Medicare, Medicaid Control Costs Better Than Private Insurers: Study
Health Care

Medicare, Medicaid Control Costs Better Than Private Insurers: Study


Growth in Medicare and Medicaid spending per enrollee was slower than in private insurance between 2006 and 2017, according to an analysis released this week by the Urban Institute.

Medicare spending per enrollee increased by 2.4 percent a year, while Medicaid spending grew by 1.6 percent a year. Private insurance spending, meanwhile, grew by 4.4 percent annually.

Overall spending for the government-run health care programs is growing faster than that by private insurers, the researchers say. Medicare spending growth over the period studied averaged 5.2 percent a year while Medicaid spending grew by an average of 6 percent, compared to 4.4 percent for private insurers. But the study’s authors, John Holahan and Stacey McMorrow, attribute that to much faster enrollment growth in the public programs; average annual enrollment in Medicare and Medicaid increased by 2.8 percent and 4.3 percent, respectively, while enrollment in private insurance plans essentially stayed flat, they say.

“After accounting for the enrollment growth in these programs, Medicare and Medicaid have experienced much slower growth in spending per enrollee compared with private health insurance,” they write. “These patterns do not support drastic calls to restructure Medicare and Medicaid in order to slow national health spending growth, and may actually provide some support for efforts to expand public programs or borrow some of their cost containment strategies for use in the private sector.”

They warn, however, that their conclusion is only valid if the growth rates seen over the past decade are sustainable — and that the Centers for Medicare & Medicaid Services projects significantly higher growth in per enrollee spending from 2017 to 2026, though there may be reason to doubt the accuracy of those projections.

Read the full analysis here.