CBO: Medicare spending has slowed this fiscal year
Medicare spending rose 3% to $16 billion during the first 11 months of the fiscal year, according to the Congressional Budget Office (CBO).
Axios reported average annual growth was 9% from 2000 to 2010, and 4.4% between 2010 and 2016.
The CBO also reported that subsidies paid to health insurance companies through the ACA marketplace rose by 25% this fiscal year, which was about $7 billion more.
The CBO said the reason for the Medicare spending growth slowdown reflects “typical growth in the number of beneficiaries and in the cost of services for those beneficiaries.”
Medicare, much like any other payer, has been looking to find ways to reduce healthcare costs, but these numbers don’t reflect any great savings regarding benefit design or Medicare policy changes. Instead, the CBO said it’s connected to “typical growth” that is slower than recent rates.
That said, the CMS is hoping to implement more cost-saving measures to further reduce Medicare spending. It is proposing to make costs more site neutral by paying services at off-campus hospital outpatient departments at 25% of regular outpatients rates. The same proposal also includes a small increase (1.75%) for outpatient payments.
Medicare isn't alone in seeing slowed health spending. Altarum’s Center for Sustainable Health Spending’s latest Health Sector Economic Indicators reported last week overall national health spending growth decreased in the second quarter. Spending increased by 4% in the quarter, which was less than the 4.6% Altarum predicted.
A key to the slowdown is that hospital second-quarter spending growth increased only 1.3%, rather than the expected 4% growth rate. Year-over-year hospital spending increased only 1.1% in July and 0.8% in June, which was the slowest growth rate year-over-year since January 1989. Unlike Medicare’s cost growth slowdown, the slower hospital spending growth is because of less utilization as well as payer efforts to slow growth.
Meanwhile, the CBO said ACA insurance subsidies rose 25% this fiscal year because premiums for the exchange plans were higher than last year. One of those subsidies is cost sharing reduction (CSR) payments, which insurance companies say are necessary and must be assured. Some payers have said they will leave the ACA market or substantially increase rates if Congress or the White House don't commit to funding them
President Donald Trump has threatened to stop the CSR payments, but has so far continued to pay them on a month-to-month basis. Congress is currently discussing legislation to fund CSRs for at least a year.
- Congressional Budget Office Monthly Budget Review for August 2017