Medicare - More Good News

Written by Richard Hokenson 

The recently released communication from the Boards of Trustees of the Federal Hospital Insurance and Supplementary Medical Insurance Trust Funds forecasts that Medicare expenditures as a percentage of GDP will be lower than projections made in 2016 (see Chart 1). 

This continues the trend towards moderation that began after 2009 when projections made then gave the appearance that Medicare was a runaway train that would engulf the entire U.S. economy (see Chart 2).

Much of the reduction in the growth of Medicare expenditures results from incorporating continued favorable developments in the rate of inflation in Medical Care prices, a trend that is especially evident in the 5-year compound annual growth rate (see Chart 3). Most of the recent improvement in Medical Care inflation results from Medical Care Services (see Chart 4). The 5-year compound annual growth rate in Medical Care Commodities, on the other hand, has been flat for the past 10 years although there is substantial volatility in the year-ago percent change.


This update was researched and written by Richard Hokenson, as of September 22 2017