The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Medicare Costs per Beneficiary are Skyrocketing

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Although one of the main drivers of Medicare’s unsustainable cost structure is that as the baby boomer generation retires, more people will be enlisting and using its services, this is not the only driver.  While this is certainly true, not enough light is shone on the other contributing factors to rising Medicare costs.  As a March 10, 2013 article in The Washington Post points out, Medicare spending per beneficiary is growing at an alarming rate:

Over the past decade, Medicare’s spending per beneficiary has risen at roughly the same rate as spending for privately insured patients. Medicare’s supporters have a simple explanation: Americans are living longer, and this is driving up the program’s costs. But Medicare’s own data say that a much more important factor is the growing intensity of use: more demand for care at every age.

Put simply, not only are people receiving Medicare benefits for longer periods of time, they are also receiving benefits at a much higher frequency during this extended period of time.  In a March 10, 2013 interview with David Gregory on Meet the Press, Senator Tom Coburn (R-Okla.) pointed out the distressing fact that a person retiring today would, for every $1 that they paid in, receive roughly $3.30 worth of benefits.  This belies the notion held by some recipients that they are receiving benefits that they “earned”. A November 22, 2009 60 Minutes report further delved into the issue of spiraling Medicare costs, with a particular focus on end-of-life care.  According to the report:

[In 2008], Medicare paid $55 billion just for doctor and hospital bills during the last two months of patients’ lives.  That's more than the budget for the Department of Homeland Security, or the Department of Education.  And it has been estimated that 20 to 30 percent of these medical expenses may have had no meaningful impact.  Most of the bills are paid for by the federal government with few or no questions asked.

Also adding to the problem, Medicare is legally not allowed to reject any treatment based upon cost. According to the 60 Minutes report:

[Medicare] will pay $55,000 for patients with advanced breast cancer to receive the chemotherapy drug Avastin, even though it extends life only an average of a month and a half; it will pay $40,000 for a 93-year-old man with terminal cancer to get a surgically implanted defibrillator if he happens to have heart problems too.

Needless to say, the problems with Medicare are greater than just the increasing number of beneficiaries that will soon be added to its rolls.  It is time for lawmakers and the media to start telling the full story to the American people.

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