How much has spending risen per Medicare beneficiary in 2012?

With the extensive coverage of the fiscal cliff and news surrounding the accelerating costs of federal programs such as Medicare and Medicaid, it may be surprising to hear that Medicare costs and spending per beneficiary continues to hit historic lows, according to a recent report released by the Department of Health and Human Services (HHS).

The amount that Medicare spent per beneficiary had increased by 0.4% in the fiscal year of 2012, continuing the pattern of slow growth from the past two years, as reported by the HHS. This increase in Medicare spending is three percentage points less than the economy grew during that same period, which equated to a 3.2% increase in per capita gross domestic product (GDP).

The report credits President Barack Obama’s Affordable Care Act for these low Medicare cost increases. As a result of health care reform, $716 billion has been cut from Medicare payments to insurance companies, hospitals, and other healthcare providers. In addition, penalties have been put in place for low performing hospitals and new Medicare benefits, such as free preventative screenings.

The Huffington Post and The Hill also covered this story.

What do these findings mean for future Medicare costs?

With statistics and support from the Congressional Budget Office and Centers for Medicare and Medicaid Services (CMS) Office of the Actuary, the report estimates that these historic lows may continue for years to come in part due to the healthcare law’s Medicare payment cuts. Even if there were adjustments in the physician payment system to avoid large formula-driven reductions, HHS officials still project that Medicare spending per beneficiary will grow at approximately the rate of growth per capita GDP over the next decade.

However, these findings do not indicate that concern over overall Medicare costs is unwarranted. Although spending per Medicare beneficiary increased only slightly, the program’s total spending is still rising. With the growing number of baby boomers aging into Medicare each day and the increased longevity of current beneficiaries, the federal government can only expect to spend increasingly more to provide Medicare coverage to all eligible beneficiaries.

What do you think needs to be done in order to keep the Medicare program’s spending per beneficiary low?

Medicare has neither reviewed nor endorsed this information.

About Angela Chen

Angela Chen is a contributor and editor of the PlanPrescriber Blog.