Medicare Versus Inflation: Who's Winning Now?

There is one thing that politicians on both sides of the aisle agree upon: the biggest threat to the future fiscal solvency of the United States is Medicare, the program that pays medical expenses for elderly and disabled Americans. For many years now, the Medicare budget has been growing much faster than the economy as a whole, with the cost of Medicare rising consistently faster than inflation.

In the last couple of years, however, the cost of providing Medicare coverage hasn’t risen any faster than inflation, and this at a time when inflation is quite low. To get a feel for this trend, here is a nice figure that Sarah Kliff reproduced in her blog recently:

One very important caveat to keep in mind, however. This figure tracks the cost, per enrollee, of paying for Medicare. But with an aging population, and with a smaller proportion of workers supporting the expense of Medicare and Social Security, even keeping consistent with inflation per enrollee will cause Medicare expenses to take up an increasing portion of our taxpayer money.

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