Nationally, spending from all public and private sources for long-term care  for all ages totaled about $137 billion in 2000, accounting for nearly 12  percent of all health care expenditures. Federal spending for Medicare, Medicaid, and Social  Security are expected to surge—nearly doubling by 2035—as people live  longer and spend more time in retirement. Over the  longer term, the increase in the number of elderly will add considerably to  the strain on federal and state budgets as governments struggle to finance  increased Medicaid spending. The positive benefits of the decreased prevalence of disability, however,  will be overwhelmed by the sheer numbers of aged baby boomers. Without fundamental financing  changes, Medicaid can be expected to remain one of the largest funding  sources for long-term care services for aging baby boomers, with Medicaid  expenditures for long-term care for the elderly reaching as high as $132  billion by 2050. As I noted previously, this increasing burden will strain  both federal and state governments.
What GAO Found

As more and more of the baby boomers enter retirement age, spending for Medicare, Medicaid, and Social Security is expected to absorb correspondingly larger shares of federal revenue and crowd out other spending. The aging of the baby boomers will also increase the demand for long-term care and contribute to federal and state budget burdens. The number of disabled elderly who cannot perform daily living activities without assistance is expected to double in the future. Long-term care spending from public and private sources--about $137 billion for persons of all ages in 2000--will rise dramatically as the baby boomers age. Without fundamental financing changes, Medicaid--which pays more than one-third of long-term care expenditures for the elderly--can be expected to remain one of the largest funding sources, straining both federal and state governments.