CBPP: Medicare and Medicaid Spending Trends Don’t Justify Restructuring

Rising health care costs are the main force behind the long-run budget worries that are driving the push for large cuts in spending on social services. However, health care costs for Medicare and Medicaid aren't growing as fast as projected:

Medicare and Medicaid Spending Trends Don’t Justify Restructuring, CBPP: Medicare and Medicaid spending per beneficiary has grown less rapidly than costs for private health insurance in recent years, as we have previously pointed out.  (See here and Figure 1 here.)

This favorable trend is projected to continue for at least the coming decade, according to a new article in The New England Journal of Medicine.  These data belie the claim that spending for Medicare and Medicaid is “out of control” and that the programs must be fundamentally restructured...

Looking at these trends, Holahan and McMorrow conclude:

With the per-enrollee spending growth in Medicare and Medicaid less than that in private insurance and close to the growth in GDP per capita, it’s hard to argue that spending on either program, on a per-enrollee basis, is “out of control.”. . . Policy options such as premium support and block grants that entail indexing growth rates to some measure of economic growth will have a hard time achieving lower per-enrollee spending growth than is currently projected. CBO estimates suggest that both approaches may achieve savings for the federal government, but such savings shift Medicare costs onto existing enrollees and, in the case of Medicaid, onto the states as well. . . . Rather than pursuing major restructuring of either program, then, we should continue adopting available strategies to contain costs within the programs’ current structure, especially since many of those implemented in the past decade seem to be working, and many on the horizon appear promising.