Even some major deficit reduction proposals, like the one known as Simpson-Bowles, aren’t much bigger. It’s so much money that almost no major legislation passed during this period comes close in scale. The difference is more than could be saved by raising the eligibility age for Social Security or converting Medicaid into a block grant, controversial proposals raised by legislators concerned about the federal debt. If Medicare spending had grown the way it had for much of its history, federal spending would have been $3.9 trillion higher since 2011, and deficits would have been more than a quarter larger, according to an Upshot analysis. Medicare may even wind up saving money because of Covid-19 - because the older Americans who died from the disease tended to have other illnesses that would have been expensive to treat if they had survived, according to an analysis from the Medicare actuary. The cost containment strategies in hospitals may mean patients have been denied the treatments of their choice. Reductions in heart attacks and strokes have had big benefits for public health, but the paucity of major medical breakthroughs has been accompanied by slowing improvements in life expectancy for seniors. That budgetary good news isn’t all good news for people with Medicare. Professor Buntin says the direction of recent federal policies and choices by private insurers have caused doctors, nurses and hospital administrators to become more cost-conscious. “What I’ve been arguing for more than a decade now is something that’s very difficult to quantify but is nonetheless real,” said Melinda Buntin, who measured the trend as a deputy assistant director at the Congressional Budget Office, and now studies it as a professor at Johns Hopkins. Note: Mandatory Medicare outlays adjusted for inflation using the G.D.P. Sources: New York Times analysis of data from the Congressional Budget Office, the White House Office of Management and Budget, and the Medicare board of trustees. Parts of the health system appear to have become more efficient, as medical providers have been more cautious about adopting new therapies without much evidence, and more care has shifted outside hospitals into cheaper settings. (Medicare is currently barred by statute from covering the new class of expensive anti-obesity drugs.) And drug makers and surgeons haven’t developed as many new blockbuster treatments recently - there has been no new Prozac or angioplasty to drive up spending. Older Americans appear to be having fewer heart attacks and strokes, the likely result of effective cholesterol and blood pressure medicines that became cheap and widely used in recent years, according to research from Professor Cutler and colleagues. Most of those reductions came from a category the budget office calls “technical adjustments,” which it uses to describe changes to public health and the practice of medicine itself. In a recent letter to the Senate Budget Committee, economists at the Congressional Budget Office described the huge reductions in its Medicare forecasts between 20. Congress also cut Medicare payments as part of a budget deal in 2011.īut most of the savings can’t be attributed to any obvious policy shift. The biggest such shift came with the Affordable Care Act in 2010, which reduced Medicare’s payments to hospitals and to health insurers that offered private Medicare Advantage plans. Some of the reductions are easy to explain. Scholars have been arguing about it for years, but no one seems sure enough to confidently predict whether it is likely to stick around for much longer. The reason for the per-person slowdown is a bit of a mystery. “Without a doubt, this is the most important thing that has happened to the federal budget in the last 20 years,” said David Cutler, a professor of health policy and medicine at Harvard, who helped the Obama White House develop the Affordable Care Act. Budget news often sounds apocalyptic, but the Medicare trend has been unexpectedly good for federal spending, saving taxpayers a huge amount relative to projections. But it has had enormous consequences for federal spending. The trend can be a little hard to see because, as baby boomers have aged, the number of people using Medicare has grown.
Instead of growing and growing, as it always had before, spending per Medicare beneficiary has nearly leveled off over more than a decade. Something strange has been happening in this giant federal program. Now, flat Medicare spending might be a bigger one. For decades, runaway Medicare spending was the story of the federal budget.
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