Medicare spending per person has also grown from $5,800 in 2000 to $15,700 in 2022. Net Medicare outlays are projected to increase from $744 billion in 2022 to nearly $1.7 trillion in 2033. Most of this money (76%) is spent on managed care organizations, hospitals and physician services. Another 12% goes to prescription drugs.
The Biden administration has proposed some cuts in Medicare spending:
But these savings amount to just $24 billion a year over the next decade: clearly inadequate, considering that Medicare spending is projected to increase an average of nearly $100 billion a year over the same period. What else can be done to rein in those costs?
One suggestion is for Medicare to stop paying physicians higher rates for procedures performed in hospital outpatient clinics than for identical procedures rendered in physician offices. As a result of this nonsensical policy, physicians have shifted much of their procedural work to hospital outpatient settings.
Another suggestion comes from Chris Pope, an expert on healthcare payment policy. To quote from his recent paper, Keeping Medicare Affordable: The Cost of Adding Services:
“Medicare’s steadily increasing burden on the federal budget is largely the result of the program’s commitment to pay for ever-increasing volumes of new medical products, procedures, and services—most of which are currently approved without scrutiny of their cost-effectiveness. Congress should be required to approve additions to Medicare fee schedules before they take effect.”
Here are some other ideas, all from my January 14, 2022 post, Getting to Switzerland: How to Cut US Healthcare Spending and Save Lives in the Process:
Increase Medicare/Medicaid fraud prevention, detection, and prosecution.
Greatly expand the number of nurse practitioners as independent primary care providers and gatekeepers to specialists, as is already happening in several European countries.
Institute a no-fault medical malpractice system, like the one in Denmark.
Develop federal guidelines for medical testing and treatment, much like the NICE system in Britain, which would reduce excessive testing and treatment, as well as malpractice claims. As in Britain, medical providers would still be allowed to depart from guidance per their independent judgment of what’s best for the patient.
This is doable. But it will require facing down some powerful interest groups, starting with the American Medical Association and Trial Lawyers of America.