The Obama administration updated its economic forecast in its mid-session budget review this morning (read the WSJ story here and a post by budget director Peter Orszag here ). Costs associated with health care, it says, are at the center of the government’s financial woes. In its own words: The Federal Government’s long-term fiscal shortfall is driven primarily by escalating health care costs. If health care costs continue to grow at their historical rates, Medicare and Medicaid will double as a share of spending on Federal programs within the next 30 years. These growth rates are simply unsustainable and are why slowing the growth in health care costs is the single most important step we can take to put the Nation on firm fiscal footing. For example, slowing the rate of health care cost growth by 0.15 percentage points per year would produce the same amount of savings for the Federal budget as closing

the 75-year Social Security shortfall. According to the revised proposed budget numbers, Medicare costs of $612 billion, which comprised 2.7% of GDP in 2008, are expected to grow to $871 billion, or 3.3% of GDP, by 2019. Medicaid spending, at 1.4% of GDP in 2008, or $201 billion, will grow to 2.1% of GDP by 2019, or $482 billion. (To see the numbers for yourself, check out the tables starting on p. 25.) The report also includes a bit about health reform, touting that policies proposed by the administration “identifies a total of $622 billion in savings over 10 years in Medicare and Medicaid (increased from $309 billion in the Budget), which can be used to ensure that health reform will be deficit neutral. This brings the Health Reserve Fund total to $954 billion over 10 years.”

See more here:
OMB Report: Health Care Costs at Heart of Budget Deficit