Slowing Medicare Spending Growth: Reaching for Common Ground

Over the past half century, per-beneficiary real spending growth in Medicare has exceeded real per-capita gross domestic product (GDP) growth by more than 2 percentage points. It is widely agreed that this gap should not continue. In fact, the Patient Protection and Affordable Care Act (PPACA) is projected to close the gap completely, largely by reducing the rate of increase in fees paid to health plans and providers. Yet the ability to sustain the proposed fee cuts is highly uncertain. Moreover, even if the PPACA spending trajectory is realized, Medicare spending as a share of GDP will grow due to the aging of the population. (August 2012)