Yesterday's New York Times included a fascinating article by Eduardo Porter on Medicare financing.  Porter makes the point that with the drop in the growth in health spending that we have recently seen (at least three, if not four years in a row of less than 4% growth in health spending), the projections already show Medicare spending will be $143 billion less over the next decade.  This is what the CBO now projects, compared to what they projected just last August.  Wow.  And that is without any sequester, budget cuts, or policy changes.

Of course we’re all still trying to figure out why health spending growth is slowing.  Is it the ACA, the recession, private sector changes not having anything to do with the ACA, or private sector changes anticipating the ACA, or something else?  What we do know is the growth rate in health spending is unprecedented.  And it spills over to Medicare.  

My view is that some if not a good portion of the changes are due to profound changes going on in the health delivery system that will last for a long time.  Some of these changes are being encouraged by the ACA, or provisions passed before them (e.g., the stimulus).  So we are seeing a bending of the "cost curve" and we will look back on this period and say it was a period of big change.  Yes, some of the change has been due to the recession.  

No one would say Medicare does not need reform, and major reform.  But the main reason it needs reform still is because of demographics, the doubling of the aged population, the baby boom.  Certainly these trends help, though I won’t take it to the bank yet.  But we still need to deal with the long-run problem that the population needing Medicare is going to double.