The annual growth rate in per-capita Medicare spending has grinded to a halt in recent years, but taxes may still need to be raised to take care of the growing, aging population.
That’s one of researchers’ key takeaways from a new analysis released Friday by the Kaiser Family Foundation. KFF took a closer look at the most recent historical and projected spending data for Medicare, which funds about 20% of U.S. skilled care.
Per-capita spending for the senior care federal health insurance program grew just 1.5% between 2010 and 2017, thanks in part to the Affordable Care Act and an influx of baby boomers, the foundation notes.
That’s compared to more robust 7.3% upticks from 2000 and 2010. The downward trend can be attributed to reduced payments to skilled nursing and other providers, caused by the Affordable Care, along with younger beneficiaries aging into the program, thus bringing with them lower healthcare costs.
Overall, Medicare spending has grown from $425 billion in 2007, up to $702 billion last year. It represents about 15% of federal spending, which is projected to hit 18% by 2028.
The foundation expects per-capita spending to swing back upward by 4.6% in the next decade, thanks to ballooning enrollment, more use of services, higher intensity of care, and swelling healthcare prices, according to the analysis.
A number of possible program changes — such as restructuring Medicare benefits and cost sharing, increasing premiums for those with higher incomes, and raising the eligibility age — could possibly help to address growing spending challenges, the foundation notes. However, “it is unlikely that these changes alone would be sufficient to address Medicare’s long-term financial challenges.”
“This raises the question of whether revenue options should also be considered to help finance care for Medicare’s growing and aging population, including raising the Medicare payroll tax or increasing other existing taxes,” conclude authors Juliette Cubanski and Tricia Neuman, two Medicare policy experts with the Kaiser Family Foundation. “The prospects for proposals that would affect Medicare’s financial outlook are unknown, but few would question the importance of carefully deliberating ways to bolster the Medicare program for today’s beneficiaries and for the growing number of people who will depend on Medicare in the future.”