Private insurance price growth outpaces Medicare and Medicaid

Medicare and Medicaid prices have grown at a slower pace than the private market, according to an analysis from the Urban Institute.

Per enrollee, Medicare spending grew 2.4 percent annually from 2006 to 2017, while Medicaid grew 1.6 percent. By comparison, private insurance grew 4.4 percent per year for each enrollee.

The findings underscore that the rising concern about healthcare costs could be increasingly focused on the private healthcare market. The analysis also comes at a time when CMS Administrator Seema Verma has continually called for actions to lower costs in the public healthcare programs. Last year, the Trump administration announced it would allow states to implement work requirements for certain beneficiaries of their Medicaid programs as part of these initiatives. So far, eight states have received approval for a work requirement.

“Medicare and Medicaid are doing a good job of keeping per capita costs under control, though the continuation of recent policies is essential. The larger cost containment problems the nation faces are in the private insurance market,” John Holahan, institute fellow at the Urban Institute, said in a statement. “There is no need for major changes to Medicare and Medicaid that would reduce coverage and cause financial hardship.”

Medicare and Medicaid overall spending was higher than private insurance from 2006 to 2017, with annual growth at 5.2 percent for Medicare and 6 percent for Medicaid, due to higher enrollment in these public programs compared to private insurance, according to the analysis. 

Average Medicare and Medicaid enrollment has increased 2.8 percent and 4.3 percent, respectively. Private insurance enrollment has stayed relatively flat, according to the analysis.