We Were Bending the Cost Curve. Then We Looked Away.
We Were Bending the Cost Curve. Then We Looked Away.
There’s a story we don’t tell very often about Medicare and Medicaid. Mostly because it complicates the talking points on both sides.
For a stretch of time, roughly the early to mid-2010s, the largest public health insurance programs in the United States were doing something unexpected: they were stabilizing. Not “solved.” Not cheap. But no longer spiraling in the way everyone had been trained to assume was inevitable.
And then, quietly, the trajectory changed.
What “breaking even” actually meant
Let’s be precise, because this is where the conversation usually goes off the rails.
Medicare and Medicaid were not literally breaking even in an accounting sense. They are entitlement programs, not startups. What was happening was more interesting and more threatening to received wisdom:
- Per-beneficiary cost growth slowed markedly, especially in Medicare
- Spending growth began tracking closer to, and in some periods below, GDP growth
- Long-term projections from CBO and CMS briefly looked… manageable
- Medicaid expansion states often saw costs come in below forecasts, with offsets in uncompensated care and state budgets
In other words, the cost curve was bending. Not collapsing. Bending.
That matters, because for decades the dominant narrative had been that public health programs were inherently uncontrollable. That demographics plus technology plus moral hazard equaled fiscal doom. Full stop.
The data interrupted that story.
Why costs slowed
This wasn’t magic, and it wasn’t just one thing.
A few forces lined up at the same time:
- Post–Great Recession dynamics dampened utilization and wage growth
- Payment and delivery reforms actually started to bite, especially in Medicare
- Generic drug penetration accelerated
- Provider consolidation hadn’t yet fully translated into pricing power
- Medicare Advantage and Stars created real operational incentives, not just slogans
- Medicaid expansion brought healthier populations into managed care environments with better baseline access
None of this meant the system was suddenly elegant or fair. It meant it was being managed.
And that was the uncomfortable part.
The turn
Then the trajectory shifted.
Some of this was inevitable. Some of it was self-inflicted.
COVID blew a hole through every cost model, public and private. Deferred care snapped back. Emergency spending normalized at a higher level. Workforce costs rose permanently. Drug pricing pressure intensified.
But there were also quieter changes:
- The political appetite for sustained cost management evaporated
- Risk adjustment became more aggressive than anyone wanted to admit
- Delivery reform lost its teeth and became branding
- We treated a temporary slowdown as proof the problem was “handled,” instead of evidence that stewardship mattered
The lesson should have been: this only works if you keep doing the work.
Instead, the takeaway became: see, it was never really under control.
Why this matters now
If you believe Medicare and Medicaid are fundamentally ungovernable, then today’s cost growth confirms your priors and absolves you of responsibility. Nothing to be done but cut benefits, shift risk, or wring hands.
If you accept the historical record honestly, something else becomes clear:
Public programs can be managed. But they require sustained attention, boring discipline, and political tolerance for saying no.
We briefly proved that cost growth is not purely destiny. Then we stopped acting like that proof mattered.
That’s the real tragedy. Not that costs are rising again, but that we forgot they didn’t have to.
And if we’re serious about the next decade of Medicare and Medicaid, that’s the part worth remembering.