Why Medicare is expensive, Part 2

Source: Sarah Kliff at WonkBlog

Thursday, I looked at what medical specialties are driving up Medicare costs faster than expected. Today, my colleague Lori Montgomery has another thoughtful look at why Medicare is so expensive. She hits on a point that often gets lost in the political debate over entitlements: Medicare’s cost problem isn’t about runaway inflation in health care spending. The program has actually gotten relatively good at bringing down increases in how much it spends per member. Instead, Medicare’s cost problem has nearly everything to do with the size of the program’s membership, which is skyrocketing as a wave of baby boomers age into the program:


(The Washington Post)

This is good news in what it says about Medicare’s ability to reign in spending per member. The entitlement program has demonstrated an ability to hold down its per-member spending in a way that’s surprised even top Medicare officials. “We thought, ‘Wow, what’s happening?’ ” Medicare actuary Rick Foster told Montgomery in an interview on seeing the cost slowdown. “Part B cost growth has slowed down so much, we’re seeing virtually the lowest rates ever.”

It’s bad news, however, for the challenge of bringing down Medicare costs in the future. Demographics don’t leave much wiggle room. Unless the country wants to make Medicare membership more limited, raising the eligibility age to 67 for example, bringing down the program’s cost is going to prove to be a pretty big task.