The annual Medicare and Social Security trustees' report released Monday
showed remarkable savings in the Medicare program demonstrating, in part, the effectiveness of the reforms included in the Affordable Care Act. There a nugget in the report though, ferreted out by Vox's Sarah Kliff, that's
potentially groundbreaking: the government looks to be paying less to cover more beneficiaries for hospital insurance than a year ago.
Medicare's hospital insurance program — known to wonks as Medicare Part A — spent $266.8 billion covering 50.3 million people in 2012. In 2013, the same program spent $266.2 billion to cover 51.9 million people. These figures come from Table II B.1 in the 2012 and 2013 reports.
Medicare's hospital insurance program is gigantic; it spends more money in a given year than the entire state of Wisconsin. In that context, $600 million is not much more than a rounding error. And some senior administration officials I spoke with cautioned against reading too much into these particular figures; receipts for services rendered in 2013, for example, might trickle after the year has ended.
But what's definitely clear—and what's driving this trend—is that Medicare is spending significantly less per person than they did two years ago. And this report expects that trend to continue for another two years going forward.
If the trend is sustained, the report projects, by 2015 the program will spend less per person on hospital care than it did in 2008. The country hasn't gone backward in healthcare spending in decades, if ever.This part of the Medicare program—hospital coverage—contributed to the fact that per-person Medicare spending in the entire program did not change from 2012-2013, "a growth rate of 0 percent," as Health and Human Services Secretary Syliva Mathews Burwell pointed out.
The Obamacare reforms—like penalizing preventable readmissions of patients—are certainly part of the picture here, as are technology developments in health care that make various treatments less invasive and less costly. This shows that health care doesn't have to be the thing that could bankrupt the nation in the coming decades. But that's if we undertake more extensive reform in the entire system. Because Medicare is a government program, the law could effect the kinds of reforms that work. This demonstrates better than anything the need for the government to take a stronger hand in regulating the healthcare industry as a whole, even to the extent of expanding Medicare to cover more of the population.