NCPA - National Center for Policy Analysis

Medicare Realizes Some Savings

May 6, 1999

Medicare spending actually dropped somewhat in the six months ending March 31, compared with the same period a year earlier.

  • It was $2.6 billion less than the $106.5 billion spend in the earlier comparable period.
  • Analysts are attributing the decrease to a clamp down on Medicare spending in the 1997 Balanced Budget Act -- which curbed payments for many health services.
  • Prior to passage of the act, the Congressional Budget Office predicted Medicare would spend $1.348 trillion from 1998 to 2002 -- a figure which was later revised to $1.249 trillion.
  • Now it appears spending will total $1.146 trillion.

But not if either health-care providers or senior citizens' lobbies have their way.

Doctors, hospitals, physical therapists, home health agencies, nursing homes and health maintenance organizations are furiously lobbying Congress to restore some of the payment cuts.

They are competing with Medicare beneficiaries who want to use the same money for new benefits -- principally coverage of prescription drugs.

Nevertheless, the CBO is projecting that annual Medicare outlays will more than double during the next decade and will exceed $400 billion by 2008. By then there will be more than 44 million beneficiaries then, compared to about 39 million now.

Source: Robert Pear, "With Budget Cutting, Medicare Spending Fell Unexpectedly," New York Times, May 4, 1999.


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