Not Understanding Medicare Spending

A recent report (NEJM 2013; 369: 1066-1073) highlights the lack of understanding regarding the costs of Medicare and the political problems ahead for those who try to reduce these costs.  The data the authors provide is derived from six public opinion polls in 2013 with 1013 to 2017 U.S. adults along with historical data.

Key points:

  • 62% believe Medicare spending is rising faster than it was 5 years ago –it’s not.
  • The three top reasons why the public thinks Medicare has rising costs: poor government management, fraud and abuse, and excessive charges by hospitals .
  • Only 53% are aware that it is one of the largest federal budget items.
  • Only 31% believe it is a major cause of the deficit.
  • Two thirds of respondents believe that most Medicare recipients get benefits worth about the same (27%) or less (41%) than what they have paid in payroll taxes/premiums.  In fact, “Medicare beneficiaries on average pay approximately $1 for every $3 in benefits.”
  • Political implications: among registered voters, 12% say they would be more likely to vote for a congressional candidate who favored cuts in Medicare spending to reduce  the federal budget deficit compared with 58% who be less likely to vote for that individual.

Take-home message: Expectations to solve all of Medicare’s projected costs/financial sustainability by eliminating mismanagement along with fraud and abuse are misguided.  A better public understanding of Medicare’s finances would aid the long-term resolution of these issues.

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