Comparing Medicare And Private Insurers: Growth Rates In Spending Over Three Decades

Abstract

Over the past three decades both Medicare and private insurers have initiated cost containment mechanisms to control the growth of spending on personal health care. To compare spending growth between these two payers, we present four measurement principles that should be implemented when drawing such comparisons, and we apply them to the National Health Accounts data files. We attribute Medicare's ability to equal--and using our measures, actually exceed-the private sector in controllingthe rate of health spending growth to Medicare's ability to price aggressively for the services it covers.