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CBO Medicare Forecast Accuracy

November 11, 2009 in Medicaid/Medicare

According to a N.Y. Times editorial, the Congressional Budget Office has consistently underestimated costs savings from a variety of institutional changes to Medicare.  For instance:

Medicare enacts the prospective payments system (PPS) for reimbursing inpatient hospital stays.

  • The CBO projected total Medicare spending will rise to $60 billion in 1986.
  • Actual Medicare spending in 1986 was only $48 billion.

Medicare begins paying skilled nursing facilities and home health care services a set fee per patient.

  • The CBO projected a 9.1% reduction in Medicare spending.
  • The actual savings turned out to be 50 percent greater in 1998 and 113 percent greater in 1999 than the budget office forecast.

The Medicare Modernization Act created Part D prescription drug coverage.

  • The CBO projected that spending on the drug benefit would be $206 billion.
  • Actual spending was nearly 40 percent less than that.

HT: GoozNews

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