A new review of Medicare spending over the last several decades shows a leveling off in Medicare spending per person since 2010, reports The New York Times. No one knows why exactly. Given that the government overpays Medicare Advantage plans–health plans administered by corporate health insurers–tens of billions of dollars a year, this slow-down in the rate of per person spending has made Medicare stronger than expected.
In 2011, Medicare spent $13,159 per enrollee. Passage of the Affordable Care Act in 2010 appears to have controlled per person spending since then. If this spending had continued to grow at the same rate as it had been growing, Medicare would spend an average of $22,006 per person today. Instead, it is spending less, $12,459 per person on average.
Medicare spent about $3.9 trillion less than projected since 2010. Part of the explanation for the reduction in spending is that Congress reduced payments to hospitals and to Medicare Advantage plans through the Affordable Care Act. But, that can hardly be all of it as our government is overpaying Medicare Advantage plans some $75 billion a year at this point.
The Times suggests that spending has leveled off in part because older adults are experiencing fewer heart attacks, possibly because more of them are taking cholesterol and blood pressure medicines. The Times also suggests that there are few blockbuster costly new drugs to drive up spending. But. Aduhelm is now available to people with Alzheimer’s and is incredibly expensive. And, if Medicare approves coverage of Ozempic for weight loss, that would also drive up Medicare spending.
Some argue that Medicare spending per person has barely increased in more than a decade because hospitals and other health care providers are focused on cost-containment. But, that focus could be denying people access to needed treatments. Life expectancy among older adults is falling.
Of course, Covid-19 also kept people out of the hospital and from getting other costly care. So, the pandemic also contributed to savings. And, while the New York Times story does not say so, high out-of-pocket costs keep a lot of people from getting Medicare services they otherwise would be getting.
Here’s more from Just Care:
- To strengthen the Medicare Trust Fund, Congress cannot allow Medicare Advantage overpayments to continue
- If you’re billed for a Medicare procedure, you likely should not pay
- Medicare patients with liver cancer face $10,000 in out-of-pocket costs
- One third of Social Security benefits spent on Medicare costs
- Six tips for keeping your drug costs down if you have Medicare
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