Medicare spending grows faster than private sector
The nation’s total spending for health care increased 5.5% in 1995 to nearly one trillion dollars, an estimated average of $3,621 per person, according to a report released by Department of Health and Human Services Secretary Donna E. Shalala.
The report also shows that spending grew faster for Medicare than the private sector because the private sector had greater savings from managed care.
Medicare by law must base its managed care payments on a formula related to Medicare fee-for-service costs. Therefore, Medicare may not benefit from discounts and other factors that generate savings for the private sector. This is a primary reason why private sector spending grew at a rate of 2.9% in 1995 while public sector spending grew 8.7% in that year, says the report released by Shalala at a meeting of the American Hospital Association.
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