(Orange, Texas)

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February 21, 2013

Financials for Medicare Improve, Cost Containment Working

AUSTIN, Texas — Projections for the cost of the Medicare program have fallen by a half trillion dollars since the last estimate three years ago.

The Congressional Budget Office now expects Medicare to spend $500 billion less by 2020 than it had projected just three years ago.

In the long term, health care - especially Medicare - is expected to be the biggest cause of federal budget headaches. That's why this new estimate makes Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, 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."

Medicare's critics say the savings are not enough to make up for the wave of baby boomers now entering the program, and that it's hard to predict if the savings will continue. Chapin White, senior health researcher for the Center for Studying Health System Change, agreed, although he pointed out that Medicare is doing a much better job of controlling costs than are 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."

The CBO projections are in part confirmed by the rating agency Standard and Poor's, White said, which also reduced the amount it expects Medicare to spend in the future. Some of this is the result of cost controls in Obamacare, he said.

Van de Water agreed, adding that 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."

The latest figures show about 3.2 million Medicare beneficiaries in Texas, or about 12 percent of the state's total population.

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