For each of the fiscal years 2012 to 2022, Chairman Ryan and his staff specified amounts of total revenues and spending for major categories of the federal budget. For 2022, total revenues were set at $4,601 billion; net spending on Medicare, $855 billion; spending on Medicaid and CHIP, $332 billion; spending on Social Security, $1,340 billion (matching CBO’s projected amount under current law); and spending on other mandatory programs together with defense and nondefense discretionary programs, $1,747 billion. For 2023 and later, Chairman Ryan and his staff specified rules by which revenues and spending would evolve:
■ Revenues. Starting from 18¾ percent of GDP in 2023, revenues would rise by one-tenth of 1 percent of GDP per year until they reach 19 percent of GDP in 2025 and then stay at that level.
■ Net Medicare Spending. For people enrolled in the program prior to 2023, net Medicare spending—including offsetting receipts, which are mostly payments of premiums—would grow at the same rate as under the extended baseline scenario. For people born in 1958 or later (that is, people who turn 65 in 2023 or later) or for those who otherwise become eligible for the program in 2023 or later, net Medicare spending is calculated as follows: Total spending for those beneficiaries in 2023 would be set to a total that works out to be $7,500 (in 2023 dollars) for each new 65-year-old beneficiary on a full-year-equivalent basis. Total spending would grow in subsequent years with nominal growth in per capita GDP plus 0.5 percentage points per year, and with an adjustment for the health status and number of beneficiaries who entered the program in 2023 or later. In addition, the eligibility age for Medicare would increase by two months per year beginning in 2023 until reaching age 67 in 2034.
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■ Federal Medicaid and CHIP Spending. Federal spending for Medicaid and CHIP would increase from the $332 billion specified for 2022 at an annual rate that equals the sum of the annual growth rates of the consumer price index for all urban consumers (CPI-U) and the total U.S. population. (For all years, the Chairman specified that there would be no spending for subsidies to purchase health insurance through new exchanges established by the Affordable Care Act.)3
■ Social Security Spending. Social Security spending would grow at the same rate as in CBO’s June 2011 extended baseline scenario.
■ All Other Federal Spending Apart from Interest Payments. Other mandatory spending together with defense and nondefense discretionary spending would start at $1,739 billion in 2023 and then grow with the GDP price index.
