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Good News On The Deficit – Medicare Cost Containment Working

Projected Medicare spending for 2011-2020 has fallen by more than $500 billion since 2010. Chart by the CBPP based on CBO estimates.
Projected Medicare spending for 2011-2020 has fallen by more than $500 billion since 2010. Chart by the CBPP based on CBO estimates.
February 18, 2013

CHARLESTON, W.Va. - In what could be important good news about the federal deficit, projections of what the Medicare program will cost by the end of the decade have fallen by half a trillion dollars. The Congressional Budget Office (CBO) now expects Medicare to spend $500 billion less by 2020 than it had projected just three years ago. That's important because, in the long-term, health care - especially Medicare - is expected to be the biggest cause of federal budget headaches.

Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities, is cautiously optimistic.

"The recent data on slower health-care cost growth is good news," he said, "and even in the somewhat blase world of Washington budgeting, that's a lot of money."

Critics contend that the savings is not enough to make up for the wave of baby boomers now entering the program, and they complain that it is hard to predict if the savings will continue.

Chapin White, senior health researcher at the Center for Studying Health System Change, agreed - although he pointed out that Medicare is doing a much better job of controlling costs than private insurance programs.

"In Medicare it seems like there has been a fundamental shift in how the program is operated," he said. "They set prices, and they set them in a fairly conservative way."

White says the CBO projections are in part confirmed by the rating agency Standard and Poor's, which also reduced the amount it expects Medicare to spend in the future. White said some of the drop results from cost controls in Obamacare. Van de Water agreed, and said he expects to see more as other parts of the reform kick in.

"The health reform legislation also contains a long list of other changes, which hold the potential for slowing health-care cost growth in the longer run," he said.

More than one out of five West Virginians is enrolled in Medicare, the second highest proportion of any state.

The CBO projections can be found at

Dan Heyman, Public News Service - WV