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Medicare Spending Slows Sharply
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Issue
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| Contributor | RP |
| Last Edited | RP Aug 25, 2011 12:33pm |
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| Category | Analysis |
| Author | Maggie Mahar |
| News Date | Thursday, August 25, 2011 06:00:00 PM UTC0:0 |
| Description | It is an article of faith, at least among conservatives, that as long as Medicare remains a government program, outlays will rise relentlessly, year after year. Only “the market” could possibly tame Medicare inflation, they say. The fear-mongers argue that unless we either shift costs to seniors; raise the age when they become eligible for Medicare; or turn the whole program over to private sector insurers, Medicare expenditures will bankrupt the country.
Here is the truth: Both Standard & Poor’s (S&P) and the Congressional Budget Office (CBO) now have 18 months of hard data showing that Medicare spending has begun to slow dramatically. Health reform legislation has not yet begun to kick in to pare Medicare payments, but something is changing on the ground. As I pointed out in an earlier post, Medicare spending began to plunge in January of 2010.
This slow-down is not a result of Congress cutting Medicare spending. Instead, as former White House health care adviser Dr. Zeke Emanuel pointed out in Part 1 of this post, providers are “anticipating the Affordable Care Act kicking in 2014.” They can’t wait until the end of 2013, he explained: “They have to act today.
In the past, Medicare has rewarded providers for “Volume,” by paying them fee-for-service. But the Affordable Care Act contains financial carrots and sticks that reward doctors and hospitals for “Value”-- better outcomes at a lower price--while penalizing those that “do more” without improving patient outcomes. “Either we get volume under control, or prices paid both by private insurers and by Medicare will drop,” says Emanuel. “Hospitals know this. This is why they want to make their systems more efficient.” |
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