Comparing Medicare and Private Cost Growth: Lessons from the Past, Guidance for the Future

Numerous comparisons have been made between the rates of spending growth in Medicare and private health insurance. Many believe that private sector innovations present opportunities for constraining Medicare costs. Nonetheless, recent research looking at the past 30 years concludes that Medicare spending growth has been similar to the private sector, and at times even slower. Figures from the Centers for Medicare and Medicaid Services show Medicare cost growth was lower than that of private insurance in 2000 and 2001. Some of the difference may be attributed to the fact that private insurance, unlike Medicare, usually covers outpatient prescription drugs, one of the fastest-growing segments of health care. Moreover, some analysts say that Medicare’s relative success in controlling costs has been at the expense of quality and access.