NCPA - National Center for Policy Analysis

Medicare Spending Growth Compared to Other Plans

June 18, 2003

A recent report from the Joint Economic Committee of Congress compared Medicare to two other government health programs concludes that they provide more comprehensive coverage and have a better record in controlling costs.

The two programs are the Federal Employee Health Benefits Plan (FEHBP), which covers federal workers and retirees, and CalPERS, the health insurance plan for California state and municipal workers and retirees.

  • The JEC report found that over the past two decades, Medicare costs grew an average of 6.7 percent per year; FEHBP costs grew 6.5 percent per year; and CalPERS costs grew 6.9 percent per year.
  • But unlike Medicare, FEHBP and CalPERS cover out-of-hospital prescription drugs -- if they had not, FEHBP's costs would have grown by an estimated 5.8 percent per year and CalPERS' costs would have grown an estimated 6.4 percent per year.

Among leading forms of insurance, according to the JEC, Medicare has the least generous benefits package, covering 56 percent of total health care expenses, while typical employment-based health insurance covers 70 percent.

Source: Michael J. O'Grady, "Health Insurance Spending Growth - How Does Medicare Compare?" June 10, 2003, Joint Economic Committee of Congress.


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