Medicare Spending Limits: Issues and Implications

Several major deficit-reduction plans include provisions that would impose an explicit limit on the growth in Medicare spending. In general, such limits would trigger cuts if Medicare spending grows more rapidly than a target, such as the growth in the economy.

This brief prepared for the Kaiser Family Foundation describes and analyzes various approaches to setting and enforcing limits on Medicare spending. It looks at how proposed spending limits might work if Medicare spending per beneficiary and the economy grow at the pace currently projected by the Congressional Budget Office for the next decade, as well as under alternative scenarios, including if such limits were based on total Medicare spending rather than per-beneficiary spending and if current projections understate the future growth in Medicare spending.

The brief is authored by Chapin White of the Center for Studying Health System Change.

Issue Brief (.pdf)