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Medicare Spending Up 8.4 Percent

August 14, 2001

WASHINGTON (AP) _ Medicare spending has risen 8.4 percent so far this budget year, according to congressional budget analysts.

The reason: higher payments since spring to doctors and hospitals, according to the Congressional Budget Office’s budget review of Medicare, the federal insurer of the elderly and disabled.

The review shows Medicare spent $197 billion in the first 10 months of fiscal 2001 _ October 2000 to July of this year. During the same months in fiscal 2000, Medicare spent $181 billion.

Budget analysts are expecting Medicare spending to rise by 10 percent for the entire year. That increase, calculated when fiscal 2001 ends this fall, will be well above the 3 percent rise in Medicare last year.

In recent years, there was little increase in Medicare’s year-to-year spending. That was mainly because Congress, to save money, had trimmed payments to hospitals, doctors and others who serve the program’s nearly 40 million patients. But in 1999 and 2000, federal lawmakers approved givebacks that raised such payments.

The increases come as Congress is grappling with how to keep the program financially healthy as well as create a new prescription drug benefit. This fall Congress will have to decide whether it wants to approve more givebacks _ and how it will spend $300 billion set aside in the budget to overhaul Medicare and add drug coverage. That $300 billion could be in danger, however, if new budget projections expected later this month show that federal surpluses are not as high as previously expected.

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