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Medicare spending slows to record low
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1-17-2000 Washington. Medicare spending growth slowed to its lowest level in 35 years, reflecting early effects of the Balanced Budget Act of 1997 and savings from reduced waste, fraud, and abuse. But some Medicare experts are calling the slowdown an anomaly that is not expected to have much long-term impact. According to a report by the Health Care Financing Administration (HCFA), Medicare spending grew 2.5 percent for 1998, compared to a 6 percent growth rate in 1997. "Virtually nobody expects [the low growth rate for Medicare spending] to be a long-term trend, so we don't expect it to have that much impact on beneficiaries,'' said Tricia Smith, senior coordinator for federal health issues with the American Association of Retired Persons. "I heard one analyst say we ought to put it in the Smithsonian because we won't be seeing it again.'' Although the low rate is expected to extend the solvency of the Medicare program, no one knows what impact Congress' 1999 Balanced Budget Amendment revisions restoring about $12 billion of earlier cuts will have on Medicare. In the private sector, healthcare spending grew 6.9 percent in 1998, compared to a 4.8 percent increase in 1997, according to the report. Overall healthcare spending increased 5.6 percent in 1998, compared to 4.7 percent in 1997, mainly due to rising prescription drug costs and insurance premiums. The hike in prescription drug costs is hurting older Americans, who are less likely to have prescription drug coverage, Smith said. Prescription drug spending grew by 15.4 percent, more than any other area of health care, according to the HCFA report. "That's having a tremendous impact on these folks,'' Smith said. "One of our highest priorities in the Medicare reform debate is to achieve a prescription drug benefit for Medicare beneficiaries.''
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