Federal government health care actuaries released their annual report on the nation’s medical spending this week, in the January issue of the journal Health Affairs. The study’s headline number sounds, on its face, like encouraging news: In 2011, the most recent year for which figures are available, nationwide health-spending rose at a record-low rate of 3.9%. But Medicare’s numbers grew much faster, a fact that may well add fuel to the political debate over whether and how to reform the government’s health-care program for the elderly.
Associated PressBehind the overall spending number lies a mixed bag of statistics and trends. The medical growth rate slowed down in recent years largely because of the recession, as more people lost their job-based insurance coverage and cut back on elective care (or, for that matter, necessary care). In 2011, patients started going back to doctors more often, and spending more on specialty drugs—possible signs of a strengthening recovery and of higher spending down the road, reports Louise Radnofsky in the Wall Street Journal. On the other hand, the growth rate of spending on hospital care slowed down in 2011, which may reflect some success by the federal government and insurers in their efforts to rein in costs at the most expensive end of the medical spectrum, notes Robert Pear in the New York Times.
What’s getting less attention in the major papers, though, is a more unsettling point: Medicare spending was already speeding up in 2011, rising 6.2% after a 4.3% gain in 2010. Part of that reflects an increase in enrollment, as more members of the baby-boomer demographic wave turn 65 and qualify for coverage. But per-enrollee spending for Medicare also grew faster than it did for private health plans, and by that measure, Medicare’s growth rate in 2011 was double that of 2010’s. (Medicare spending accounted for $554 billion, or a little more than 20% of all health-care consumption, in 2011, according to the actuaries’ report; private insurance covered $896 billion, and consumers paid $308 billion out of pocket.)
To put things in perspective: Medicare’s 2011 growth rate was still lower than the pre-recession average (double-digit growth was the norm in the 1980s and ‘90s). The study’s authors also note that some elements of the Affordable Care Act that are designed to restrain spending hadn’t kicked in yet, and won’t do so until 2014. Still, you can expect these Medicare numbers to get some time in the spotlight when Congress and White House jump back into the deficit-reduction battle later this year.
