For the first time since Medicare's creation, the cost to operate the program declined -- 1 percent from fiscal 1998 to 1999. Medicare spending totaled $212 billion in the Treasury Department's preliminary fiscal '99 estimates -- down from $213.6 billion in 1998.
The decrease added fuel to the fire for health plans, which have been sweating under spending restrictions imposed by the Balanced Budget Act. In late November, Congress and the White House agreed to restore about $12 billion in funding that the law had taken away. Congress's intent in passing the Balanced Budget Act was, in part, to slow the growth of the entitlement program -- not to reverse outlays.
The government credits the decrease to relatively low medical inflation, better fraud-and-abuse enforcement, and the Balanced Budget Act. Medicare's absence of drug coverage shields it from some cost pressures private insurers face.
Medicare spending rose about 10 percent a year for most of the 1990s, slowing to 1.5 percent from 1997 to 1998.