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A nugget of good Medicare news

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Mark Wilson Getty Images Health and Human Services Secretary Kathleen Sebelius. The Medicare trustees’ report had the potential to be ugly. The economic downturn has cut into the payroll tax revenue that finances hospital insurance. At the same time, Medicare was absorbing more enrollees as baby boomers aged into the program.

Yet despite those deteriorating conditions, the Medicare trustees stuck with the fiscal predictions they made last year: The Medicare trust fund will be able to cover its bills through 2024. That stability doesn’t owe itself to Washington or any policy that Congress passed. Instead, once you dig into the numbers, the most plausible explanation is a pretty encouraging one: Our health-care system is getting better at delivering the same medicine more efficiently.

One key indicator on that front is the federal government’s spending on Medicare hospital visits last year, which was 2.3 percent less than expected, according to figures provided by senior administration officials. Seniors made fewer trips to the hospital and, when they did, the necessary treatment was less intense than years past.

That’s a departure from the normal trend. In recent years, the average “case mix,” a metric Medicare uses to measure the intensity of care required by a hospital visit, was ticking upward by 1 percent annually. Last year, that figure was flat.

The White House is not completely sure why seniors’ care is getting less intense. But its best guess is that our health-care system is getting better, with some traditionally complex cases being treated in outpatient settings instead of hospitals.

“What we tend to see is some of the simpler cases that used to require hospitalization being handled in doctors’ offices,” said one senior government official, briefing reporters on the report on condition of anonymity.

This could indicate that some costs are simply being shifted. Medical costs covered by Medicare’s hospital insurance, Part A, may be getting shifted to the part of the program that covers doctor visits, Part B. But even so, the presumption is that a case treated by a doctor will be less costly than one handled by a hospital, where overnight stays and intensive medical services can quickly add up.

Since 2011 was the first year to see intensity of health services slow, there is a chance that this could be a blip in the statistics. Next year’s report will probably provide a better sense of whether this is the start of a promising trend. And even if it is, there’s still pretty widespread concern about Medicare’s financial future.

As Bob Reischauer, one of Medicare’s public trustees, told reporters this afternoon, “even if we make a unified and concerted effort [to control costs], further major legislative efforts above the Affordable Care Act will be required to put Medicare on a stable trajectory.”

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