NCPA - National Center for Policy Analysis

Future Medicare Costs Underestimated, Say Experts

November 30, 2000

Health costs will grow faster than the government now assumes -- partly because of advances in medical technology. So the long-term financial outlook for Medicare is less rosy than officials assume. Those are among the conclusions of the six-member government panel known as the Technical Review Panel on the Medicare Trustees' Reports.

  • Although Medicare's trustees had stated in April that the hospital insurance trust fund would be solvent until 2025, the new report says the fund will run out of money four years sooner -- in 2021.
  • Medicare's annual cost -- which stood at $218 billion in the last fiscal year -- is expected to double by 2010.
  • Under the higher estimates of future costs assumed by the panel, Medicare's annual costs would be 60 percent higher than currently assumed after 75 years.
  • Health spending, currently at about 13.5 percent of gross domestic product, would be 30 percent of GDP after 75 years.

Panel members said that technology accounts for one-half to two-thirds of the growth in medical spending that is not attributable to inflation in the economy as a whole.

Source: Robert Pear, "Experts Say Cost of Medical Care Is Underestimated," New York Times, November 30, 2000.


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