Private Insurers, not Medicare or Medicaid, are behind increased healthcare spending

A new study released this week by The Urban Institute shows that Medicare and Medicaid spending is increasing more slowly than with Private Insurers, contrary to some of the policy proposals that have been put forth in recent years.

According to the study of CMS data between 2006 and 2017, “Medicare and Medicaid spending per enrollee grew 2.4 percent per year and 1.6 percent per year, respectively, compared to 4.4 percent per year for private insurance.”

The study also recognized that overall spending has grown more for Medicare and Medicaid than private insurers: “overall spending growth for Medicare (5.2% per year) and Medicaid (6.0% per year) exceeded growth in private spending (4.4% per year).” However, this is most likely due more so to an aging baby boomer population, as well as the Affordable Care Act expanding Medicaid programs in the middle of this time frame.

The focus of the study, however, that spending growth per enrollee is down for Medicare and Medicaid. For Medicare and Medicaid, the increases in spending are due to the rising cost of drug prices. We are seeing this addressed in recent bills intended to better regulate the cost of drugs as it relates to spending in Medicare and Medicaid.

However, for private insurances, the growth in spending is related to hospitalization. Forming policy for drug costs is critical, particularly with the increase in the cost of just insulin that we’ve seen over the last decade. It will help in the long run, but policies need to be introduced regarding the growing costs of hospital visits as well to truly make an effect in healthcare spending and ultimately reduce premiums for individuals.

What does this data say to you? What proposed policies do you feel will help get a handle on healthcare spending? Share your thoughts in the comments below.




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