Health system executives are watching the federal budget deficit closely headed into 2025 as they develop their own budgets for next year.
A report from the Congressional Budget Office estimates the U.S. budget deficit grew to $1.8 trillion in the last fiscal year, driven partially by increased spending on programs for older Americans, including Medicare.
Here are five takeaways from the report:
1. The federal government collected $4.92 trillion in revenue but spent $6.75 trillion in 2024, leading to the $1.8 trillion budget deficit. The gap was driven by Social Security and Medicare, together increasing costs 6% year over year, according to The Wall Street Journal. Medicare outlays increased by 9% to $78 billion due to increased enrollment and higher payment rates.
2. High interest rates also contributed to the deficit. For the 2024 fiscal year, the U.S. upped spending on interest 34% to $950 billion as interest rates ballooned year over year to exceed military spending for the first time ever.
3. The federal deficit accounted for around 6.4% of gross domestic product, a high percentage given low unemployment and steady growth of the U.S. economy, according to the report.
4. Future projections show the deficit is likely to continue for the next several years and accumulated debt could exceed record highest in the short term, according to the report, putting the U.S. on "riskier" financial footing.
5. The November presidential election will affect future debt projections as well. The Committee for a Responsible Federal Budget estimated Vice President Kamala Harris' tax plan would increase the debt by $3.5 trillion in the next 10 years while former President Donald Trump's plans would bump the debt by $7.5 trillion. Both Mr. Trump and Ms. Harris would extend 2017 tax cuts Mr. Trump's administration enacted.