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Medicare expenditures shown visually

Healthcare expenditures in the United States have been increasing for years by double digits and although cost increases have slowed, the damage has been done. We hear billions and trillions are being spent on health care, but what do we really know about where all this money is going? How much do we really spend and on what? What type of health care services are we spending all this money on? Do we spend more on Medicare in New York, Florida or Arizona? What about Texas or Maine? How much we spend is only part of the story, a small glimpse into what we are doing with our Medicare dollars. There are Medicare costs and Medicaid costs; there are private insurance costs, company costs, out of pocket costs, caps and probably a dozen more types of ways to pay.

In this first article, I will only examine Medicare costs. In an upcoming article, I will examine Medicaid costs. I really just wanted to find out how much we as a country spent Medicare wise each year and on what types of medical care, then be able to explain it to others. I wanted to know as much as anyone else and I figured if I could find out and then explain it maybe some questions we all have could then be answered. I wanted to know where we are spending the most money, where we are spending health care dollars the fastest and in what regions. If we know where all this money is going, then we are on the way to knowing how to address health care costs, hopefully by developing sound policy and then implementing it in an efficient way.

First, it was necessary to gather the aggregate Medicare data from the Centers for Medicare and Medicaid and then port it over to a Microsoft Excel workbook. Once formatted, I was able to analyze statistically all those numbers through pivot tables. I then took the results and produced the graphs you will see in this article. In part two we will continue the analysis, but next time with Medicaid expenditures. It is my hope that the graphs themselves will explain more than words. The costs involved cover a variety of health care services from 1980 to 2009. All the charts shown in this article cover those specific years.

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The above graph shows our national combined Medicare health care costs per year from 1980 to 2009. As you can see in 1980, our total Medicare expenditures were under five hundred million dollars. However, by 2009 our total Medicare expenditures had increased to almost 4 billion dollars. The graph is color coded by the category of health care service provided. As you can see from the above graph personal health care was the biggest driver of health care cost increases over the last 30 years followed by hospital services and then durable medical goods.

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The second graph above shows how much was spent over the same years but categorized by region. This graph shows that health care costs for personal health care services in the Mideast, the Great Lakes region and the Southeast. As you can see, Mideast costs on health care are eclipsed eventually by expenditures incurred in the Southeast. This may have occurred due to people moving from the Northeast to the Sunbelt areas of the United States during the last thirty years.

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The above pie chart covers the same 29 years categorized by health care service as a percentage of overall costs. The health care services that incurred the most costs over the last 29 years were in personal health, again the largest cost regions being the Southeast and the Mideast, followed by all other regions. Personal health care costs were followed by hospital care in the Far West. Again, most of the cost increases as a percentage of total cost were driven by personal health care in all United States regions followed by hospital care in the Far West.

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The above bar chart shows the minimum and maximum costs incurred by each type of healthcare service over the last three decades. This shows that personal health care had the steepest cost increase followed by hospital care and then physician and clinical services. It should also be noted that prescription drug costs have increased as well ranking fourth on this list of maximum health care expenditures.

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The above line graph shows both the United States aggregate cost of all health care services combined from 1980 to 2009 and the linear slope of that line. What the slope tells us is that the increase total increase in Medicare expenditures from 1980 to 2009 is almost 45%. If you follow the linear slope out for several more years beyond the plotted line chart the costs incurred become unsustainable. Medicare cannot have compounded cost increases like this for any sustained amount of time and still maintain its capacity to serve the populace as public health insurance.

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The above line graph only shows the regional aggregate costs for personal health care, hospital care and prescription drugs for the last 29 years. This chart shows that for all three health care services Medicare costs were the highest in the Mideast, the Southeast and the Far west, while New England and the Rocky Mountains had the lowest overall costs for all three services.

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Finally, this line chart shows the total Medicare health care cost increases for the last three decades broken down by the specific type of service. This chart shows personal health care services made up the majority of health expenditures for all years surveyed while hospital care was second. Physician and clinical services, while only a small factor in the overall Medicare costs incurred in 1980, increased to 500 million in 2009. Also, notice that prescription drug costs in 2009 were roughly 250 million dollars while three decades earlier it only cost Medicare 13 million dollars.

Above all, these charts show that Medicare cannot sustain its current level of growth, but cutting Medicare reimbursements may not be the answer either. If Congress cuts Medicare, reimbursements the states that will be most affected will be the Sunbelt states and their citizens. If the Mideast, Southeast and Midwest regions will be most affected by cuts in Medicare what will the hospitals and doctors in those regions need to do to in order stretch their services to meet the needs of the communities around them? Since it is easier to cut Medicare than for the citizens and doctors effected by those cuts to move to another state will they just have to make due with much less health care? These are not easy questions to ask or answer, but at least we know where the money is going and how we are using it.

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