Saturday, February 23, 2008

Nation's Health Care Bill Hits All-Time High

" by Joanne Silberner"

"For the first time ever, the total spent on health care topped $2 trillion in 2006, according to a government analysis. The details are in the current issue of the journal Health Affairs.
Fortunately, the rate of growth is slowing down.

But that news may not be as good as it sounds.
The analysis was headed by Aaron Catlin, an economist with the Department of Health and Human Services.

"Health spending in the U.S. accelerated slightly," he says. "It picked up in growth to 6.7 percent in 2006. That's up two-tenths of a percentage point from 2005."
That's not much of an increase in growth if you're an economist, especially when you consider it's been twice that rate in previous years.

But in one area, there was a pretty dramatic increase. Spending on prescription drugs went up 8.5 percent. That's $16 billion.

"We attribute about 50 percent of the increase in spending to increase in use," Catlin says. "Some of that increased use came from beneficiaries under Part D."
The Part D beneficiaries are people who have bought prescription drug insurance through Medicare. Some of them didn't have drug insurance until they purchased it through Medicare and were unable to afford certain prescription medications before the plan went into effect.

Where is the health care economy going? The government won't come out with its projections for the next decade until the end of February. But some other health experts say there are big problems ahead: Health care inflation is far from solved.

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 sees other problems. He's president of the Center for Studying Health Systems Change, which has been studying health care costs in 25 communities around the country. For one thing, Ginsburg says, if the economy hits a downturn and wages slump, health care costs will take a bigger bite out of every paycheck.

Plus he expects that the nation's obesity epidemic is going to drive up health costs. And in travelling around the country he's seen marketplace changes that worry him.
"What we've seen is that the hospitals and physicians have identified which services are the most profitable," he says. "So hospitals identify cardiac procedures and physicians have identified imaging. So what's profitable, they're building."

When a new hospital wing gets built, or doctors buy fancy new machines, those new buildings and machines are going to be used. And when they're used, somebody has to pay for them."

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