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CBO report looks at reasons for Medicare spending slowdown

August 23, 2013

Changes in Medicare payment rates and in beneficiary demand for services account for only about one-quarter of the slowdown in fee-for-service Medicare spending growth for elderly beneficiaries between 2000 and 2010, according to a new report from the Congressional Budget Office. While the other causes of the slowdown remain unclear, it “appears to have been caused in substantial part by factors that were not related to the recession’s effect on beneficiaries’ demand for services,” the report states. “Some of the other influences on Medicare spending that may have contributed to the slowdown, such as changes in how care is delivered to beneficiaries, might well have persistent effects on spending growth. The fact that growth slowed even further in 2011 and 2012 for the fee-for-service portion of Medicare indicates that the slowdown persisted, and perhaps intensified, after our study period. That view is consistent with CBO’s recent forecast of Medicare spending growth, which projects slower growth in the next few years than prior forecasts anticipated.”