Bloomberg View, August 6, 2014

The good news about health-care spending continues. In the first nine months of this fiscal year, Medicare spending increased only 1.2 percent in nominal terms, and for 2014, it's now projected to be $1,000 lower per beneficiary than the Congressional Budget Office said it would be as recently as 2010. Even the Medicare trustees are starting to recognize that something big may be happening. In evaluating the recent deceleration, however, a crucial question remains: Can slower cost growth continue without harming the quality of outcomes? Jack Wennberg, emeritus professor of the Dartmouth Institute for Health Policy and Clinical Practice, has spent his career suggesting the answer is yes, because costs vary substantially across the U.S. in ways not correlated with quality.

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