A few key facts about Medicare spending, care of the Kaiser Family Foundation:

  • In 2021, Medicare spending comprised 13% of the federal budget and 21% of national health care spending

  • Medicare spending per person has also grown, increasing from $5,800 to $15,700 between 2000 and 2022 – or 4.6% average annual growth over the 22-year period. 

  • Looking to the future, net Medicare outlays are projected to increase from $744 billion in 2022 to nearly $1.7 trillion in 2033, due to growth in the Medicare population and increases in health care costs.

Where is all that money going? Here’s where it went in 2021:

Managed Care is the same as Medicare Advantage, which provides the same coverage as traditional Medicare plans, mostly for hospital and physician services. Medical Advantage plans often cover additional benefits as well, such as dental care. In 2021, 43 percent of Medicare beneficiaries were enrolled in Medicare Advantage plans and these plans are projected to account for half of total Medicare enrollment by 2025. Studies have largely found that Medicare Advantage plans cost the government more than traditional Medicare on a per beneficiary basis.

If you think Medicare is expensive now, check out the cost projections:

Ok, so the above projections didn’t include Medical Advantage, known as Part C plans. But as already noted, Medical Advantage is already more expensive than traditional Medicare plans, so will likely follow the same cost trajectory. In other words, the situation is bad and it’s only going to get worse.

Next: How to rein in Medicare spending without harming patients.

References:

Keeping Medicare Affordable: The Cost of Adding Services. Chris Pope/Manhattan Institute  May 30, 2023

Medicare Advantage: A Policy Primer. The Commonwealth Fund May 3, 2022

Medicare Trustees Report, 2022 https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf

The Facts about Medicare Spending. Kaiser Family Foundation.  June 2023