"Unprecedented in the history of the Medicare program"

[Greenbeard]

ASPE reminds us this week of what other indicators were already telling us: Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows.

Exhibit 1. Annual Increase in Medicare Spending Per Beneficiary and GDP Per Capita

Exhibit 1. Annual Increase in Medicare Spending Per Beneficiary and GDP Per Capita
Note: 2010 and 2011 statistics are calculated on a calendar year incurred-basis. 2012 statistics are calculated on a fiscal year cash-basis, because calendar year incurred-basis data are not yet available.
Source: Medicare spending for 2010 and 2011 from the CMS National Health Expenditures data published in Health Affairs, January 2013; Medicare spending for FY 2012 from Office of the Actuary, CMS; GDP per capita for 2010 and 2011 from the CMS National Health Expenditures data published in Health Affairs, January 2013; GDP per capita for FY 12 calculated from BEA and Census data.


Exhibit 2. Projected and Historical Annual Growth Rates of Medicare Spending Per Beneficiary In Excess of GDP

Source: Medicare Spending Per Beneficiary from 1970-2010 from OACT data on incurred costs; GDP per capita for 1970-2010 from BEA historical data; 10 year future projections and SGR fix data from OACT projections of incurred costs and CBO projections. CBO's SGR fix assumes resetting the SGR Target at 2011 Spending Levels and using GDP +1% in Target. OACT’s SGR fix assumes that payment rates will increase at 1% per year.


The slow growth in spending per beneficiary from 2010 to 2012 combined with the projections of spending growth at GDP+0 for 2012-2022 is unprecedented in the history of the Medicare program. If sustained, the slower growth would improve Medicare’s ability to meet its commitments to seniors and persons with disabilities in future generations.

The Affordable Care Act is an important factor contributing to slow growth in spending per beneficiary in 2011 and 2012, and is the primary cause of the projections of continued slow growth over the next decade. The Affordable Care Act restrains the rate of growth of payments to Medicare Advantage plans, restrains the rate of growth in unit payments to hospitals and other providers, promotes value-based payment systems, and makes major investments to reduce fraud and abuse. The CBO estimated that these provisions of the Affordable Care Act would reduce Medicare spending by $3 billion in 2011, and $10 billion in 2012, with comparable OACT estimates of $6.5 billion in 2011 and $13.5 billion in 2012, or approximately a 1% reduction in spending per beneficiary in 2011, and more than a 2% reduction in 2012. Both the CBO and OACT estimate that the Affordable Care Act will reduce the rate of growth of spending per beneficiary by approximately 1 percentage point per year over the ten year budget window.4,5

In addition, the Affordable Care Act provides CMS the flexibility to implement a wide range of innovations designed to transform the delivery system by paying for value not volume. These innovations include fostering the growth of Accountable Care Organizations, Primary Care Medical Homes, bundled payments for acute and post-acute care, reducing the frequency of readmissions, reducing hospital acquired infections, and reducing fraudulent activity. These innovations are in the early stages of development, but they have the potential for reducing expenditure growth below projected levels.

This tracks well with the observation that Medicare hasn't grown as a percentage of GDP over the past few years:

Government social benefits to persons: Medicare (W824RC1)/Gross Domestic Product, 1 Decimal (GDP)

Also picked up in S&P's health care indices:

 

[dblack]

Cha-ching

 

[midcan5]

You mean the legislation passed by congress is working, jeez, who woulda thunk it.

Watching my mom in her last year was a telling and sorta funny sight. 'Tests more tests, are you crazy!' Nine decades were enough. The problem with most things in life is people, oh, and the solution too.

 

[Luddly Neddite]

Medicare is one of the smartest things we've ever done. It wasn't perfect at the beginning and still isn't but it has consistently run in the black and still pays for itself.

I must say that when I first learned that I had to keep paying for it after I retired, I was annoyed but really, it makes sense that we all have to continue to pay the premiums for our coverage.

Let's just hope we can keep it out of the hands of the GObP.

 

[Greenbeard]

In related news, Medicare continued ramping up some of its reforms this month:

Medicare nearly doubled the size of one accountable care program as of Jan. 1 with 106 new ACO contracts (PDF) that offer hospitals and doctors financial incentives to improve quality and slow health spending.

The CMS announced its latest and largest round of accountable care organizations under the Medicare shared-savings program, which launched in April last year with 27 ACOs. Another 89 ACOs were named to the program last July. The Center for Medicare and Medicaid Innovation separately launched 32 Medicare ACOs known as Pioneers roughly one year ago. CMS said half of ACOs are physician-led and care for less than 10,000 Medicare enrollees.

Jonathan Blum, the CMS acting principal deputy administrator and director for the center for Medicare, said it is too soon to release results from Medicare accountable care efforts launched last year. Blum, speaking with reporters after the CMS announced the latest ACOs, said the agency was optimistic the contracts would reduce costs.

 

[Greenbeard]

The CBO's been very cautious about recognizing the slowdown in Medicare spending growth.

Back in August of last year there was a little bit of fanfare because they had to go back and revise down their Medicare spending estimates for last year's budget outlook: Medicare spending forecast reduced in new CBO analysis

WASHINGTON | Wed Aug 22, 2012 3:31pm EDT
(Reuters) - Medicare, the popular healthcare program for the elderly that both political parties vow to rescue from financial ruin, will spend less money over the coming decade than previously expected, U.S. analysts said on Wednesday.

In a report on the U.S. economy and budget, the non-partisan Congressional Budget Office reduced its spending forecasts for Medicare by $19 billion for 2012 and by $169 billion over the coming decade from earlier this year. Total Medicare spending is projected at $7.7 trillion for the 10 years ending in 2022.

Well, yesterday the new budget outlook (now extending through 2023, not 2022) is out and--surprise!--they've had to again lower their Medicare spending estimates based on the exceptionally slow growth we've been seeing. That is, they've now lowered again the estimates they just had to lower in August.

CBO: Medicare spending slowing faster than expected

By Elise Viebeck - 02/05/13 03:36 PM ET

The Congressional Budget Office (CBO) lowered spending projections for Medicare on Tuesday, noting that the program's bills have been "significantly lower" than predicted for three years straight.

The non-partisan budget office revised down its 10-year spending projection for Medicare by $137 billion, or two percent, in its latest long-term economic forecast.

Report authors said spending in Medicare Parts A and B has risen by an average of 2.9 percent per year since 2009, or markedly less than the 8.4 percent annual growth seen between 2002 and 2009.

It's fascinating to see. You can actually look at each iteration of their spending projections table and watch their spending estimates for every single year over the next decade tick down each time.

January 2012: The Budget and Economic Outlook: Fiscal Years 2012 to 2022 (Table 3-1, page 49)
August 2012: An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022 (Table 1-2, page 6)
February 2013: The Budget and Economic Outlook: Fiscal Years 2013 to 2023 (Table 1-3, page 16)

You've got to respect the empiricism and the caution they've exercised in only slowly acknowledging Medicare's unprecedented (and sustained) slowdown--it's taking them quite a while to come around on it. They say seeing is believing.

 

[Greenbeard]

You've got to respect the empiricism and the caution they've exercised in only slowly acknowledging Medicare's unprecedented (and sustained) slowdown--it's taking them quite a while to come around on it. They say seeing is believing.

The CBO updated those February 2013 estimates today based on "additional data" and seeing continues to be believing. Another updated budget picture, another downward revision in Medicare spending. Another hundred billion dollars in projected Medicare costs over the next decade has melted away since the budget outlook was released three months ago.

In particular, additional data on spending in 2013 caused CBO to reduce projected spending by about 1 percent for Medicare benefits this year and over the 2014–2023 period.

Compared with amounts in the February 2013 baseline, estimated spending for Medicare benefits over the 2014–2023 period is lower for all major components of the program—Part A (hospital insurance), Part B (medical insurance), and Part D (outpatient prescription drug
benefits).

 

[lynn63]

Higher out of pocket cost is definitely the key player in the reduction of healthcare spending. There isn't a single insurance company out there that doesn't love it when we don't obtain healthcare services since the premium becomes profit.

Everyone is happy even with the future death numbers that will surely rise as a result of their accomplishments in reducing spending. The government wins since if you die they don't have to pay social security to you.

By all means, give them a pat on the back for a good job well done!

 

[Katzndogz]

The government is reducing the cost spent per beneficiary by two very simple methods. One is they are just refusing to pay for many procedures. Two is that they are paying providers less than it cost those providers to provide the service. This means the providers themselves won't perform. Overall the expenditures go down.

 

[lynn63]

That works great providing you don't get sick and you don't need one of those procedures that they are not going to pay for in the future.

 

[Greenbeard]

The government is reducing the cost spent per beneficiary by two very simple methods. One is they are just refusing to pay for many procedures.

Medicare denials are at about half where they were in 2008, and they have been throughout the current administration; last year they were comparable to (but a little bit lower than) Anthem and Aetna. The only coverage changes made at the national level in recent years were to increase covered services under the ACA.

Two is that they are paying providers less than it cost those providers to provide the service. This means the providers themselves won't perform. Overall the expenditures go down.

In 2011, 96 percent of Medicare beneficiaries reported that they were satisfied with the quality of medical care they received and only 5 percent reported trouble getting needed health care.

If their care dropped of a cliff, nobody seems to have told them.

 

[CrusaderFrank]

Obamacare sucked $700B out of the program, no?

Tell Cass we said Hello

 

[Political Junky]

Next is Medicare for All.

 

[CrusaderFrank]

Even for illegals!!

That will drive the costs down further!"

Sent from my DROID RAZR using Tapatalk 2

 

[Wry Catcher]

The government is reducing the cost spent per beneficiary by two very simple methods. One is they are just refusing to pay for many procedures. Two is that they are paying providers less than it cost those providers to provide the service. This means the providers themselves won't perform. Overall the expenditures go down.

PROVE IT! [or, STFU]

We know some procedures are employed not to benefit the patient, but the provider. If that's your point, you're even dumber than I thought.

 

[boedicca]

Considering how many doctors are opting not to see Medicare patients, a drop in costs is more likely linked to lack of supply, and Obamacare will make that situation worse.

 

[Wry Catcher]

Considering how many doctors are opting not to see Medicare patients, a drop in costs is more likely linked to lack of supply, and Obamacare will make that situation worse.

How many? Name them? Or, STFU!

BTW, patients will always be seen, the cost will be borne by local government (AND THAT MEANS LOCAL TAXPAYERS will pay for health care, and in return suffer more pot holes, fewer first responders and less services).

 

[Vandalshandle]

Considering how many doctors are opting not to see Medicare patients, a drop in costs is more likely linked to lack of supply, and Obamacare will make that situation worse.

That's odd. I live in a retirement community of 31,000 people, which will not even allow anyone under 55 to live here, and we are seperated from a major metropolitian area by 40 miles of desert. Yet, I have many choices of doctors in the community, all contracted by three different Medicare Advantage plans that I can choose from. I was in Urgent Care last week, and my wait was 15 minutes. I am covered by Medicare Advantage, and though I am reading on this thread that proceedure denials are increasing, I find the oppoisite to be true. I have never had a proceedure recommended by my Primary care physicain denied by Medicare or the Advantage plans. I find myself declinng services they want to provide for me (for excmple, I am diabetic, and they want to send me down every year to buy a new pair of $500 diabetic shoes that I don't need). In short, you guys who are parroting all this crap from AM talk radio don't know what the hell you are talking about.

 

[Political Junky]

No problem here. My first physical this year was free .. Thanks, ObamaCare.

 

[Luddly Neddite]

Obamacare sucked $700B out of the program, no?

Tell Cass we said Hello

No.

Even for illegals!!

Wrong again.

I love Frank's posts. Just like katzenstupid's, they're always wrong.