1. Opinion

Editorial: Positive news on slowing Medicare costs

A refreshing bipartisan Medicare agreement in Congress has put doctor payments on a more sensible trajectory.
A refreshing bipartisan Medicare agreement in Congress has put doctor payments on a more sensible trajectory.
Published Apr. 17, 2015

Targeted Medicare cuts by the Obama administration, waste reduction and a shift toward rewarding efficient care have produced positive results. The Medicare cost report released this week shows that per-patient expenses have all but stabilized. Meanwhile, a refreshing bipartisan agreement in Congress has put doctor payments on a more sensible trajectory. America cannot escape baby boom demographics — providing health care to aging and disabled citizens will continue to present fiscal and moral challenges for decades. But this week's developments are a welcome respite, and the president and Congress should build on these successes.

The Congressional Budget Office estimates that federal spending will grow from 21 percent of the gross national product to 26 percent over the next 25 years, a jump attributable entirely to interest on the national debt, Social Security and major health care programs. Social Security spending can be managed by incremental adjustments if necessary. Preserving Medicare — though less expensive now at about $560 billion a year — has long appeared more challenging because of the double whammy of a rapidly aging population and spiraling health care costs. That perception has fueled calls in some quarters for privatizing Medicare or dramatically raising the eligibility age.

Medicare's latest cost report should ease pressure to make dramatic changes in the near future. Per-patient expenditures grew by only 0.2 percent in 2013, considerably below the general cost of living rise of 1.7 percent. That compares to Medicare's 1.8 percent annual cost growth from 2009 through 2012 and a 5.8 percent average during the five prior years.

Baby boomers drove part of the cost report's rosier per-patient outlook, because they are swelling the ranks of Medicare's "young old," aged 65 to 70, who need fewer costly medical services than their older predecessors. As they continue to age, Medicare's per-patient spending will again climb.

But that's not the whole story. The Obama administration has wisely reduced payments to private Medicare Advantage insurance companies, bringing them more in line with the traditional fee-for-service system. Competitive bidding for durable medical equipment is expected to save $26 billion over the next 10 years.

Fraud and waste remain a problem, consuming one Medicare dollar out of every 10, say government auditors. A New England Journal of Medicine article this week cited one example — half of Medicare's 1.7 million cataract surgery patients in 2011 had tests and office visits that rarely served a purpose. The administration, however, is making slow progress. Fraud recovery has jumped threefold, to $28 billion in the last five years. Hospitals now can lose payments if patients develop infections or return too soon after discharge.

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Less quantifiable are the effects of still-evolving payment strategies on Medicare's fee-for-service side, where doctors, hospitals and other providers are encouraged to coordinate care more efficiently and be on the hook financially for outcomes. This week's bipartisan deal to increase doctor payments included an agreement that Medicare could accelerate this emphasis on "quality outcomes."

Along with other efforts to rein in costs, this week's promising news suggests an encouraging direction for Medicare that should benefit providers, patients and taxpayers.


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