Medicare spending in surprising slowdown

Dec. 23, 2011 at 7:44 PM
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WASHINGTON, Dec. 23 (UPI) -- U.S. Medicare spending growth has slowed even as enrollment rises, and could remain below targets set by Congress for the next 10 years, experts said.

Medicare recorded a sharp drop in the volume of doctor visits and other outpatient services early in 2010, from an annual growth rate of 4 percent growth to less than 2 percent.

"We thought, 'Wow, what's happening?'" chief Medicare actuary Rick Foster told The Washington Post in an interview. "Part B cost growth has slowed down so much, we're seeing virtually the lowest rates ever."

Budget analysts consider the news as a temporary aberration, since an average of 10,000 baby boomers will turn 65 every day for the next 20 years, eventually doubling the program's enrollment, and annual Medicare spending is projected to reach nearly $1 trillion by 2021.

But the drop does point to an often-overlooked truth, analysts say -- Medicare spending per person is rising more slowly than spending in the private health sector.

It's expected to mirror overall growth in the economy for much of the next decade, staying well below targets set by Congress, they say.

"Medicare is not out of control," said Robert Berenson, vice chairman of the congressionally appointed Medicare Payment Advisory Commission, which studies the program's finances. "This 'bloated and inefficient' program is not bloated and inefficient."

Still, officials and politicians acknowledge, Medicare faces challenges.

Medicare "is going from 40 million people to 80 million people. You're doubling the consumers of the program. Spending is going to go up," House Budget Committee Chairman Paul Ryan, R-Wis., said. "The question is: Is it going up in the stratosphere, where it bankrupts us? Or is it going up in a way where our economy can manage it?"

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