CBO reduces estimate of Medicare spending by $69 billion

The Congressional Budget Office (CBO) last week reduced its estimate of Medicare spending over the next 10 years by $69 billion. The "Budget and Economic Outlook" report said the reduction was due to updated data on actual spending for 2011 and changes in use of services. The largest single factor driving Medicare spending is the increase in beneficiaries, and the CBO projected that Medicare spending per beneficiary would rise an average of 1 percent annually above the rate of inflation over the next decade. The report said repeal of the Sustainable Growth Rate formula that freezes physician payments at 2011 levels would cost $316 billion over the next 10 years, higher than the agency's previous estimate of $290 billion.