November 09, 2012
1 min read

Study: Medicare spending increased by 198.7% during past 3 decades

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Researchers from New York found that Medicare spending for elderly patients increased 198.7% between 1980 and 2009 while a similar program in Canada increased by only 73% during the same time period.

“Had U.S. Medicare spending per elderly enrollee increased as slowly as in Canada, the savings from 1980 through 2009 would have totaled $2.156 trillion,” David U. Himmelstein, MD, professor at the City University of New York’s School of Public Health, stated in a press release. “That is equivalent to more than one-sixth of the U.S. national debt.”

Himmelstein and colleagues believe the Canadian program, which is also called Medicare, spent less on patients 65 years or older because of reduced administrative costs, lump-sum budgets for hospitals, controlled spending for new buildings and equipment and single-buyer spending on medical devices and drugs. The program also had low litigation and malpractice costs and an emphasis on primary care.

“In a nutshell, including the elderly in a universal, non-profit, publicly administered single-payer system has been the key to Canada’s cost control,” Steffie Woolhandler, MD, MPH, stated in a press release. “Although U.S. Medicare is often called a single-payer system, that is not quite accurate. It is true that traditional Medicare is relatively efficient – only about 2% of its budget goes to administration, according to the most recent trustees’ report, vs. about 14% for privately run Medicare managed-care plans – but Medicare is only one of many health care payers in the United States.”


Himmelstein DU. Arch Int Med. 2012;doi: 10.1001/2013.jamainternmed.272.