Medicare growth is really low

There’s been a lot of talk recently about how healthcare spending in 2014 has been increasing really fast. That’s due, in part, to the fact that we just massively expanded coverage for millions of people. But Medicare spending, on the other hand, has been going up much more slowly.

It turns out that actual Medicare growth for the first eight months of the fiscal year has been 0.3%. That’s amazing. But, of course, there are some temporary policies in place that have been restraining spending. These include things like the seqester, some ACA stuff, and frozen means-tested Medicare premium income thresholds.* Without these policies in place, growth would have been 2.5%.


Economic growth is 3.9%. That means that Medicare growth is nowhere near the GDP + 1% or so that would be needed to see the IPAB kick in. This has important, and positive, effects on the long-term federal budget outlook.


*Of course, there are temporary ACA-related things like the filling-in donut hole, which are increasing spending as well, so actual growth is likely less. Amazing! Loren Adler tells me that the calculations already account for things like this.

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