Quick Medicare Factoids

Posted by

Joe Paduda

First posted 9/08/11 on Managed Care Matters

There’s going to be a LOT coming out in the next two months about Medicare, so it may help to know a few things about the program to help put it in context.

– We spent over a half-trillion dollars on Medicare in 2010.

– That’s fifteen percent of total Federal expenditures.

– 48 million people were covered in 2010.

– The health reform bill (aka the PPACA of 2010) is credited with reducing Medicare costs by by $424 billion (net ten-year savings) over the next ten years, certainly a step in the right direction.

– That equates to a 3.5% annual growth rate – almost two full points lower than projected per-capita growth in private health insurance spend.

– Despite those reductions, costs will get to within whispering distance of a trillion dollars in ten years.

– All those reductions don’t come without pain. In fact, Medicare’s Office of the Actuary projects Medicare reimbursement rates will be lower than Medicaid’s…a result that may well lead to providers abandoning the system.

– Some of that pain may start January 1st, when physician reimbursement is slated for a 29.4% across-the-board cut.

So. we have on the one hand, huge costs that are getting bigger despite aggressive efforts to slash growth. And on the other, we have consequences that look pretty daunting – dramatically reduced reimbursement that will almost certainly lead to access problems for beneficiaries.

What does this mean for you?

There are no simple, easy, painless answers. Every time you hear someone talking about one aspect of the issue (physician payment, impact on the deficit, access problems, reductions in payments to Medicare Advantage plans) remember there’s another side to the issue, another perspective that almost certainly can make a well-founded and reasonable counter-argument.

See the KFF report on implications on the Super Committee and Medicare.

Joe Paduda is an analyst focused on group health, publicly financed health care and Workers Compensation.

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