Medicare Costs Growing Even As Other Healthcare Costs Stay Flat

Medicare Costs Growing Even As Other Healthcare Costs Stay Flat

By Mary Johnson

Recent healthcare cost data have the experts perplexed. According to a new analysis from actuaries of the Centers of Medicare and Medicaid Services, national healthcare spending in 2011 grew at just 3.9 percent. This is the third consecutive year it's grown so slowly, making it the slowest pace in the more than 50 years such data have been tracked. Federal officials don’t know for sure if it's a temporary fluke due to prolonged recessionary effects, or part of a long-term trend.

The Medicare portion of spending, officials say, grew 6.2 percent in 2011, after growing just 4.3 percent in 2010. A major factor holding down costs was the recession. As tens of thousands of working seniors lost jobs, and their healthcare coverage, other seniors were hit by the crash of retirement savings and real estate values. This was followed by two years without any cost-of-living adjustment (COLA) in 2010 or 2011.

Not surprisingly, TSCL surveys and email indicated that although Medicare costs continued to grow from 2010 to 2011, many seniors were forced to cut back and forego healthcare services.  This undoubtedly was a major reason why government spending on Medicare remained relatively flat.  The following table illustrates responses to a question from the TSCL 2011 Healthcare Cost Survey conducted in October 2011:


How Seniors Put Off Healthcare During Recession


"In 2011, have you postponed any of the following healthcare services? If so please indicate how often?" Never Occasionally Frequently
Visits to doctors or outpatient services? 45% 36% 15%
Visits to dentists, opticians, hearing specialists? 32% 33% 27%
Filling prescriptions (or did you take a lower dosage)? 51% 29% 15%


Common sense suggests that the slowdown in rising Medicare costs is unlikely to last long. Medicare spending results for two main reasons:

  • The amount spent per person, which increases with age and health changes, and
  • The number of people receiving benefits.

Demographics dictate that Medicare spending will climb in the future as more people become eligible and enroll, and as aging increases the need for more healthcare services. Cutting the growth of Medicare spending without cutting access to affordable care for seniors will be a monumental challenge for Congress. TSCL believes a great deal more can be done to find savings by making the system more efficient and to clamp down on fraud, waste and abuse.

What you can do? Tell others! Describe what you are doing to manage your Medicare costs on a Social Security budget. Send your story to your Members of Congress, to the editor of your local newspaper, and to TSCL!


Sources:  National Health Expenditures 2011 Highlights, Department of Health and Human Services, January 8, 2013.