According to the Congressional Budget Office and Standard and Poor?s, Medicare spending growth has dropped sharply from an average of 9.7 percent a year from 2000-2009 to less than 4 percent since the passage of health care reform in 2010. Compare that to the fact that spending growth by commercial health insurers climbed by 7.35 percent from May 2010-May 2011 while Medicare claims rose by just 2.6 percent for that same one year span.Of course, these facts fly in the face of Washington conservatives? crisis calls claiming we can?t afford Medicare. Their solution is to slash benefits, raise the eligibility age, shift costs to seniors or gut the program entirely to create CouponCare. This same group also wants to repeal healthcare reform before there?s any chance seniors can see the improvements to Medicare that come as a result of the Affordable Care Act.
?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. After levitating by an average of 9.7 percent a year from 2000 to 2009, CBO?s monthly budget reports show that Medicare pay-outs are now rising by less than 4 percent a year.? Maggie Mahar, Taking Note Blog, Century Foundation
Maggie Mahar has written two detailed descriptions of how and why this is happening, even before full implementation of health care reform in 2014.
?What is striking about the recent dip to 4 percent, is that this time around, there have been no major policy changes in Washington. Over the past 18 months, neither benefits nor payments to providers have been reduced in any significant way. The Affordable Care Act does call for cutting overpayments to Medicare Advantage insurers, while shaving annual increases in payments to hospitals, nursing homes and other institutional providers by 1 percent a year over ten years. But these changes have not yet taken effect.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. Everywhere I go,? Emanuel, told me, ?medical schools and hospitals are asking me, ?How can we cut our costs by 10 to 15 percent?? They know that they must trim their own costs if they are going to lower the bills that they send to Medicare.?” Like Orszag, Emanuel is seeing a ?shift toward value in the health sector.?
We must allow Medicare reforms that focus on improved outcomes while lowering costs and don?t target beneficiaries for severe and debilitating benefit cuts to be given a chance to work before jumping on a deficit bandwagon that directly targets America?s seniors for benefit cuts.Washington?s new ?Super Committee? appears ready to consider many of the destructive proposals pushed by fiscal hawks targeting Medicare beneficiaries to foot the bill for our debt reduction. Rather than targeting beneficiaries, these ?Super Committee? members should build on the successes already seen in health care reform.