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Medicare Spending During the Epidemic

By June 22, 2022Commentary

Medicare has a big problem.  It covers a lot of Americans and is running out of money set aside to pay for benefits.  The epidemic upended Medicare spending in several ways.  CV-19 itself accounted for a lot of spending as it disproportionately hit older beneficiaries.  The high death rate among this group, however, meant a reduction in the number of people covered by Medicare.  And fear and provider actions lowered visits and spending for non-CV-19 services.  A Kaiser Family Foundation brief examines these recent trends in Medicare spending.  (KFF Brief)

Overall Medicare spending in 2020 was $348 billion for those in the fee-for-service or traditional arm of Medicare, which still covers about 60% of beneficiaries.  This was down 5.8% from the prior year.  On a per beneficiary basis, spending declined 3.6%.  Spending rose overall because Medicare Advantage payments increased by almost 7%, as those payments were set based on utilization in earlier years.  Spending declines were particularly noticeable for surgical procedures, but utilization was lower for almost every service category.  Spending likely rebounded in 2021, partly due to deferred services, but there may be a multi-year effect from the deaths of many people who either were or shortly would have become beneficiaries.

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