One way predictions go wrong

One useful reason for medium-term predictions missing their goals comes from Ezra Klein’s reflection on Medicare costs:

Why are Medicare costs growing faster than Congress predicted they would back in the late 1990s? What created the gap between how much we budget for Medicare and how much we spend on the program?

It mostly comes down to a handful of medical specialities that have grown much faster than expected…

Radiation oncology, for example, overshot what we expected it to cost by just about 300 percent. General surgery, however, has actually cost much lower than expected while opthalmology is just about on target.

So a useful tip: break down trendlines into multiple stands, then test them for individual variations.

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