Medicare and Medicaid Spending Growth Slower Than Private Insurers

According to an analysis published by the Urban Institute, spending growth was slower for those enrolled in Medicare and Medicaid than those enrolled with in a private insurance plan between 2006 and 2017.

The report states that Medicare spending per enrollee grew 2.4% per year, Medicaid followed at 1.6% per year, with private insurance spending growth coming in at 4.4%.

Researchers said that while overall spending growth for government run health care programs was higher than private spending—Medicare (5.2%), Medicaid (6.0%) compared to 4.4% for private spending—they attribute it to increased enrollment. Over the same period, GDP per capita grew an average of 2.4 percent per year.

The authors found that changes in specific types of health care spending affected Medicare, Medicaid, and private insurers differently, especially for prescription drugs, administrative costs, and hospital services.

The analysis, “Slow Growth in Medicare and Medicaid Spending per Enrollee Has Implications for Policy Debates,” was released by the Urban Institute and financially supported by the Robert Wood Johnson Foundation. It looked at how enrollment and specific services contributed to spending growth for each major payer, examined spending and enrollment projections for each major payer from 2017 to 2026, and considered how the predictions align with recent experience.

It then considered how both historic and projected spending patterns might inform cost containment strategies within and across payers, as well as policy proposals targeting the expansion or contraction of public programs.

The report stated, “Based on our analysis of recent spending patterns by payer, we conclude that Medicare and Medicaid have successfully moderated growth in spending per enrollee over the last decade and thereby do not require major restructuring. We also use our analysis of spending growth by service type to consider alternative policy proposals to address spending growth for public and private payers.”—Edan Stanley