Federal government continues to spend less on kids than on adults

January 1, 2015

Children get about 10% of the federal budget, while 43% goes to the “adult” expenditures under Social Security, Medicare, and Medicaid, says an analysis from the Urban Institute in Washington, DC.

Children get about 10% of the federal budget, while 43% goes to the “adult” expenditures under Social Security, Medicare, and Medicaid, says an analysis from the Urban Institute in Washington, DC.

The trend is set to continue, the report says. Under current federal law and under budget proposals by the president or Congress, “Spending on children would decline as a share of the budget and of the national economy,” write C. Eugene Steuerle and Julia B. Isaacs in Health Affairs.

Children have done relatively well with health insurance because of public programs. The number of uninsured children is down from about 13.9% in 1997 to 7.1%, according to the Medicaid and Children’s Health Insurance Program Payment and Access Commission.

However, the Health Affairs article notes, “Medicaid has grown to be the largest federal support for children, but overall, federal healthcare costs eat away at the share of the budgetary pie left for anything else.”

A mixed blessing for kids

For children, government healthcare spending is a mixed blessing, said Steuerle at a Health Affairs symposium in Washington. Children do get a certain amount of increased healthcare spending, but “the overall cost of healthcare in aggregate is one of the huge pressures” that cause children to get less from the rest of the budget.

Most pressure on nonhealth programs that affect children comes from the fact that the mandatory spending portion in the federal budget has been growing for decades. Mostly Social Security, Medicare, Medicaid, and some other health expenses, these programs promise, by law, benefits to eligible persons no matter how high the costs become. They have grown from 26% of the budget in 1962 to 60% today.

After payments for defense and interest on the national debt, one-seventh of spending is left for nondefense “discretionary” programs, including science and technology research, education, the Centers for Disease Control and Prevention, the environment, childcare, housing, and numerous programs.

The Urban Institute authors point out that the economy is expected to grow in the future and thus the size of total federal spending could increase. However, they say, “Economic growth, in turn, is affected by how well the nation invests in children.”

Children’s share of the population has been shrinking for over 200 years and will continue to do so, says Richard Kogan, senior fellow at the Center for Budget Priorities and Policies (CBPP). Nevertheless, he indicates, investments in children have been inadequate for decades, but increases for children should not come at the expense of the elderly.

“The solution lies more in expanding the size of the pie, which really is a discussion about revenues,” Charles Friedman, vice president of CBPP, says.

Kogan notes that every Northern European country does much more for its children, adults, and the elderly than the United States. “One reason is they have had long-standing universal healthcare systems, which makes the cost of healthcare for everybody a lower share of gross domestric product [GDP],” he says.

He adds that there could actually be further cuts in both discretionary and mandatory programs (such as Medicaid and food stamps) with the next Republican Congress.

Meanwhile, a recent report from the Centers for Medicare and Medicaid Services said that although the increase in healthcare costs was only 3.6% in 2013, “The health share of the [GDP] is expected to rise from 17.2% in 2012 to 19.3% in 2023.”

Ms Foxhall is a freelance writer in the Washington, DC, area. She has nothing to disclose in regard to affiliations with or financial interests in any organizations that might have an interest in any part of this article.