Chronic Conditions Account For Rise In Medicare Spending From 1987 To 2006
Chronic conditions are chiefly treated not in hospitals but in outpatient settings and by patients at home with prescription drugs. Health reform must address changed health needs through evidence-based community prevention, care coordination, and support for patient self-management.
Slowing the rise in health spending is among the nation’s top health policy priorities. Absent policy change, the Congressional Budget Office (CBO) estimates that Medicare spending will grow at an average of 7 percent each year from 2010 to 2018, rising to $879 billion annually and 4 percent of gross domestic product (GDP). The rate of growth of Medicare spending over the long term is predicted to exceed the rate of growth in federal revenues and the overall economy.1 As a result, much academic and political attention has focused on reforming Medicare as imperative for restraining spending increases.
Many Medicare reform proposals designed to slow the growth in spending would redirect costs from the government to others, such as enrollees and participating providers. The slowdown would be accomplished by reducing provider payments,2 increasing the age of Medicare eligibility,3 implementing means testing for Medicare,4 restricting coverage as with the Part D "doughnut hole,"5 and increasing copayments and deductibles.2 These approaches are unlikely to produce long-term reductions because they fail to address the key factors driving the rise in health care spending overall and in Medicare spending, particularly for chronic diseases. Understanding these facts is essential to reaching the right policy solutions.
