More Good News on Medicare

We continue to get good news on Medicare. Today, a new analysis shows the growth in Medicare spending per beneficiary has continued at a historically slow pace. This report follows news earlier this week that overall Medicare spending, as well as total U.S. health care spending, has been growing at a lower rate than it has been in the past.

As highlighted in the analysis, the Affordable Care Act is helping to put Medicare on a sustainable path for the years ahead so that seniors and people with disabilities can continue to receive quality care.  And we’re making Medicare stronger without cutting benefits for seniors. In fact, the health care law cuts prescription drug costs for seniors, makes recommended preventive services like mammograms available for free, and includes new proposals for improving the quality of care.  

The report we released today shows that Medicare spending per beneficiary grew by only 0.4 percent in fiscal year 2012, following slow growth in 2010 and 2011. This is significantly below the 3.4 percent increase in per capita gross domestic product (GDP).

The Congressional Budget Office and the Office of the Actuary at the Centers for Medicare & Medicaid Services estimate that Medicare spending per beneficiary will grow at about the same rate as the economy over the next 10 years. This level of spending breaks a 40-year pattern of Medicare spending growth exceeding economic growth.

The 2010 health care law is one of the reasons why growth has slowed. The law makes more appropriate payments to hospitals and other providers, promotes care that’s based on quality and not quantity of services, and cracks down on fraud and abuse.

And the Affordable Care Act provides the flexibility we need to support innovations to transform the health care delivery system to pay for value instead of volume. For example, doctors and other health care providers across the country are coming together in new groups called Accountable Care Organizations to provide high quality, coordinated care. The innovations are already having a big impact: We announced more than 100 new ACOs today, meaning that over 1.5 million more Medicare patients are getting better coordinated care. In total, more than 250 ACOs across the country serving more than 4 million Medicare beneficiaries are working to improve patient care. This will likely slow future Medicare spending even more. This is great news for patients, and great news for the long-term health of Medicare.  

We have more work and challenges ahead. However, the slowed growth of Medicare spending per beneficiary provides strong evidence that the health care law offers a path for avoiding runaway growth in health care spending and makes Medicare stronger. By following this path, we will help ensure that millions of Americans have the access to high quality, affordable health care they need and deserve.

For more information on the HHS issue brief, “Growth in Medicare Spending per Beneficiary Continues to Hit Historic Lows,” see http://aspe.hhs.gov/health/reports/2013/medicarespendinggrowth/ib.cfm

To learn about the new Accountable Care Organizations, see www.hhs.gov/news/press/2013pres/01/20130110a.html.