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Medicare saved $473 billion from cost slowdown, HHS says

Medicare spent $473 billion less between 2009 and 2014 than it would have if previous cost-growth trends had continued, a marker of a slowdown in healthcare spending, the Department of Health and Human Services (HHS) announced Tuesday. 

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The announcement comes around the sixth anniversary of ObamaCare as part of the administration’s effort to highlight some of the lesser-known parts of the law, such as reforms to Medicare payments, that can help limit cost growth. 

“Thanks to the Affordable Care Act, we are putting the patient at the center of care and spending our dollars more wisely by paying for what works,” HHS Secretary Sylvia Mathews Burwell said in a statement. “This kind of progress is not easy, but what we have accomplished in six short years is undeniable: from 20 million uninsured, to billions of dollars saved, to changes that are making our health care system work better for everyone.”

The HHS report finds that if the growth rate from 2000 to 2008 had continued, Medicare would have spent $3.6 trillion between 2009 and 2014. Instead, a slowdown in cost growth meant that Medicare spent closer to $3.1 trillion, saving about $473 billion. 

HHS pointed to parts of the law meant to encourage Medicare providers to focus more on the quality of care than the volume of procedures performed. 

For example, the law set up Accountable Care Organizations, groups of doctors that are financially rewarded if they meet quality targets and keep costs down. 

Much of the cost slowdown, however, came from other factors. The economic slowdown coming out of the Great Recession was one major factor, as were cuts to Medicare under ObamaCare. 

The increase in health spending per person reached historic lows of around 3 percent beginning in 2010, before increasing to 4.3 percent in 2014 because of spending on ObamaCare’s coverage expansion and new high-cost hepatitis C drugs.