CMS Trustees Report Historic Low in Medicare Cost Growth
By Sara Heath
- Growth in Medicare costs remains low, according to the Trustees report released on July 21 by the Centers for Medicare & Medicaid Services (CMS). The Trustees report indicates that the Medicare trust fund will remain solvent until 2030, which is 13 years longer than the Trustees had projected in 2009. This shows financial stability in the Medicare system.
Growth has slowed to an average of 1.3 percent per enrollee annually over the past 5 years, says the report, and is not expected to increase much over the next decade, thanks in part to the cost-containment methods of the Affordable Care Act (ACA). However, in spite of this slow growth in costs, CMS officials advise Medicare still anticipates the potential for cost growth as more enrollees are expected in the near future.
“Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound,” says Andy Slavitt, Acting Administrator of CMS in the CMS release. “While this is good news, we cannot be complacent as the number of the Medicare beneficiaries continues to grow.”
Slavitt continued by explaining his vision for the future of healthcare, discussing how positive improvements will serve not only the healthcare needs but the financial needs of Medicare beneficiaries.
“That’s why we must continue to transform our health care system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond,” Slavitt says.
The report continues to explain how much spending occurred in the various facets of Medicare, as well as the predictions for premium costs next year. The report predicts a trend of financial stability in years to come.
CMS reports in 2014, it provided Medicare benefits to a total of 53.8 million people, spending a total of $613 billion while income was $599 billion. Average spending per beneficiary was $12,432, a 2 percent increase from 2013. While outlays for Part A and Part D were slightly lower than anticipated, for Part B they were slightly higher.
However, it is expected that about 70 percent of beneficiaries will not see an increase in Part B premiums in 2016; finalized Part B premiums will be determined later this year.
The 30 percent of beneficiaries who are expected to see a rise in Part B premiums includes those who will be enrolling for Part B for the first time in 2016 and those who do not see any Social Security benefit. It also includes those who are billed directly for their Part B premium and those who pay a higher premium due to their income. Information on 2016 premiums should be available in October.
Earlier healthcare reform improvement evident in 2013 report
This slow growth in cost mirrors last year’s report, where CMS announced that due to accountable care initiatives, better care coordination, and a reduction in 30-day readmissions, the Medicare trust fund that finances Medicare Part A was financially flush, as reported by HealthITAnalytics.com. Additionally, that report predicted slow growth in costs over the next several years.
“The Medicare Hospital Insurance trust fund is projected to be solvent for longer, which is good news for beneficiaries and taxpayers,” said Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services in last year’s press release. She added that the reforms which helped reduce Medicare costs will likely have a lasting effect which will improve prices for the future, as made evident by the 0.8 percent annual increase in per capital Medicare spending.
This trend of financial stability and slow cost growth is evidence of positive and efficient healthcare reforms, as well as the effectiveness of better accountable care initiatives, which should also positively impact the future of Medicare spending.
