Update: The second graph has been corrected to show the correct year for each line.
It is no secret that the growth of federal health care spending is key to the government’s long-term fiscal outlook. With evidence growing that at least some portion of the recent slowdown in health care cost growth represents structural changes in the health care system, the Congressional Budget Office (CBO) revised downward their estimates of health care spending over the coming years from their last Long-Term Budget Outlook in 2012. Despite improved projections in the near term, however, CBO’s projected long-term growth rates remain nearly unchanged and still far in excess of per capita economic growth. Moreover, the short-term gains actually erode over time due to increased projections of longevity.
In fact, while spending on Medicare is now estimated to be 4 percent lower over the next decade than it was last year, CBO actually increased its projections of program growth after 2023 (from an average annual rate of 6.4% from 2023-2050 to 6.5%). Even within a decade, though excess cost growth (the per beneficiary growth above economic growth per capita) for Medicare is expected to average only 0.3 percent (in part due to the effects of the 24 percent physician payment cut dictated by the Sustainable Growth Rate formula), it is expected to rise back to 1.4 percent by 2023, which has been a more typical level in the past.
Part of the explanation is that CBO now expects higher per beneficiary spending growth in the 2020s and only slightly lower growth thereafter. Looking at the causes of the recent slowdown, CBO explains that “even the portion of the recent slowdown that reflects structural changes in payment mechanisms or in how care is delivered may represent [a] one-time downward shift in costs rather than a persistent reduction in the growth rate.”
The Congressional Budget Office, on Friday, estimated that the Energy & Commerce Committee’s (E&C) bill to permanently replace the flawed Sustainable Growth Rate (SGR) formula is expected to cost $175.5 billion from 2014-2023, $36 billion higher than the cost of a permanent freeze in Medicare physician payments. !-
The current volume-based reimbursement that pervades America’s health care system encourages more, not better, care and is driving up spending at an unsustainable rate.
In an effort to help address the unsustainable growth of our health care programs, a few legislators are reaching across the aisle in an effort to both curb costs and protect citizens. In an article in The Hill, Senators Tom Carper (D-DE) and Tom Coburn (R-OK), and Representatives Peter Roskam (R-IL) and John Carney (D-DE) described their recent legislation that addresses fraud prevention in Medicare and Medicaid.
Tomorrow, September 12, CRFB's Moment of Truth Project and the National Coalition on Health Care will host a briefing on Medicare delivery system and payment reforms. The briefing will begin at 10:30 AM in the Capitol Visitor Center with presentations by John Rother of NCHC, and Ed Lorenzen of the Moment of Truth Project. Sarah Kliff of the Washington Post will moderate a panel discussion with Bipartisan Policy Center's Bill Hoagland and the Brookings Institution's Keith Fontenot.
Today, Senator Tom Coburn (R-OK) and former Senator Joe Lieberman (I-CT) sent a letter to House Ways and Means Chairman David Camp (R-MI) that submitted their 2011 proposal for the ongoing discussions of reforming Medicare.
Last week, the Kaiser Family Foundation released its annual survey on health costs, prompting a wide range of reactions from "Health Care Costs Rise Moderately, Survey Says" to "Obama's Affordable Care Act Looking a Bit Unaffordable.&
The slowdown in health care spending growth in recent years has been a hotly debated topic, as experts try to figure out the source of the slowdown. Some have theorized that it is due mostly to the weak economy, while others have argued that changes in the delivery of care or other factors, perhaps in anticipation of the implementation of the Affordable Care Act, have been the main drivers.
Over at Calculated Risk, Bill McBride has created an animated chart showing America's age distribution evolve, as far back as 1900 to the current day to the projected age distributions through 2060.
While everyone is focused on tax reform developments these days, we cannot forget about the need for entitlement reform. In an attempt to devise a solution, the Ways and Means Committee held a bipartisan hearing series on reforms to entitlement programs in April. They have since opened the floor up to the public by encouraging the submission of comments on any of the plans and have also released discussion drafts from each of the hearings.