middle Income
Current Law Affordable Care Act • Disruptive to alter today • Complexity
(ACA) •

Increased coverage
Market place rules
• Lack of Choice
• Too much federal control

• Market-based state grants • Loss of coverage


Repeal & Replace Graham-Cassidy- • Medicaid per-capita grant • Reduced benefits
Heller-Johnson, •

Choice/Repeal mandates
Federal savings


No essential health benefits
Too much state flexibility/state
amendment • Expand HSAs rating rules

• Encourage early retirement


Incremental Medicare-Like Plan •

Buy-ins thru market places/silver plan
Extends & enhances cost-sharing • Adverse selection, upward

Changes Medicare Buy-In for •
State option Medicaid-buy in for all
Expand coverage
pressure on premiums
• Public costs
50-64
Medicaid Buy-In for
All
• Global budget • Public costs
Single Public Plan Medicare for All • Increased coverage • Single government-administered
• Cover all services + dental/vision program
• No premiums/limited cost • Eliminate private insurance
sharing • National fee schedule
Alzheimer’s: Costs & Funding
Projected Number of People Age 65 & Older
with Alzheimer’s Dementia
2010 to 2050
Aggregate Cost of Care by Payment for Americans Age 65 & Older
with Alzheimer’s and Other Dementias, 2019.
Average Annual Per-Capita Payments for Medicare Beneficiaries with and
without Alzheimer’s or Other Dementias
2018
Medicare and Medicaid Costs
for Alzheimer’s or other Dementias
National Institute of Aging
Funding for Alzheimer’s Research
“A Budget for Better America”
President Trump’s FY 2020 Budget Proposal
(in billions of dollars)

2018 2019 2020 ∆ 19-20 %∆


Proposed
National Institute of 36.151 38.010 33.477 -4.533 -13.5%
Health
National Institute of 2.572 3.083 2.654 -.430 -14.0%
Aging

AD/ADRD 1.915 2.340 1.990* -.350 -15.0%


Research
Nondefense Caps 578.0 597.0 543.0 - 54.0 -9.1%
* Estimate by author based on past relationship of NIA and AD/ADRD
funding.
2020 Political Setting
Distribution of ideology of U.S. House of Representatives
1967-2017
Party Polarization 1879-2006
Distance Between the Parties First Dimension

1.0
Distance Between the Parties

0.9

0.8

0.7

0.6

0.5

0.4

1879 1887 1895 1903 1911 1919 1927 1935 1943 1951 1959 1967 1975 1983 1991
1999 2006

Source: Polarized America, The Dance of Ideology and Unequal Riches. McCarty, Poole, and Rosenthal. MIT Press, June 2006
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