Explaining the Continued Decline in Projected Medicare Spending

There are several reasons for the falling Medicare projections, including lower estimates for health care cost growth, lower-than-expected costs for the Medicare Part D prescription drug program, and the Affordable Care Act, or ACA.

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Idea of the Day

Idea of the Day

New data released yesterday from the nonpartisan Congressional Budget Office, or CBO, show an enormous decline in projected Medicare spending compared with earlier CBO reports. Even though the new Medicare numbers are higher than CBO’s 2014 projection, they still reflect a decade of remarkable progress in controlling Medicare spending.

The declining Medicare projections are not just limited to recent years, when health care costs grew unusually slowly; long-term projections for Medicare spending have also fallen dramatically, even though CBO assumes that the recent slowdown in health care cost growth will not continue indefinitely. Looking ahead to 2050—the final year covered by CBO’s 2005 long-term budget outlook—the difference between CBO’s 2005 and 2015 Medicare spending projections for 2050 is about 0.95 percent of gross domestic product, or GDP, which translates into roughly $370 billion in 2015 constant dollars. Since 2005, CBO’s projections for total Medicare spending from 2011 to 2050 have fallen by $13.3 trillion.

For more on this idea, please see:

A Decade of Progress in Controlling Medicare Spending by Harry Stein

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