On this, the 50th anniversary of Medicare, new research shows that the overall health of American enrollees is dramatically improving and that hospital expenses are falling.
Enrollees becoming healthier and for longer
With millions of baby boomers now turning 65, they’re becoming eligible for Medicare. As such, the program’s population will continue to grow. This, in turn, increases overall costs for Medicare, even as the average cost per illness or hospitalization comes down. The study’s researchers noted that mortality rates have also dropped steadily during that time. These beneficiaries were found to be less likely to end up in the hospital. But as older Americans live longer, they’re taking advantage of their Medicare coverage for more years than previous generations.
These improvements in hospital stays and mortality are great news for the American public and the nation’s healthcare system. But they also spotlight just how effective and well-run Medicare itself has become over the last 15 years, due to the combined efforts of doctors, hospital s and the U.S. government. “The results were rather remarkable,” states Dr. Harlan Krumholz, a cardiologist and leading Yale health care researcher. “We found jaw-dropping improvements in almost every area that we looked at.”
“If the rates had stayed the same in 2013 as they had been in 1999, we would have seen almost 3.5 million more hospitalizations in 2013, says Krumholz. “People who were being hospitalized were having much better outcomes after the hospitalization. They had a much better chance of survival.”
Medicare improvements reducing healthcare costs
Research suggests that the overall improvements to Medicare have had a very positive economic impact. A Yale University study published in the the Journal of the American Medical Association shows that hospital stays have actually fallen over the last 15 years. Specifically, for Traditional Medicare beneficiaries, average hospital stays have fallen from $3,290 to $2,801 (in inflation-adjusted dollars) over the last 15 years. It should be noted that the study’s findings don’t take into account Medicare Advantage (Part C, or MA), the program’s managed care option.
Krumholz believes that these lower costs may be due to measures designed to boost patients’ health. Among these are prevention programs and advances in medical care. In addition, beneficiaries are receiving medical care in less-expensive outpatient clinics, rather than hospitals, which is helping to lower expenses.
Certain factors, such as the recent recession, help to keep Medicare expenses down. And, the federal government is reimbursing hospitals and doctors less for treating Medicare patients, as well. “That’s an easy way to get control of medical spending in Medicare,” says economist Craig Garthwaite at the Kellogg School of Management at Northwestern University. Garthwaite continues, “it’s just not something we can do in the private market, and we have to worry about how sustainable it is for the Medicare program overall.”
Medicare does have a small deficit and several adjustments may be required in the coming years. But overall, Medicare’s financial picture is improving. According to the program’s trustees, the program’s trust fund is expected to be solvent through 2030.