Medicare Monday: Putting MedPAC’s 19% in context

If you pay attention to Medicare, you’ve probably heard of MedPAC or the Medicare Payment Advisory Commission. MedPAC is an independent congressional agency that advises Congress on issues related to the Medicare program, such as payment, access to care, and quality of care.

At its most recent public meeting, Medicare spending on drugs and pharmacy was a topic of discussion, and a new broader estimate of this spending as a share of all Medicare spending (Parts A, B, C and D combined) was released. This is a good opportunity to take a closer look at the estimates. What does spending on certain items and services, such as prescription drugs, look like as a percent of total Medicare program spending?

Eighty-one percent ($465 billion) of all Medicare spending goes toward hospital care, skilled nursing facilities, hospice, surgery, lab tests, physician visits and more. Spending on the Medicare outpatient prescription drug benefit (Part D) was 10.8% of total Medicare spending in 2013 and still just 10.9% in 2014 (as the next chart shows). Other drug and pharmacy spending in Parts A, B and C was about 8% in 2013.

When looking at spending numbers, it’s always important to keep costs in context. Check back with Medicare Monday for more.