Medicare Savings Estimate of Doubtful Accuracy

There is much doubt about health care reform's plan to save about $575 billion in the Medicare program over its first decade. If accomplished, that kind of savings would significantly change the trajectory of Medicare spending, as shown in Figure 9-1.

Figure 9-1. $575 billion in Medicare savings in the new health care law could lower the program's bite out of the gross domestic product by 0.5 percent. Source: Richard S. Foster, chief actuary, Centers for Medicare & Medicaid.

Experts believe that about $300 billion of the savings are possible. Those initiatives include eliminating the Medicare Improvement Fund ($27 billion), reducing payments to safety net hospitals ($50 billion), reducing Medicare Advantage plan payments ($145 billion), increasing the number of people paying Medicare Part B income-related premiums ($8 billion), and sticking to strict spending targets ($24 billion).