Magazine article Medical Economics

Why Is Medicare Spending Slowing Down?

Magazine article Medical Economics

Why Is Medicare Spending Slowing Down?

Article excerpt

Medicare is spending about $1,000 less per beneficiary than it was expected to just a few years ago, and no one is quite sure whyor whether the slowdown will last.

A BLOG posting A blog posting on the Kaiser Family Foundation's website compares the Congressional Budget Office's (CBO) 2010 baseline projection of what Medicare spending would be in 2014 with the CBO's current baseline estimates for 2014. The authors find a difference of nearly $33 billion ($644.8 billion versus $612 billion), or $1,048 per beneficiary.

Looking ahead a few years, the differences are even greater. In 2010, the CBO's baseline projection for 2019 was $869.3 billion, whereas the current projection for 2019 is $778 billion, a difference of $91.3 billion, or $2,369 per beneficiary.

"Healthcare observers are still scratching their heads trying to explain why Medicare spending is growing so slowly," write Trida Neuman, Ph.D., and Juliette Cubanski, Ph.D., the post's authors, adding,"the consecutive year-to-year reductions in projected Medicare spending are unprecedented."

The 2010 projection was developed after passage of the Affordable Care Act (ACA), and Neuman and Cubanski note that the CBO's 2010 and subsequent spending projections already include many of the legislation's cost-saving provisions, such as reductions in Medicare Advantage payments. Similarly, CBO projections after 2013 include the 2% reduction in provider payments under sequestrations, but even with those the CBO has continued to lower its Medicare spending projections. …

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