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Has Medicare spending fallen? PolitiFact rates it

The statement

"Medicare costs have slowed down dramatically. In fact, the first two months of this fiscal year, Medicare costs were down even in nominal terms relative to the previous year."

Peter Orszag, Dec. 15, 2013, in an interview on CNN's State of the Union

The ruling

There's broad agreement that one of the biggest challenges for the nation's future fiscal health is rising federal spending on Medicare, the health insurance program for Americans age 65 and older. That's why a recent claim about Medicare costs caught our attention.

On the Dec. 15, 2013, edition of CNN's State of the Union, Peter Orszag said, "Medicare costs have slowed down dramatically. In fact, the first two months of this fiscal year, Medicare costs were down even in nominal terms relative to the previous year." Orszag is the former director of the Office of Management and Budget for President Barack Obama.

Earlier in the year, the Congressional Budget Office — Congress' nonpartisan budget-analysis arm — projected that the cost of Medicare would rise due in large part to the aging baby-boom generation. So Orszag's claim that Medicare costs are slowing down is notable and surprising.

When we contacted Orszag, he pointed us to a CBO document, the "Monthly Budget Review for November 2013." (Orszag knows his CBO documents; he was once the office's director.)

In that document, CBO reported that, according to preliminary data, outlays for Medicare fell from $101 billion in October-November 2012 to $96 billion in October-November 2013.

This fits the bill for what Orszag claimed — a year-over-year decline in "nominal" Medicare costs. In fact, Orszag told PolitiFact, this decline is "all the more remarkable because the number of beneficiaries is rising." Still, there are a few points to keep in mind about Orszag's statement.

For starters, past performance does not equal future performance, said Joseph Antos, a health care specialist at the conservative American Enterprise Institute. The pattern Orszag cites "does not mean a slower trend will last," Antos said.

Gail Wilensky, who headed Medicare and Medicaid under President George H.W. Bush, said she sees the recent data as a positive development, but added, "If only anyone knew why and whether it will last."

Orszag doesn't dispute their words of caution. "I agree it's unclear how long it will last, but I am more hopeful than some others," he said. "The bottom line is that it's not guaranteed to continue, but it's a huge deal if it does."

Overall, determining the reasons why Medicare spending is slowing remains a work in progress, but that doesn't detract from the statement's factual accuracy. We rate it True.

LOUIS JACOBSON, Times staff writer

This report has been edited for print. See the full report at politifact.com.

Has Medicare spending fallen? PolitiFact rates it 01/02/14 [Last modified: Thursday, January 2, 2014 10:05pm]

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