Medicare Costs Well Under Control So Far in 2014


Health care costs have increased sharply over the past few quarters, causing a lot of hand-wringing despite the fact that it’s probably due to an entirely predictable cause: higher utilization of the health care system thanks to Obamacare. Still, we don’t know that for sure. Maybe there’s also an underlying rebound in medical inflation that spells trouble down the road.

We probably won’t know for sure for years, but today the Committee for a Responsible Federal Budget released a data point that suggests underlying costs remain well controlled. The Medicare system has 3.8 percent more beneficiaries than last year, but underlying costs have increased only 2.5 percent:

Adjusted for timing shifts, Medicare growth is even lower through eight months at just 0.3 percent. And even after removing the effects of temporary policies, year-to-date Medicare growth remains extremely low at 2.5 percent, even lower than through April. This is more than a full percentage point below economic and beneficiary growth, meaning that even excluding one-time effects, Medicare spending is on pace to both fall as a percent of GDP and on a per-capita basis.

It’s just a single data point. But it’s definitely pointing in the right direction.

UPDATE: Peter Orszag tweets a follow-up:

All true, except even reported Q1 acceleration for total (red) may be revised now that we have real #s (blue).

Orszag’s chart is below, with PCE medical inflation in red and the actual change in total health care spending in blue. Normally the two trend lines track each other fairly well, but they diverged dramatically in late 2013. This suggests that the medical inflation number may be revised downward once actual health care spending is taken into account.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate