Wash. Post misleads on Medicare cost growth

In a June 25 article, The Washington Post suggested that the rising cost of Medicare and Medicaid is driven primarily by the aging of the U.S. population. Contrary to the Post's suggestion, however, the Congressional Budget Office (CBO) has found that the principal factor behind upward trajectory of Medicare and Medicaid costs is the growth in per-capita health care costs "over and above demographic effects." The Post article, which reported on recent Medicare fraud indictments, stated that "[t]he cost of Medicare, which covers the elderly and disabled, and Medicaid, its sister program for the poor, are growing as the American population ages, giving new urgency to initiatives to detect and prevent phony claims." But a December 2008 CBO study concluded that "[m]ost of that increase" in federal spending on Medicare and Medicaid over the next 40 years "will result from growth in per capita costs rather than from the aging of the population." The CBO also stated that the effect of the increase in enrollment caused by the baby boom generation becoming eligible for Medicare "pales in comparison with the likely impact of continued increases in health care spending per enrollee."

The CBO study, "Key issues in Analyzing Major Health Insurance Proposals," stated:

The rising costs of health care and health insurance pose a serious threat to the future fiscal condition of the United States. Under current policies, CBO projects that federal spending on Medicare and Medicaid will increase from about 4 percent of gross domestic product (GDP) in 2009 to nearly 6 percent in 2019 and 12 percent by 2050. Most of that increase will result from growth in per capita costs rather from the aging of the population.

The study later stated:

[T]he impending eligibility of the baby-boom generation will have a substantial effect on the share of GDP devoted to Medicare as a result of the increase in enrollment, but that effect pales in comparison with the likely impact of continued increases in health care spending per enrollee. According to CBO's analysis, future demographic changes will account for somewhere between one-fifth and one-third of the increase in federal spending on Medicare and Medicaid over the next 25 to 75 years, and rising outlays per enrollee (over and above demographic effects) will account for the remainder.

From the June 25 Washington Post article:

Federal agents arrested dozens of people in Miami and Detroit for allegedly submitting Medicare claims for $50 million in treatments that were unneeded and sometimes never provided, authorities said.

The indictments returned by a grand jury in Detroit focus mostly on costly HIV-AIDS infusion drugs and physical and occupational therapy. Authorities filed criminal charges against patients, doctors, medical assistants and company owners who allegedly played complicit roles in the fraud schemes. Prosecutors are seeking forfeiture of the criminal proceeds and restitution to the Medicare program.

The cost of Medicare, which covers the elderly and disabled, and Medicaid, its sister program for the poor, are growing as the American population ages, giving new urgency to initiatives to detect and prevent phony claims.

The action was announced at a news conference in the District by Attorney General Eric H. Holder Jr., Health and Human Services Secretary Kathleen Sebelius, and FBI Director Robert S. Mueller III, a signal that the Obama administration is giving the issue high priority as it pushes for legislative reforms in health care.