Questions? Call 800-624-6242

| Items in cart [0]

PAPERBACK
price:\$53.95

## Choosing the Nation's Fiscal Future (2010) National Research Council (NRC)

### Citation Manager

. "Appendix F: Constructing Multiple Paths to Sustainability." Choosing the Nation's Fiscal Future. Washington, DC: The National Academies Press, 2010.

 Page 300

The following HTML text is provided to enhance online readability. Many aspects of typography translate only awkwardly to HTML. Please use the page image as the authoritative form to ensure accuracy.

Choosing the Nation’s Fiscal Future

TABLE F-1 Basis of the Low Spending Trajectory for Medicare and Medicaid

 2008 (Percentage of GDP) 2025 Percentages of GDP Actual CBO Extended-Baseline Scenario CBO: 0% Excess Cost Growth CBO Alternative Fiscal Scenario/Study Baseline 0% Excess Cost Growth: For Use in Committee’s Scenarios 4.1 7.3 5.9 7.4 (5.9/7.3)*7.4 = 6.0

the assumption that Medicare’s payment rates for physicians will grow with inflation) that is the basis of the committee’s study baseline for Medicare and Medicaid.

The committee adopted a simple approach to reconcile CBO’s zero percent ECG trajectory with the study’s baseline assumptions. In 2025, for example, CBO’s path puts Medicare and Medicaid spending at 7.3 percent of GDP and program spending at 5.9 percent of GDP—that is, 19.2 percent below the extended baseline. Although the study baseline puts Medicare and Medicaid at 7.4 percent of GDP in 2025, which is slightly higher than CBO’s extended baseline, the committee still assumed that the zero percent ECG trajectory would put Medicare and Medicaid at 19.2 percent below the study baseline—that is, at 6 percent of GDP; see Table F-1.

##### High Spending Trajectory

The high spending path uses CBO data to broadly mimic the long-term cost-growth path of the Medicare Trustees. The formula used in the extrapolation does two things:

1. It causes spending in 2083 to be at the same level as that achieved by the 1 percent ECG path laid out by CBO in its most recent update of the long-term budget outlook. The same adjustments the committee made to the zero percent ECG path (as described above) were made to the 1 percent ECG path.

2. It causes the spending curve to flatten out to zero percent ECG by 2083.

The formula that accomplishes that is as follows:

 Page 300
 Front Matter (R1-R22) Summary (1-8) 1 The Long-Term Challenge (9-34) 2 Framing the Choices (35-48) 3 Fiscal Prudence (49-64) 4 Choices for a Sustainable Budget (65-74) 5 Options for Medicare and Medicaid (75-104) 6 Options for Social Security (105-128) 7 Options for Defense and Other Domestic Spending (129-142) 8 Revenue Options (143-172) 9 Multiple Paths to Sustainability (173-186) 10 Fiscal Stewardship: A Budget Process for the Long Term (187-208) 11 What Should Be Done Now? (209-216) References (217-232) Appendix A: Fiscal Sustainability (233-236) Appendix B: Baseline Assumptions and Estimates (237-246) Appendix C: Social Security Options (247-260) Appendix D: Defense and Other Domestic Spending: Program Options (261-274) Appendix E: Revenue Options and Their Implications (275-298) Appendix F: Constructing Multiple Paths to Sustainability (299-320) Appendix G: International Experience with Long-Term Budgeting (321-328) Appendix H: Biographical Sketches of Committee Members and Staff (329-338)