The Congressional Budget Office (CBO) lowered its spending projections for Medicare earlier this month. The watchdog agency noted that Medicare’s expenses have been “significantly lower” than estimated for three straight years. The CBO revised its 10-year spending projections for the program down by $137 billion in its latest long-term economic forecast. That’s a two percent drop.
The report noted that spending on Medicare Parts A and B (hospital and doctor insurance) increased by an average of 2.9 percent per year since 2009. This is a significant downward trend compared to the 8.4 percent annual growth seen between 2002 and 2009.
“In recent years, healthcare spending has grown much more slowly both nationally and for federal programs than historical rates would have indicated,” the CBO wrote. The CBO previously attributed the slowdown to the recovering economy and “structural factors” in the healthcare system, however, supporters of the new ObamaCare law insist its reforms are the reason for the slower cost growth.
The latest CBO report also forecasts a 5.5 percent decrease in Medicaid spending between 2013 and 2022 compared with estimates made in August, 2012. The CBO explained that Medicaid spending per person is expected to go down as a result of the Affordable Care Act’s extension of eligibility to healthier adults. The CBO also predicts that Medicaid will see fewer enrollments than previously estimated.