Slower Growth in Medicare Spending — Is This the New Normal?


Policymakers have singled out federal spending on health care, especially Medicare, as the most serious long-term threat to the nation’s fiscal health in recent years. Over the past four decades, the average growth in Medicare spending per enrollee has exceeded the growth in per capita gross domestic product by 2.6 percentage points per year. This trend is obviously unsustainable, and if it continued, Medicare would consume all federal revenues by 2060. But there are indications that Medicare spending growth has recently slowed. This is most likely multifactorial related to the recent economic downturn, growth of the ‘young elderly’ as a share of the Medicare population, tighter Medicare payment policy, and other policy changes. The framers of the affordable care act (ACA) perceived broad provider payment reform as the best prospect for slowing the long-term spending trend. The ACA planted the seeds for accountable care organizations, bundled payment for episodes of care, patient-centered medical homes, and incentives for reducing readmissions. This will however, require reaching across different types of providers and helping to stitch together real delivery systems, which do not currently exist.

Keywords: Gross Domestic Product, Motivation, Cardiology, Delivery of Health Care, Medicaid, Health Expenditures, Accountable Care Organizations, Medicare, Patient Protection and Affordable Care Act, United States, Patient-Centered Care

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