A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why.

[Greenbeard]

Well, I'm pretty sure why, but I guess others are still wondering what odd thing happened in 2010 to make both Medicare and the entire American health care system more sustainable.

Anyway, the New York Times clues in today on "the most important thing that has happened to the federal budget in the last 20 years," a story that's actually been obvious for quite some time. (I looked back and the first thread of my own I could find on this was from the summer of 2014.)

A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why.

For decades, runaway Medicare spending was the story of the federal budget.

Now, flat Medicare spending might be a bigger one.

Something strange has been happening in this giant federal program. Instead of growing and growing, as it always had before, spending per Medicare beneficiary has nearly leveled off over more than a decade.

I'll note that the "over more than a decade" referenced here is (as shown in every graph in the linked piece) actually since 2010, when the Affordable Care Act passed. Surely, I'm certain my conservative friends will declare, one of the greatest coincidences of all time.

Some of the reductions are easy to explain. Congress changed Medicare policy. The biggest such shift came with the Affordable Care Act in 2010, which reduced Medicare’s payments to hospitals and to health insurers that offered private Medicare Advantage plans. Congress also cut Medicare payments as part of a budget deal in 2011.

But most of the savings can’t be attributed to any obvious policy shift. In a recent letter to the Senate Budget Committee, economists at the Congressional Budget Office described the huge reductions in its Medicare forecasts between 2010 and 2020. Most of those reductions came from a category the budget office calls “technical adjustments,” which it uses to describe changes to public health and the practice of medicine itself.

Older Americans appear to be having fewer heart attacks and strokes, the likely result of effective cholesterol and blood pressure medicines that became cheap and widely used in recent years, according to research from Professor Cutler and colleagues. And drug makers and surgeons haven’t developed as many new blockbuster treatments recently — there has been no new Prozac or angioplasty to drive up spending. (Medicare is currently barred by statute from covering the new class of expensive anti-obesity drugs.)

Parts of the health system appear to have become more efficient, as medical providers have been more cautious about adopting new therapies without much evidence, and more care has shifted outside hospitals into cheaper settings.

If Medicare spending had grown the way it had for much of its history, federal spending would have been $3.9 trillion higher since 2011, and deficits would have been more than a quarter larger, according to an Upshot analysis.

“There is basically no recent history of the kind of actual budgetary savings similar to what we have seen with the Medicare spending slowdown,” said Joshua Gordon, the director of health care policy at the Committee for a Responsible Federal Budget, a group that supports deficit reduction.

So we've had policy changes which were accompanied by better management of seniors' health and more efficient health care delivery since passage of the ACA, all of which seemed to have played a role in the unprecedented Medicare cost slowdown. I would say that's what they promised in 2010, but reality has actually far exceeded what was promised when the ACA passed.

 

[Exquisitor]

"Repeal Obamacare and have nothing."

 

[watsup]

Well, I'm pretty sure why, but I guess others are still wondering what odd thing happened in 2010 to make both Medicare and the entire American health care system more sustainable.

Anyway, the New York Times clues in today on "the most important thing that has happened to the federal budget in the last 20 years," a story that's actually been obvious for quite some time. (I looked back and the first thread of my own I could find on this was from the summer of 2014.)

A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why.


I'll note that the "over more than a decade" referenced here is (as shown in every graph in the linked piece) actually since 2010, when the Affordable Care Act passed. Surely, I'm certain my conservative friends will declare, one of the greatest coincidences of all time.

So we've had policy changes which were accompanied by better management of seniors' health and more efficient health care delivery since passage of the ACA, all of which seemed to have played a role in the unprecedented Medicare cost slowdown. I would say that's what they promised in 2010, but reality has actually far exceeded what was promised when the ACA passed.

Just imagine the savings if the Republicans would allow Medicare to mediate with Big Pharm about drug prices!

 

[Mr Person]

Surely, I'm certain my conservative friends will declare, one of the greatest coincidences of all time.

They'll talk about inflation and Hunter Biden's dick pics. Something, anything, but not credit where it's due.

 

[dmpi]

A lot to do with fraud control and limiting what medicare pays for.

 

[nota bene]

Well, I'm pretty sure why, but I guess others are still wondering what odd thing happened in 2010 to make both Medicare and the entire American health care system more sustainable.

Anyway, the New York Times clues in today on "the most important thing that has happened to the federal budget in the last 20 years," a story that's actually been obvious for quite some time. (I looked back and the first thread of my own I could find on this was from the summer of 2014.)

A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why.

I'll note that the "over more than a decade" referenced here is (as shown in every graph in the linked piece) actually since 2010, when the Affordable Care Act passed. Surely, I'm certain my conservative friends will declare, one of the greatest coincidences of all time.

This conservative says only thank you for posting this information. Sounds to me as if we all need simply to be grateful if the health system is more sustainable.

 

[Greenbeard]

Just imagine the savings if the Republicans would allow Medicare to mediate with Big Pharm about drug prices!

 

[Overitall]

This conservative says only thank you for posting this information. Sounds to me as if we all need simply to be grateful if the health system is more sustainable.

I'm sure glad my wife became eligible for Medicare recently. The ACA plan I purchased for her was anything but affordable or able to cover all the care she needed.

 

[Greenbeard]

A lot to do with fraud control and limiting what medicare pays for.

I'm more inclined to give Title III of the ACA ("Improving the Quality and Efficiency of Health Care") more credit, but if you want to give the lion's share to Title VI of the ACA ("Transparency and Program Integrity") I suppose we're just quibbling.

 

[trixare4kids]

They'll talk about inflation and Hunter Biden's dick pics. Something, anything, but not credit where it's due.

Actually, it's you who's talking about it on this thread.

 

[PoS]

Actually, it's you who's talking about it on this thread.

Kinda telling, isnt it?

 

[trixare4kids]

Kinda telling, isnt it?

All hat, no cattle.

 

[Mircea]

So we've had policy changes which were accompanied by better management of seniors' health and more efficient health care delivery since passage of the ACA, all of which seemed to have played a role in the unprecedented Medicare cost slowdown. I would say that's what they promised in 2010, but reality has actually far exceeded what was promised when the ACA passed.

Healthcare delivery is not more efficient. Efficiency is impossible in the antiquated outdated outmoded obsolete Hospital Model that the American Hospital Association coerces on everyone and it is the most inefficient and ineffective methods of healthcare delivery.

The Germans and all other Euro-States abandoned the Hospital Model decades ago in order to save money and have the universal healthcare systems you all rale about but don't understand.

Here's what the former German Minister of Health has to say:

Polyclinics—clusters of general practitioners who work together to form more specialized primary care centers—were used extensively and quite successfully in the former German Democratic Republic. However, many politicians in West Germany initially disliked the idea of polyclinics because they associated them with communist ideology. It took a while for many people to understand that polyclinics offer significant advantages with regard to communication, coordination, and cooperation.

Source: How Germany is reining in health care costs: An interview with Franz Knieps pp 30-31.

Imagine that.

"Communist" countries like the DDR, Poland, Romania, Bulgaria, Soviet Union and Czechoslovakia adopted two Capitalist Property Theory corollaries: Diversify and Specialize in order to provide cost-effective and efficient healthcare.

Historically, Medicare spending is greatest in the last 6 months of an elderly patient's life.

That has never been true in the universal healthcare systems of the Euro-States because they use palliative care rather than extraordinary care.

US healthcare providers will heroically spend $Millions to save a life than cannot be saved and even if saved has a negative outcome.

That's not just old-fashioned ranting. They spent $3.5 Million on 35 days of neo-natal care for an infant that had no chance of survival and was already brain dead.

Well, the hospital billed $3.5 Million but that is not proof that costs plus a 100% profit margin equals $3.5 Million.

You have an 81-year old bed-ridden dementia patient in an LTC and you're gonna send them out for a hip replacement.

Why in the hell would you do that?

Well, gosh, Medicare's free money. You just have to bill for it. It's fun and profitable.

I would suggest it is immoral and unethical to needlessly prolong a patient's life which is why doctors in Euro-States do palliative care instead of extraordinary care.

The US has been slowly coming around but you can see it in the reduced Medicare spending which is why it is lower.

 

[Lycanthrope]

DAMN YEWWWW OBAMMMMMMMAAAAAAAAA!

 

[PeacefulWarrior]

I'm sure glad my wife became eligible for Medicare recently. The ACA plan I purchased for her was anything but affordable or able to cover all the care she needed.

I agree. Socialism is just flat out better than crapitalist health insurance.

Sign me up!

 

[Slavister]

Here's what the former German Minister of Health has to say:

Polyclinics—clusters of general practitioners who work together to form more specialized primary care centers—were used extensively and quite successfully in the former German Democratic Republic. However, many politicians in West Germany initially disliked the idea of polyclinics because they associated them with communist ideology. It took a while for many people to understand that polyclinics offer significant advantages with regard to communication, coordination, and cooperation.

Source: How Germany is reining in health care costs: An interview with Franz Knieps pp 30-31.

Imagine that.

And then he said Germany accepted that model since 1990s, which is when the two combined into 1 country. That's the very next thing he said and you forgot to mention that.

Historically, Medicare spending is greatest in the last 6 months of an elderly patient's life.

...You have an 81-year old bed-ridden dementia patient in an LTC and you're gonna send them out for a hip replacement.

Why in the hell would you do that?

I don't think you know what you are talking about. End of life care is expensive in ALL countries. In fact, Germany spends HIGHER percentage of medical care per patient than US on last year of life



source

Of course in absolute dollars Germany spends somewhat less than US because healthcare is more expensive in US and yet they spend higher percentage in the last year... which of course means they spend lower percentage than US before the last year.

 

[CaughtInThe]

I'm more inclined to give Title III of the ACA ("Improving the Quality and Efficiency of Health Care") more credit, but if you want to give the lion's share to Title VI of the ACA ("Transparency and Program Integrity") I suppose we're just quibbling.

ouch

 

[Greenbeard]

Worth noting just how much the slowdown in health care cost growth (including for Medicare) has improved the long-term budget picture. Backing in the 2010 Long-Term Budget Outlook, the CBO was projecting that by 2035 federal health spending would cost ~10% of GDP.

In the 2023 version, health spending is about 4 points of GDP lower than that in the mid-2030s and is still sub-8% out into the mid-2050s.

That's a pretty big change!

 

[Greenbeard]

Well, I'm pretty sure why, but I guess others are still wondering what odd thing happened in 2010 to make both Medicare and the entire American health care system more sustainable.

I'll give the NYT some credit for doing a follow-up article today exploring a little more the potential reasons for the huge unanticipated cost savings to Medicare.

Does Obamacare Explain Medicare’s Spending Slowdown?

The Affordable Care Act, which passed in 2010, should get credit for a significant share of Medicare’s savings during this period — and it may be responsible for a larger share than can be easily measured.

Let’s start with the easy part. The A.C.A. reduced the payments Medicare made to hospitals and to the insurance companies that administer private Medicare Advantage plans. Those changes alone are responsible for more than a trillion dollars in spending reductions, according to estimates from the Congressional Budget Office, or about a quarter of the savings attributable to the recent flat spending trend.

Now, the harder part. Parts of Obamacare intended to make health care more efficient may explain a share of the technical changes during this period, too. Obamacare included incentive programs, such as one that penalized hospitals if patients were released and then returned too quickly. And it established an office to run experiments to test whether various payment changes could lower Medicare’s spending without sacrificing quality. This set of policies is often called value-based payment because it tends to link the quality off medical outcomes to payment.

There is a rich scholarly literature evaluating savings from the various programs. In general, they tend to show middling results. Many saved Medicare a little money, but certainly nothing in the trillions of dollars. Still, the existence of the programs — and Medicare officials’ new determination to squeegee waste out of the system — may have led hospital administrators, doctors, nurses and others to focus on reducing waste.

“We have bent the cost curve,” said Ezekiel Emanuel, a professor at the University of Pennsylvania who worked in the Obama White House. He said all the experiments have added up to a new culture of medical practice. “There are things which we’re not seeing because of the way we analyze the data that are actually happening, and value-based payment is one of them.”

 

[upsideguy]

I'll give the NYT some credit for doing a follow-up article today exploring a little more the potential reasons for the huge unanticipated cost savings to Medicare.

Does Obamacare Explain Medicare’s Spending Slowdown?

This is what you get with Democrats in office: policies that work and make things better for all people.

With Republicans you get Jim Jordan, Marjorie Taylor Green, investigations into conspiracy theories and Ex_Presidents that can not accept election losses and then become criminal defendants of multiple crimes..... (and way too much whining).

 

[Greenbeard]

This is what you get with Democrats in office: policies that work and make things better for all people.

I shout it from the rooftops as often as I can: defying all predictions, health spending essentially stopped growing as a share of the economy (other than a transient COVID spike) when the ACA passed. The implications for both the federal budget (in large part due to the Medicare cost slowdown documented in this thread) and for the economy as a whole--and all the households in it--have been staggering. And yet you virtually never hear about it, unprecedented as this era has been.

 

[Peter]

What the government should do is just ask everyone to not get ill for a few years.

That would save a fortune.

 

[MaryP]

Well, I'm pretty sure why, but I guess others are still wondering what odd thing happened in 2010 to make both Medicare and the entire American health care system more sustainable.

Anyway, the New York Times clues in today on "the most important thing that has happened to the federal budget in the last 20 years," a story that's actually been obvious for quite some time. (I looked back and the first thread of my own I could find on this was from the summer of 2014.)

A Huge Threat to the U.S. Budget Has Receded. And No One Is Sure Why.


I'll note that the "over more than a decade" referenced here is (as shown in every graph in the linked piece) actually since 2010, when the Affordable Care Act passed. Surely, I'm certain my conservative friends will declare, one of the greatest coincidences of all time.

So we've had policy changes which were accompanied by better management of seniors' health and more efficient health care delivery since passage of the ACA, all of which seemed to have played a role in the unprecedented Medicare cost slowdown. I would say that's what they promised in 2010, but reality has actually far exceeded what was promised when the ACA passed.

Nice to hear good news for once. Thanks!

 

[Greenbeard]

Just to elaborate on a point I made above that I think is worth repeating (a lot), one thing worth noting here is that the halt in real per beneficiary Medicare cost growth is not just a Medicare thing.

In reality, it's just an example of Medicare--and thus the taxpayers--benefiting from a broader slowdown in health care cost growth that everyone experienced after the ACA passed. I was just playing around with the numbers, using CPI-U to convert per person health spending to 2010 dollars for a few populations other than just Medicare:

In real dollars, 2023 per enrollee spending relative to 2010:

Coverage type​	Total real per enrollee growth since 2010​	Approx. number of millions​
Medicare	+1%​	~46 million Americans
Employer-based insurance	+2%​	~157 million Americans
Medicaid	-9%​	~68 million Americans

In other words, real cost growth for all of the major coverage sources in America have been flat (or negative) since the ACA passed thirteen years ago, comporting with the observation above that health care costs haven't grown as a share of the economy since the ACA passed.

This is wild, unprecedented stuff. The federal budget is one beneficiary of this trend, but so is every other budget in the country. Thanks, Obama.