Skyrocketing Medicare Costs Will Bankrupt Us All! (Well, Maybe Not.)

Medicare is a huge driver of the federal debt and is looking worse and worse into the future, where it will swallow up the federal budget completely -- right?

Not so much.

For one thing, we all know that the overhead costs of Medicare are much less than the costs of the private system, which has profit margin, advertising expenses and duplicative bureaucratic costs. But here's more.

Twice a year Standard & Poor's does an in-depth study of health care costs. Click here for an article at businessinsider.com by Peter Orszag, former budget director, entitled Peter Orszag's Chart Of The Year Could Change Everything You Think About Healthcare And The Federal Budget.

Click on the graph to enlarge. It shows year-over-year costs of medical care from January '05 to January '013, and it's an eye-opener. The Professional Services Index, Hospital Index, and Commercial Index are all substantially higher than the Medicare Index -- and the trend is accelerating dramatically.

Says Orszag: “This graph from S&P illustrates two key facts: health-care costs have decelerated over the past few years, and Medicare costs have decelerated more than other health costs ... If this slower growth continues, the impact on our long-term fiscal gap will be much more meaningful than any plausible outcome of the fiscal cliff negotiations.”