Medicare, Medicaid keeping per-capita cost under control, study suggests

Morgan Haefner - Print  | 

Growth in private health plan spending is increasing more than growth in Medicare and Medicaid spending on a per-capita basis, according to a report from the Urban Institute, a left-leaning think tank.

For its analysis, the Urban Institute used CMS estimates to analyze spending growth for private health plans, Medicare and Medicaid from 2006-17. Researchers examined how enrollment and certain services contributed to spending growth across the three payers. They also predicted how spending and enrollment would look for each payer from 2017-26.

Three takeaways:

1. The report found the average annual spending growth between 2006-17 was 5.2 percent for Medicare, 6 percent for Medicaid and 4.4 percent for private health insurance. All the averages surpassed the 3.2 percent average annual growth in gross domestic product.

2. However, much faster enrollment in public payers compared to private insurers was the main reason Medicare and Medicaid spending growth outpaced that of private insurance, according to the Urban Institute. When looking at growth in spending per enrollee in Medicare and Medicaid from 2006-17, Medicare averaged 2.4 percent per year and Medicaid averaged 1.6 percent per year. That's compared to 4.4 percent per year for private health plan enrollees. GDP per capita increased an average of 2.4 percent during the same time.

3. "The Centers for Medicare and Medicaid Services project much faster growth in Medicare and Medicaid spending per enrollee from 2017 to 2026 than we have seen in the past decade," according to the Urban Institute. "These projections raise concerns about the sustainability of current trends and have been cited in proposals to dramatically restructure both programs. Based on our analysis of recent spending patterns by payer, however, we conclude that Medicare and Medicaid have successfully moderated growth in spending per enrollee over the last decade and thereby do not require major restructuring."

For the full report, click here.

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