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Medicare’s Surprising Cost Savings

Medicare has been one of those political footballs where both sides of the aisle have had an entrenched position for decades.  One side has been vying for better coverage for our older citizens and the other side claiming a need for more fiscal constraint so as to limit the ever “threat of bigger government.”   But regardless of which side of the argument one may have taken, there was never any denying that insuring our most vulnerable population has been an expensive proposition.  And it has just kept getting more and more costly.  …until recently.

True, it continues to grow as an overall price tag, but the cost per Medicare enrollee has been almost flat for more than a decade, something that has not happened ever before for this entitlement program.  If the spending per enrollee had continued on its trajectory since 1970, the average spent per individuals should have exceeded $20,000 by now, but instead it has been hovering$12,000 to $14,000 for more than ten years.

The overall budget for Medicare has continued to climb, but this plateau translates into $3.9 trillion in federal dollars saved.  That’s about 85% of the total federal pandemic expense, 14 times the annual benefits to veterans, 18 times the annual salaries paid to public school teachers, 27 times the annual federal spend on food stamps (referred to as SNAP), 161 times NASA’s annual budget and the list goes on.

Recognizing that we’re not out of the proverbial woods yet, Medicare has been most recently granted permission to negotiate directly with Big Pharma on the prices of ten branded drugs.  I had talked through this in a recent post.  Better drugs are important to our vulnerable older citizens, but higher prices are not as I wrote in that earlier post.

There is also the suggestion from the Congressional Budget Office that adding more Boomers to the Medicare rank and file will kick prices up soon enough.  If you have an older loved one either on Medicare or soon to be enrolled in Medicare listen closely to what your representatives are saying about Medicare.  You may want to make the call to inform them of the facts.  Being an active citizen just might turn out to be really good for your older loved one’s health!

Charlotte Bishop is an Aging Life Care Advisor, Geriatric Care Manager and founder of, certified professionals who are geriatric advocates, resources, counselors and friends to older adults and their families in metropolitan Chicago.  She also is the co-author of How Do I Know You? A Caregiver’s Lifesaver for Dealing with Dementia.


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