25 things to know about Medicare spending

Medicare spending is creeping upward as an average of 10,000 baby boomers age into Medicare every day and prescription drug prices continue to grow.

Here are 25 things to know about Medicare spending.

Total Medicare spending
1. In 2014, Medicare spending grew 5.5 percent to $618.7 billion. That's compared to spending growth of 3 percent in 2013, according to a study by CMS' Office of the Actuary.

2. Medicare spending represented 20 percent of total healthcare spending in 2014.

3. Increases in use of medical goods and services by aging beneficiaries and continued baby boomer enrollment are expected to cause Medicare spending to accelerate in 2016 and beyond, according to National Health Expenditure data.

4. Net Medicare spending is projected to grow modestly as a share of the federal budget and the nation's economy in the coming 10 years, according to according to a report by the Kaiser Family Foundation. Medicare's share of the federal budget is projected to increase from 14.3 percent in 2015 to 15.2 percent in 2024.

5. A Medicare Trustees report released in 2015 projects Medicare spending will increase to 5.5 percent of gross domestic product by 2050 and grow to 6 percent by 2080. The trustees assume per capita Medicare spending will increase more slowly than other health spending. The trustees base their assumption on the belief that Medicare payments under the Affordable Care Act are increasingly likely to fall below private payer and Medicaid reimbursement levels over time, which would cause Medicare spending to rise at a slower rate than other health spending.

6. In contrast to the Medicare Trustees report, the Congressional Budget Office assumes per capita Medicare spending will increase more quickly than other health spending. The CBO released a report last year that projects Medicare spending will reach 7 percent of GDP by 2050 and grow to more than 11 percent by 2080.

7. After the conflicting Medicare Trustees report and CBO report were issued, Louis Sheiner, a senior fellow in economic studies and policy director of the Brookings Institution's Hutchins Center on Fiscal and Monetary Policy, said neither of the projections should be believed. "The large wedge between these two arguably sensible projections of Medicare should be taken as evidence that we really don't know how big a fiscal problem health spending will be 25 or 50 years in the future," she wrote in a Wall Street Journal article.

Medicare spending breakdown
8. Medicare spending on hospital care rose 2.9 percent in 2014 to $250.3 billion, according to the Peterson-Kaiser Health System Tracker.

9. In 2014, Medicare spending on physician care hit $138.4 billion, up 5 percent from the year prior.

10. Medicare spending on prescription drugs jumped 16.9 percent in 2014 to $86.4 billion.

Medicare spending per capita
11. Between 2000 and 2010, per capita Medicare spending growth averaged 7 percent, according to a KFF report.

12. From 2010 to 2014, per capita Medicare spending growth averaged 1 percent.

13. Per capita Medicare spending on hospital care was $786 in 2014, a 2.1 percent increase over the year prior, according to the Peterson-Kaiser Health System Tracker.

14. Per capita Medicare spending on physician care jumped 4.2 percent in 2014 to $435.

15. Per capita spending on prescription drugs hit $271 in 2014, up 16.1 percent from the year prior.

16. Medicare spending is projected to grow at a rate of 4.1 percent on a per capita basis between 2014 and 2024, according to KFF.

17. The spending growth projections are not the same for each part of the Medicare program. Between 2014 and 2024, per capita spending growth is projected to be 5.7 percent for Part D, 3 percent for Part A and 4.7 percent for Part B.

18. CMS' Office of the Actuary predicts the per capita growth rate for Medicare spending on Part D will be higher in coming years due to rising drug costs, specifically the increasing price tags for specialty drugs.

Geographic variation in Medicare spending
19. Unadjusted Medicare per capita spending averaged $13,149 in 2013 in the 20 counties with the highest per capita spending — nearly two times greater than the national average of $9,415.

20. The 20 counties with the highest unadjusted Medicare per capita spending in 2013 were primarily in the northeast, mid-Atlantic and southern states, according to a report by KFF.

21. Unadjusted Medicare per capita spending averaged $6,726 in 2013 in the 20 counties with the lowest per capita spending.

22. The 20 lowest-spending counties had significantly more physicians and post-acute care providers than the 20 highest-spending counties.

23. Medicare per capita spending for home healthcare, hospital services and durable medical equipment fell between 2007 and 2013 in the counties with lowest spending growth rates.

24. When adjusted to account for differences in Medicare prices and beneficiaries' health risk, the gap between the averages in the 20 highest-spending counties and the 20 lowest-spending counties narrows from a 96 percent difference to a 22 percent difference, according to KFF.

25. "The Affordable Care Act included a number of provisions designed to encourage greater efficiency in the delivery of care for Medicare beneficiaries by modifying incentives for providers to reduce excess costs and improve quality of care," according to the KFF report. "Yet even with such efforts, deep differences in per capita Medicare spending in different parts of the country remain and are likely to persist due to underlying differences in beneficiary characteristics related to poverty and poor health, along with differences in the prices that Medicare pays for services, that contribute to variations in spending."

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