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Why did Medicare spending growth slow down over the past decade, and what can we do to reverse this trend?


Buntin and colleagues pose this question. (2022). The authors used data from the 2007-2018 Medicare Master Beneficiary Summary File and then ran a regression adjustment to control for patient demographics (i.e., age, sex), number of chronic conditions (none, 1-3, ≥4), and whether the individual had Part A or Parts A and B coverage.

This approach led to the following:

Between 2008 to 2011 and 2012 to 2015, the adjusted annual Medicare Parts A and B per-beneficiary spending growth rate declined from 3.3% to −0.1%. While the average annual Medicare spending growth rate increased relative to the preceding period, it remained lower than that of the baseline period, which was 1.7% per year. This slowdown extended across all sectors within Parts A and B, except for physician-administered drugs offered under Part B. The difference in per-beneficiary spending between 2007 and 2011 and 2012 and 2015 and 2016, and 63% between 2017 and 2018, was attributed to changes in payment rates, including sequestration measures, and beneficiary characteristics.

The authors conclude that payment rates are close to inflation (21% over the same period), with physician reimbursement being…

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