Between 2009 and 2013, Medicare spent $316 billion less than expected due to slower-than-expected health care cost growth.
Medicare just saved more than 10 times the combined cost of Amtrak and the National Parks
Christophe Haubursin was a senior producer for the Vox video team. Since joining the team in 2016, he has produced for Vox’s YouTube channel and Emmy-nominated shows Glad You Asked and Explained.
That is clearly a large number — much more money than you or I or even Bill Gates (whose network comes in at just over $80 billion) can imagine having or spending. To underscore just how much money $316 billion is, I stacked it up against other things the federal government spends money on.
The savings Medicare accrued between 2009 and 2013 would be enough to cover federal spending on the Children’s Health Insurance Plan, Amtrak, and the National Park Service more than twice over.
When health costs grow slowly, Medicare benefits
The United States is in the midst of a remarkable slowdown in health-care spending growth.
Health care costs grew, on average, 2 percent faster than the economy between 1990 and 2008. Health spending took over an ever-growing share of the economy. Workers barely got raises; skyrocketing premiums ate up most of their additional wages.
Since 2008, things have been different. New federal data released in December shows health care costs grew at 3.6 percent — the slowest rate the government has recorded ever, since it began keeping track of health-cost growth in 1960.
This has been true in Medicare, too. From 2002 through 2008, the program's per-person costs grew at an average of 5.8 percent annually. But from 2009 to 2013, that rate slowed to 1.8 percent per year and then dropped to 0.2 percent in 2013. The drop-off was likely due to a couple of factors: Medicare patients are now using the health-care system less intensely than they did before, and the health-care law includes a number of cuts to reimbursements that the government pays doctors.
Less Medicare spending leaves more money for other things
This may overstate the obvious, but $316 billion is a pretty astounding amount of money. It works out to a 12 percent reduction in Medicare spending in the time period studied (from an expected $2.87 trillion down to an actual $2.55 trillion).
Those savings are meaningful: when the government spends less money on Medicare, it frees up dollars to spend more money on education or defense or whatever other priorities the administration wants to invest in. Over four years, $316 billion could, for example, cover federal spending for the Children's Health Insurance Program (which covers about 8 million low- and middle-income kids) about nine times over. Or it could cover the entire Education Department's budget, without spending any more money.
This is what makes the spending slowdown in health care so meaningful for the federal government: it suggests that Medicare, a program typically seen as a budget-buster, may not be the juggernaut we thought.
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