The Two Trillion Dollar Health Care Bill

The nation's health care bill for 2006 has just been released in the current issue of Health Affairs. While the rate of growth has slowed the total still comes to a record high of $2.1 trillion dollars!

According to analysts, medical expenditures increased 6.7% in 2006 -- slightly higher than the 6.5% increase in 2005 and double the rate of inflation. The increase in health care spending has been as much as four times the inflation rate in recent years.

Prescription drug sales climbed more than average, jumping $16 billion in 2006, 8.5% higher than in 2005. Approximately half of that increase is due to the Medicare Part D prescription drug plan, which covers many people who had no prior prescription coverage.

NPR's Joanne Silberner addresses the ramifications in her report on Morning Edition today (which you can listen to online):

Health care consultant Bob Lasziewski says it's like a ship sinking at a reduced rate from how it was sinking before. "Health care is still increasing at twice the rate of inflation," he says. "Five years ago, it was four times the rate of inflation."

But twice the rate of inflation is still unsustainable, he says, especially given what he sees for the future: doctors and hospitals joining together to resist insurers' cost cutting, and baby boomers continuing to age.

Paul Ginsburg, president of the Center for Studying Health Systems Change, warns that if an economic downturn occurs the cost of health care will take an even larger portion of paychecks as wages decline. In addition he sees the national obesity epidemic and changes in the health care marketplace as worrisome issues that could exacerbate the situation further.

The increase in prescription drug spending was part of an overall increase of $62 billion in Medicare expenditures, which topped $400 billion in 2006, up a staggering 18.7% from 2005. Steven Reinberg of U.S. News and World Report examines the situation:

Dr. Sidney M. Wolfe, director of the Health Research Group of Public Citizen, said he thinks the significant increase in expenditures in the Medicare drug program was due to the law that prohibits the government from negotiating prices with the drug companies, as well as a great deal of waste in administering the program.

"If you have a segment of health care completely out of control as in prescription drug prices for Medicare -- it's a strong argument why there should have been price controls and negotiated prices," Wolfe said.

In 2006, the U.S. population reached 300 million people. With medical spending at $2.1 trillion, that's $7000 for every man, woman, child, and undocumented worker in the country.

The burden of over 50 million uninsured Americans is distributed largely to insured Americans through higher insurance bills, higher medical bills, and higher taxes. When the cost of the uninsured is added, the average cost for insured Americans is $8500. Medical spending per insured American now averages $25,000 a year for a family of three. Clearly something needs to be done to restrain the growth in those numbers and/or get better care for such substantial outlays.

SOURCE: "Nation's Health Care Bill Hits All-Time High" 01/08/08
SOURCE: "Medicare Drug Plan Fuels Health-Care Spending: But Medicaid spending slowed for first time since its inception in 1965 " 01/08/08
SOURCE: "National Health Spending In 2006: A Year Of Change For Prescription Drugs " Jan/Feb Issue, 2008
photo courtesy of AMagill, used under this Creative Commons license