HHS Reports Medicare Spending Has Declined By Billions of Dollars

By Kelly A. Briganti, Editorial Director, G2 Intelligence

After announcing earlier this month that the goal of linking 30 percent of Medicare payments to quality was reached months earlier than anticipated, the U.S. Department of Health and Human Services (HHS) reported last week that Medicare spending between 2009 and 2014 was $473.1 billion lower than it would have been if average growth in the eight years prior to that period had continued. HHS also estimates that Medicare could spend $648.6 billion less between 2009 and 2015 than it would have if 2000-2008 average growth rate had continued. “To put this in context, this reduction in spending is greater than all of Medicare’s spending for personal health care expenditures in 2015,” according to HHS’ report. The prediction relies on per enrollee spending growth remaining as low as 1.1 percent.

Crediting the Affordable Care Act for the success, the HHS press release announcing the Medicare spending report said “[t]he health care law gives HHS new tools to pay providers for what works, better coordinate and integrate care, and make information more readily available to those who can use it to improve health. Initiatives to limit avoidable hospital readmissions and to promote new payment models that focus on value are contributing to the moderation in overall health spending, and particularly for Medicare.”

Despite the slowed growth in spending, the report does reveal that 2014 expenditures for national personal health care increased by 4.3 per cent per person. Still even this increase is considered “modest” by HHS, compared to growth in prior years, and is attributed to the increase in health care insurance coverage under the ACA.