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Jun 14 2013

Examining Medicare Spending: What’s Realistic to Expect?

CMS Office of the Actuary Says 2013 Alternative Scenario Is More Realistic Than Estimate in Medicare Trustee’s Report

On May 31, 2013, the Medicare Trustees released their annual report assessing the future of Medicare spending. However, the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) also produced a 2013 "alternative scenario" of Medicare spending. Here is how the Office of Actuary explained the purpose of the second examination of Medicare outlays:

"The future of The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report under current law are clearly unrealistic with respect to physician expenditures and, in addition, may well understate expenditures for most other categories of health care providers. The purpose of this memorandum is to present a set of Medicare projections under hypothetical alternatives to these provisions to help illustrate and quantify the potential magnitude of the cost understatement under current law."

The Actuary’s office said their intent was "to help inform Congress and the public at large that an evaluation of the financial status of Medicare, based on the provisions of current law, is likely to portray an unduly optimistic outcome." They said they also wanted to "promote awareness of these issues, to illustrate and quantify the amount by which the Medicare projections are potentially understated, and to help inform discussions of potential policy reactions to the situation."

As the Actuary’s office ominously warned, "the sizable differences in projected Medicare cost levels between current law and the illustrative alternative scenarios highlight the critical importance of finding ways to bring Medicare costs—and health care costs in the U.S. generally—more in line with society’s ability to afford them." To read more click here.

Supporting Documents:

A Medicare Trustee's Commentary on Medicare's Oulook in 2013 here

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