Analysis, Health and Fitness

Center for American Progress Analysis Shows Medicare Saving $2 Trillion Over the Next 10 Years Due to Bending Cost Curve

A doctor examines a patient

A doctor examines a patient at a clinic in Sacramento, California, on February 18, 2016. Source: AP/Rich Pedroncelli

Washington, D.C. —(ENEWSPF)–August 9, 2016.  A new analysis from the Center for American Progress looks at the dramatic decreases in long-term projections for Medicare spending. Using spending projections from the Congressional Budget Office, or CBO, CAP found that Medicare will spend approximately $2 trillion less over the next decade compared with CBO projections from 2009. The savings grow larger in later years due to lower projections for Medicare cost growth. This bending of the cost curve demonstrates that the Affordable Care Act, or ACA, is working and meeting a major goal of slowing the growth of Medicare spending and overall health care costs.

“This is a very promising development,” said Harry Stein, Director of Fiscal Policy at CAP. “Medicare spending projections have dramatically improved over the course of the Obama administration. If health care costs continue to grow very slowly, we should expect the CBO to continue lowering its long-term projections for both Medicare spending and the overall national debt.”

CAP’s analysis noted that there are several possible reasons for the changes in Medicare cost projections, including promising early results from ACA-mandated penalties for hospital readmissions, payment reforms to focus on the quality of care instead of just quantity, and improvements in primary care. In March, CAP analyzed Medicare spending projections for just 2016 and found significant savings. CAP reported that the CBO’s projections for fiscal year 2016 Medicare spending have fallen $107 billion since January 2009. As a result, total spending for major federal health programs in 2016 will be less than what the CBO projected when President Barack Obama took office, even though the CBO’s earlier projections did not include the coverage expansion from the ACA, which has already helped more than 20 million Americans get health insurance.

In order to build on these accomplishments, CAP has introduced a series of new ideas to make the health care system even more efficient and effective, including expanding the use of bundled payments to replace fee-for-service payments, coordinating statewide health systems using the Accountable Care States model, and preventing mergers that reduce competition in the health care sector.

Read the full column here.

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