Medicare Surpasses Private Plans in Cost Control
A recent article in the New England Journal of Medicine (NEJM) finds that Medicare controls spending better than private plans do. Yet in the midst of current deficit-reduction debates, where Medicare reform remains front and center, some policymakers claim that Medicare spending is unsustainable. These same policymakers argue that controlling the nation’s deficit requires drastic changes to Medicare’s structure—including making beneficiaries pay more for less health security.
Yet data on Medicare spending does not support such claims. Overall, health care spending slowed towards the end of the decade, but more so in Medicare than among private plans. The report finds that between 2000 and 2010, Medicare spending per enrollee grew at a lower rate annually than did spending among private payers. While the reasons behind this spending slowdown are not well-understood, the report partly attributes a number of specific policy changes, such as measures taken to reduce hospital spending and increased utilization of generic drugs.
Experts at the Centers for Medicare & Medicaid Services (CMS) anticipate that, over the next ten years, Medicare will continue to out-compete private plans on spending measures. While Medicare costs will increase, due to enrollment in the program by baby boomers and growing health care costs overall, CMS predicts that advancements passed through the Affordable Care Act (ACA) will still result in lower expenditures for Medicare than for private plans. Specifically, CMS estimates from 2012 to 2021 show that Medicare spending is projected to grow, per year per enrollee, by 3.1 percent compared to 5 percent for private insurance.
Proposals that would cut Medicare and shift costs to beneficiaries fail to recognize that Medicare is an innovator in delivery—and cost—reform that can improve spending in the health care system as a whole. As the NEJM report concludes, Medicare should not be restructured; rather, policymakers should look to the program for examples of how to successfully contain costs.
Read the NEJM article, “Medicare and Medicaid Spending Trends and the Deficit Debate.”
http://www.nejm.org/doi/full/10.1056/NEJMp1204899
Read the Center on Budget and Policy Priorities’ summary of the NEJM report.
http://www.offthechartsblog.org/medicare-and-medicaid-spending-trends-dont-justify-restructuring/
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Actual data, not spin...
