Medicare and Prescription Drug Costs-Medicare and Medicaid Spending-Part IIa of a VII Part Series


(5/7/20)-Americans spent about $2.2 trillion in 2009 on medical care, as that recession was ending, according to the Centers for Medicare and Medicaid Services (CMS).

Health spending reached 17.7% of gross domestic product (GDP) in 2018, as noted in our item dated 12/9/19 below. With elective surgeries for procedures such as hip or knee replacements having been postponed in most major city hospitals in this country, but the costs associated with the coronavirus having exploded in the latter part of February through the rest of the year, what will its costs come to for this year?

With the effect of layoffs and closures through 2020, how will we deal with this issue and the recession or depression that it will cause?

(12/9/19)- A new report from the Department of Health and Human Services (HHS) showed that health spending in the U.S. rose by 4.6% to $3.6 trillion in 2018, accounting for 17.7% of the economy, compared to a growth rate of 4.2% in 2017.

The report also found that overall growth in household health care spending, including out-of-pocket expenses, premium payments and contributions to Medicare through payroll taxes, remained flat, at 4.4%.

The 2018 estimate of $3.6 trillion comes to more than $11,000 for every person, with 33 percent going to hospitals, 20 percent to doctors and clinical services and 9 percent to retail prescription drugs.

Prices of prescription drugs bought at a pharmacy actually fell one percent in 2018 for the first time since 1973, according to some economists from the Centers for Medicare and Medicaid Services, in a telephone interview briefing about the report.

There was a slight drop in the number of people with employer-sponsored insurance and slower growth in Medicaid enrollment, but Medicare enrollment remained the same.

Spending for people with private insurance was $6,199 a person, an increase of 6.7% over 2017, the highest per-person growth rate since 2014.. That number does not include out-of-pocket expenses.

(9/27/19)- the average total cost of employer provided health coverage rose 5% for a plan in 2019, according to the yearly poll of employers by the non-profit Kaiser Family foundation. Employers, on average bore 71% of the cost and the employees the other 29%.

Employees costs for the average amount of the annual premiums was $6,015, or up 8% from the prior year. The average deductible for single coverage was $1,655 in 2019.

The average total premium cost for individual employers was $7,188 in the 2019 survey, which was up 4% from 2018.

(8/1/19)- Health-care spending on New Yorkers who get their insurance through work rose to $6,335 per person in 2017 from $4,982 in 2013 according to data gathered by the New York State Health Foundation and the research nonprofit Health Care Cost Institute.

Nationally, per person spending was $5,641 in 2017, up from $4,834 in 2013.

The average annual rate of growth per person from 2013 to 2017 was 6.2% in New York, compared with 3.95 nationally. The data for the report was gathered from about 2.1 million people under the age of 65 covered by group insurance through an employer.Nationally, per person spending was $5,641 in 2017, up from $4,834 in 2013.

The annual average rate of growth per person spending from 2013 to 2017 was 6.2% in New York, compared with 3.9% nationally.

Care Cost Institute.

 Nationally, per person spending was $5,641 in 2017, up from $4,834 in 2013.




The annual average rate of growth per person spending from 2013 to 2017 was 6.2% in New York, compared with 3.9% nationally.

(7/3/19)- 20 pharmaceutical companies increased the list price of over 40 prescription drugs an average of 13.1%, according to Rx Savings Solutions, which sells software to help employers and health plans chose the least expensive medications. Last year, 16 companies increased the list price of their drugs by an average of 7.8% during this same period.

During the first quarter this year, the list price for U. S. branded drugs increased 3.3%, compared to 6.3% last year, according to SSR Health LLC, a pharmaceutical analysis firm.

(6/1/17)- An analysis of government data by the Wall Street Journal concluded that the median out of pocket cost for drugs purchased through Part D of Medicare was $117 in 2015, in inflation adjusted dollars, up from $79 in 2011.

The analysis excluded low income individuals whose co-pays were paid for primarily by the government. There were 220 drugs in 2015 that had annual out-of-pocket costs of $1,000 or more, up from 118 drugs in 2011

(2/17/17)- Health-care spending increased 4.8% in 2016, reaching about $3.4 trillion in total, according to a report from the Centers for Medicare and Medicaid Services (CMS). This was down from the 5.8% level, as we pointed out in our item dated 12/5/16 below. The report was published in a recent edition of Health Affairs.

Health-care spending accounted for 17.8% of the gross domestic product (GDP) in 2015 and is expected to reach 19.9% by 2025.

Prescription drug spending grew by 5% in 2016, compared with 9% in 2015, with a large part of the decrease attributed to the drop in the cost for the hepatitis drug.

(12/5/16)- National health spending grew at a rate of 5.8% in 2015, which is at a slightly higher rate than the Centers for Medicare and Medicaid Services (CMS) had projected in June. Health spending accounted for 17.8% of the national gross domestic product in 2015, up from 17.4% in 2014.

These findings were published in a recent edition of the journal Health Affairs. Spending on physicians and clinical services grew at a rate of 6.3%, which is in far excess of the rate of inflation at under 2%.

With the premiums for health insurance increasing in the marketplace for coverage under the Affordable Care Act, these numbers are expected to grow at an even greater percentage than the increase in 2015.

(11/16/16)- Medicare recently released updated figure to its online database at “Medicare Drug Spending Dashboard” that displays the rising costs for both individual and cumulative totals for both branded and generic drugs to the agency.

Total spending for Medicare for drugs rose 26% to $1.8 billion. Many of the drugs with the greatest price increases were generic drugs. The site was launched in December of last year, and it will be periodically updated.

The costliest drug to Medicare last year was the hepatitis C medication Harvoni, made by Gilead Sciences Inc., which cost $7.03 in total spending, followed by Sanofi SA’s diabetes drug Lantus, which cost $4.4 billion to the agency.

(8/27/16)- Health-care spending reached 18.2% of the gross domestic product (GDP) as of June, up from 13.3% in 2000, according to the-Altarum Institute, a health research firm.

A study from the Brookings Institute concluded that households now devote the largest share of their spending to health-care, 8.9%, a rise of over 3% from 1984 to 2014.

Both presidential candidates are talking about reducing medical expenses, but that certainly won’t be the case when the new premiums for health-insurance premiums will be announced over the coming weeks for those enrolling in the marketplace beginning in November for insurance under the Affordable Care Act.

(7/19/16)- Actuaries at the Centers for Medicare and Medicaid Services (CMS) estimated in their latest report that health care spending grew at a 5.5% pace in 2015, to a total of $3.2 trillion, compared to a 5.3%rise in 2014. Their report, was published in a recent edition of the journal Health Affairs

The report went om to estimate that health care spending will dip to 4.8% in 2016. For the five years from 2009 through 2013 that spending stayed lower than 4% for those consecutive years.

The actuaries also predicted a continued decline in the percentage of uninsured from 11% in 2014 to 8% by 2025. That decline is largely attributable to the expanded Medicaid programs adopted in at last count by 38 states.

National spending will average over $10,000 this year, according to Obama officials. Medicare spent about $12,000 per beneficiary in 2015.

Sean P. Kagan, an economist at the CMS was the lead author of the report

(3/11/16)- A recent edition of the Wall Street Journal contained a chart that showed “the five drugs with the highest total expenditures under the Medicare program for medications given in doctors offices and outpatient settings.” They are

·         Rituximab/Rituxan for rheumatoid arthritis and cancer, with total Medicare payments in 2015 of $1.51 billion

·         Ranibizumab/Lucentis for macular degeneration, with total Medicare payments in 2015 of $1.37 billion

·         Infiximab/Remicade for rheumatoid arthritis with total Medicare payments in 2015 of $1.11 billion

·         Pegfilgrastim/Neulasta for cancer with total Medicare payments in 2015 of $1.10 billion

·         Afibercept?Eyea for macular degeneration with total Medicare payments in 2015 of $1.09 billion.

(12/27/15)- The Centers for Medicare and Medicaid Services (CMS) identified at least 5 drugs that had increases of 100% in cost-per-unit from 2013 to 2014, which were covered under Part D of Medicare. Vimova, a pain-reliever saw a 500% increase after Horizon Pharma PLC purchased rights to the drug from AstraZeneca.

In addition to Vimova, other drugs with big price increases in cost-per-unit included Captopril and Digoxin, both used for cardiovascular conditions.

The 2014 drug price information was part of a new online database, the “Medicare Drug Spending Dashboard” detailing 80 drugs that ranked the highest by total Medicare spending per member, or by the percentage increase. These drugs accounted for 33% of all Medicare part D spending, and 71% of all spending on prescriptions by Medicare Part B, which covers drugs administered in a doctor’s office or outpatient clinic.

Medicare spending on prescription drugs rose 16.9% in 2014, versus 9.9% in 2013, according to the CMS.

About 540 drugs covered by Medicare Part D had increases in cost-per-unit of at least 25% during 2014, according to the CMS.

Medicare Part B had 96 drugs with increases in cost-per-unit of at least 10% in 2014.

(12/4/15)- Spending on all health care increased by 5.3% in 2014, according to actuaries at the Centers for Medicare and Medicaid Services. That compares with the 2.9% growth in 2013, which was the lowest rate since the government began tracking that data 55 years ago..

The report was published in a recent edition of the journal Health Affairs. For the prior 5 years, average spending growth was less than 4%.

Enrollment in Medicaid grew by 7.7 million last year, largely because of expanded Medicaid programs adopted by some states under the terms of the Affordable Care Act. Federal health-care expenditures grew 11.7%, or 8.2 percentage points faster than in 2013.

(6/14/15)- Spending on health care in the U.S. fell 0.4% in the first quarter of this year, compared to a 4.2% gain in the prior period, according to the latest government statistics. The U.S. economy contracted by 0.7% in the first three months of the year, but this data is expected to be revised upward in the coming months

Although spending on health care and social assistance declined, outlays at hospitals rose 2.5% in the first quarter compared to a 4.3% pace in the prior period.

Over the past year health-care spending has risen at an unadjusted rate of 7.2%.

Drug spending grew by 13.8% for Medicare plans in 2014, over 2013, while it rose 13.1% for commercial plans, and 10.29% for Medicaid plans, according to the latest annual survey from Express Script Holdings Co., the largest prescription benefits manager with 85 million participants.

(9/8/14)- Medicare will spend about $11,200 on average for every person enrolled in the program, with that cost falling to $11,000 by 2017, according to the latest estimate from the Congressional Budget Office (CBO). The CBO estimate called for that number to stay below $11,000 until 2020.

This is the first time since the late 1990s when Congress made some cuts in Medicare spending that the growth did not continue from year to year. The drop in spending went on for three years back then, but this fall is expected to occur over the longest period of time in Medicare history.

The two main factors behind this startling drop are the “young baby boomers” who are therefore healthier, who are now entering the system, and secondly, Medicare patients have been using fewer expensive medical services and the increased usage of generic drugs instead of brand name medications.

Reductions in spending made in the last four years alone have resulted in a 10-year savings of more than $715 billion for Medicare. The CBO’s projection assumes that Congress will not raise doctors’ pay as it has done every year through the “doc fix”, but even if it does act, the trend would still continue next year.

(7/17/14)- The nonpartisan Congressional Budget Office (CBO) said in its annual 25-year forecast that federal spending on major health-care programs would amount to 8% of the gross-domestic product by 2039, one-tenth of a percentage point less than its previous projection

The CBO’s estimate for spending by Medicare, Medicaid and other health programs has been reduced by $1.23 trillion, since 2010, the year the Affordable Care Act was passed. By 2039, the savings would amount to $250 billion a year.

“Evidence suggests that hospitals and other providers may be able to achieve significant productivity gains or to restrain the growth of their costs in some other way,” according to the report.

(1/14)- A recent report issued by the Centers for Medicare and Medicaid Services indicated that health-care costs continued to grow slowly for the fourth year in a row. Health-care spending in 2012 increased by 3.7% over 2011 to $2.8 trillion, and that amounts is about 17.2% of the gross domestic spending, down from 17.3% in 2011. That comes to about $8,900 per person.

Spending on hospital care and home-health services grew the most, rising by 4.9% to $882 billion in 2012, versus the 3.5% increase in 2011. Drug costs grew only0.4%in 2012, versus the 2.5% the year before. Doctors’ services and outpatient clinics costs grew by 4.6%, to $565 billion in 2012. Prescription drug costs grew by only 0.04 to $263 billion, compared to the increase of 2.5% the year before.

(12/7/13)- The Congressional Budget Office now estimates that Medicare spending in 2020 will be $137 billion lower than it thought in 2010, a drop of 15%. Medicaid spending will be $85 billion or 16% lower. The CBO further estimates that private health insurance premiums are expected to be about 9% lower than it thought in 2010.

(11/21/13)- Researchers reporting in the Journal of the American Medical Association noted that 91% of the rise in U.S. health care spending was attributed to annual increases in the prices of drugs, devices and hospital care, not a growing population of elderly patients. The study also showed that chronic conditions in patients younger than 65 were responsible for two-thirds of total U.S. health care spending.

(10/17/13)-  New estimates from the Office of the Actuary at the Centers for Medicare and Medicaid Services project that aggregate health care spending in the United States will grow at an average annual rate of 5.8 percent for 2012-22, or 1.0 percentage point faster than the expected growth in the Gross Domestic Product.

(9/22/13)- According to data released by the Commerce Department, the cost for medical care in July rose just 1% from a year earlier. This has been the slowest annual rate of growth since the early 1960s. Health-care increases now trail overall inflation, which itself has been historically slow in recent years.

(7/16/13)- A report from the Kaiser Family Foundation estimated that 10,000 baby boomers turn 65 every day. Per capita health costs at that age and older are $9,744 a year, compared with $2,739 for those 25 to 44.

Spending on prescription drugs dropped 1% in 2012 to $325.8 billion, the first decline since 1957, according to IMS Institute for Healthcare Information

(2/13/13)- The latest projections from the Congressional Budget Office (CBO) estimated that spending on Medicare and Medicaid will be about $200 billion, or 15% less than it had projected three years ago. The latest data also shows that health care spending growth is at the lowest rate in decades for a fourth consecutive year.

From 2009 to 2011, total health spending grew at the lowest annual rate since the government began keeping such records 52 years ago. In fiscal year 2012, Medicare spending per beneficiary grew just 0.4%. Data from the CBO showed that Medicare spending grew just 4% in 2012

(9/28/12)-After several years of patients delaying or forgoing medical care, utilization of health insurance is increasing, data indicate. A report from an investment analyst showed physician visit volume in the second quarter of 2012 increased 4.8%, ending two years of mostly declining rates.

The trend continues wherein corporate America is giving lump sum payments to their retirees and having them enroll in Medicare while removing them from their benefits coverage under the companies health care insurance plans.

Medicare's financial problem will only grow worse as more of corporate America goes this route.

(7/10/12)- Medicare's net spending last year totaled $486 billion, which represents 13.5% of all federal spending, according to the Congressional Budget Office. The CBO estimated that Medicare spending would grow an average of 5.7% per year through 2022 and equal 16.2% of all federal expenditures by then.

In 2009, 6.6% if the people who received hospital care died. Those 1.6 million individuals accounted for 22.3% of total hospital spending, according to an analysis that was done by the Wall St. Journal.

In 2009, the top 10% of Medicare beneficiaries who received hospital care accounted for 64% of the program's spending.

(1/17/12)- As our item dated 8/1/11 below stated, health care spending rose only 3.9% in 2010, which breaks down to $8,402 per person, according to the Centers for Medicare and Medicaid Services. Health care spending rose 3.8% in 2009.

Medicare spending for older Americans and the disabled grew by 5% in 2010 from 2009, which was the smallest increase in a decade. The main reason for this smaller increase was a slowdown in spending for the Medicare Advantage program. Medicare spending had grown by over 7% in 2009 form 2008

Federal health spending grew to $743 billion in 2010, up from $530 billion in 2007.

The study for 2010 said that hospitals reported a decline in admissions and slower growth in emergency room visits and outpatient visits. Doctor's office visits also declined and spending for doctors' services grew just 1.8% to $416 billion in 2010

Growth in spending on private insurance slowed to 2.5%, as fewer people enrolled in plans or shifted to plans with cheaper premiums and/or higher out-of-pocket costs. Spending out-of-pocket increased by 1.8%

(8/1/11)- Spending by federal, state and local governments is expected to account for 49% of all health spending, of $2.28 trillion, in 2020, up from 45% in 2010 according to a report from the federal Centers for Medicare and Medicaid Services that was recently published in the journal Health Affairs.

Private businesses are expected to account for 18% of all health spending, or $820.5 billion, down from 20% in 2010.

The data from the report showed that national health spending grew 3.9% to a total of $2.6 trillion in 2010.

(4/5/11)- Drug manufacturers have price caps on the price that they can charge for their products being sold to medical facilities that provide safety-net health services, including Medicaid patients. These caps are set in agreements signed by the drug manufacturers and the federal government.

In a recent ruling from the Supreme Court in the case of Astra USA v. County of Santa Clara, the court concluded that the county can not bring the suit for overcharges, but rather that it is the responsibility of the U.S. Department of Health and Human Services to bring such a court action.

The defendants included AstraZeneca PLC, Sanofi-Aventis SA, Bayer AG, Takeda Pharmaceutical Co., Bristol-Myers Squibb Co., Merck & Co., Pfizer Inc., and GlaxoSmithKline PLC.

(1/10/11)- A report from the office of the actuary at the Centers for Medicare and Medicaid Services showed that total national health spending grew by 4% in 2009, the slowest rate of increase in 50 years. The nation spent $2.5 trillion on health care in 2009, for an average of $8,086 a person.

Medicare spending reached $502 billion in 2009 out of that $2.5 billion, according to the report. Medicare spending rose 7.9% in 2009, the same rate of increase as in 2008, while enrollment grew about 2%.

Medicare spending increased an average of 2.3% for each person in a private Medicare Advantage plan, and 6.9% for each person in the traditional program. It still is about 11% more expensive for the government for people in Medicare Advantage plans than it is to the government for people in the traditional program.

"Many consumers decreased their use of health care goods and services, partly because they had lost employer-based private health insurance coverage and partly because their household income had declined," said Anne B. Martin, an economist and principal author of the report that was recently published in the journal Health Affairs.

Offsetting the slowdown in private health spending was a rapid increase in Medicaid spending, partly as a result of an additional 3.5 million people joining that program in 2009.

"Federal Medicaid spending increased 22% in 2009, the highest rate of growth since 1991," said Ms. Martin said, while " state spending decreased 9.8%, the largest decline in the program's history."

Spending on health care by private insurance companies grew by 1.3% in 2009, with the number of people covered by private insurance declining by 3.2% or 6.3 million.

Retail prescription drug spending rose to about $250 billion in 2009. Out-of-pocket spending by consumers, including deductibles, co-payments and purchases of goods and services not covered by insurance totaled almost $300 billion according to the report.

The share of the economy devoted to health care rose 1% in 2009, the largest one-year increase in half-century of record keeping.

(9/20/10)- The number of Americans without health insurance rose by 4.4 million to 50.7 million last year, the largest annual jump since the government began collecting comparable data in 1987, according to figures from the U.S. Census Bureau.

The percentage of Americans covered by private insurance in 2009, 63.9%, was the lowest since 1987,while the percentage of people covered by government programs, 30.6%, was the highest. The number of American with some form of health insurance dropped last year for the first time since 1987 to 253.6 million in 209 from 255.1 million in 2008.

The 50.7 million Americans who are uninsured is 16.7% of the population. The number of Americans with employer-sponsored coverage dropped by 6.6 million to 169.7 million last year from 176.3 million in 2008- the largest one time drop since 1987.

The total number of Americans with private insurance fell to 194.5 million from 201 million. The number of Americans covered by Medicaid increased to 47.8 million in 2009 from 42.6 million in 2008, and is now the largest percentage of the population on the program since 1987.

(3/23/10)- According to the latest figures from the non-partisan Congressional Budget Office (CBO), the latest version of the Democrat's health-care overhaul bill would help to reduce the deficit by $143 billion over the next decade. On the other hand the CBO estimated that the cost of the bill would come to $940 billion over the next decade.

Included in the CBO figures are both the cost of the Senate bill passed on Christmas eve last year, and also the package of changes in the House version of the bill that was released on Thursday.

The cost included $466 billion to give tax credits to help lower earners to buy insurance, $434 billion to expand the Medicaid insurance program, and $40 billion in tax credits to help small businesses offer coverage.

The CBO estimated that the Senate bill alone would reduce the federal budget deficit by $118 billion over a decade compared with the current law. New taxes and spending cuts will add an additional $25 billion in deficit reduction.

The House change package expands Medicare taxes, so that individuals earning more than $200,000 a year and families that earn more than $250,000 a year will pay a 3.8% Medicare tax on unearned income such as dividends and interest. The latest package also includes $116 billion in cuts over 10 years in subsidies to Medicare Advantage plans.

(2/7/10)- In a recent report from the Centers for Medicare and Medicaid Services that was published in the journal Health Affairs it was estimated that public spending for health care would exceed private spending for the first time in our history in 2011.

Public funds accounted for 47% of the $2.34 trillion of national health spending in 2008, the latest year for which that spending is available.

This estimate takes into account that Medicare will not cut Medicare payments to physicians as called for under the current legal requirements.

The paper estimated that total U.S. health spending hit $2.5 trillion in 2009, up 5.7% from 2008. That figure represents 17.3% of gross domestic product, up from 16.2% in 2008.

Growth of Medicaid accounts for much of the shift toward publicly funded health care. The paper predicted enrollment in Medicaid would rise 5.6% this year and spending would rise 8.9%.

Government spending on health care in the United States accounted for 8.4% of the GDP in 2009.

Christopher J. Truffer, an actuary at the Centers for Medicare and Medicaid Services was the main author of the report.

These figures show that whether you are a Republican or a Democrat, were in favor or against the recent health-care reform bill recently argued in the Senate, the growing cost for health care in this country will overwhelm us unless something is done to rein in these costs.

(1/17/10)- Total Medicare spending grew 8.6% in 2008 to $469.2 billion, up from a rate of 7.1% for 2007. Federal spending for health-care services and supplies rose by 10.4% in 2008,while spending by private businesses increased by 1.2% according to the results of a study from the Department of Health and Human Services.

Micah Hartman, a government statistician who led the work on the study stated that government spending on health care was equivalent to 36% of federal receipts, up from 28% in 2007.

In 2008, federal Medicaid spending increased 8.4%, while state spending decreased by 0.1 percent, the first decline in these expenditures in program history, according to Mr. Hartman

Spending on Medicare Advantage plans grew by 21% in 2008, to $108 billion. According to the independent figures gathered by MedPac, governmental spending for Medicare Advantage plans costs the government 12% more for Medicare Advantage plans then it spends on regular Medicare plans.

Medicare spending increased 8.6% in 2008 form 2007, to a total of $469 billion, according to the report.

(10/23/09)- It seems as if each health-care benefits evaluating firm comes up with different numbers in regards to health-care costs. Hewitt Associates concluded that employees will pay $4,023 in premiums and out-of-pocket charges next year.

In dollar terms, it is the biggest boost since the firm started keeping track of the data a decade ago.

(9/24/09)- The month of October will mean that another yearly painful period of making "benefits menu choices" is in store for many employees.

The recently released Kaiser Family Foundation's annual review of health costs found that 21% of about 3,200 companies surveyed nationally reduced employee benefits or increased cost sharing, and 15% increased the workers share of the costs.

The Kaiser study found that some 22% of workers now pay deductibles of more than $1,000, up from 10% in 2006.

Premiums for employer-sponsored health insurance rose 5% in 2009 to $13,375 for a family, more than double for the $5,791 of 10 years ago. Employees are paying an average of $3,515 a year in premiums, while their own out-of-pocket contributions have increased because of higher annual deductibles and co-payments.

It reinforced the results of a similar study by Mercer LLC, a human resource data firm, that found that 63% of employers will ask their employees to bear a greater share of their benefits costs, and 18% of them intend to eliminate the more generous plans.

(9/17/09)- A new study concluded that Medicare will not save very much under the policy that it adopted last year of refusing to pay extra costs to treat hospital-acquired infections and injuries such as bedsores.

Americans acquired about 1.7 million infections while in the hospital, and 99,000 of them die from these infections according to the federal Centers for Disease Control and Prevention.

Medicare stopped paying the extra costs of treating 10 hospital injuries and infections beginning n October 2008. The results of the study were published in a recent edition of the journal Health Affairs.

The study examined data for 767,995 Medicare beneficiaries discharged from hospitals in 2006, of which it found only 828 cases involved in these conditions, and only 26 would have been subject to the lower payment rates.

Andrew Blindman, a study author and professor of medicine and internist at the University of California at San Francisco stated: "Medicare seems to have a big bark, but the bite seems kind of limited in many ways."

(8/26/09)- The Centers for Medicare and Medicaid Services (CMS) provides health insurance to 98 million people, pays 1.2 billion claims a year and has an annual budget of more than $700 billion.

Medicare officials announced that 225 hospitals would divide $12 million in bonuses that they earned under a pilot pay-for-performance program to help prevent infections in pneumonia patients and cut death rates in heart-attack patients. Three poor under performing hospitals will be penalized under the program.

Premier Inc., a health-information company that is Medicare's contractor on the project reported that the recipient hospitals saw about 4,700 fewer deaths among heart attack patients, in the four years ended September 30,2007 than if they had not participated in the program. There were 30 quality measures taken by these hospitals in which they scored high enough levels to earn the bonuses.

As an example, Premier said, 92.6% of the pneumonia patients received antibiotics, flu vaccines or other recommended treatments to prevent acquiring other infections in the hospital, up from 69.3%.

(6/12/09)- Medical bills caused more than 60% of personal bankruptcies in the United States in 2007, according to a new study. This was true, even though over three-quarters of the people who filed for bankruptcy had health insurance at the beginning of their illness.

The study covered a random national examination of 2,314 bankruptcy filings in 2007, with the researchers personally interviewing 1,032 of them. The results of the study will be published in the August edition of the American Journal of Medicine.

According to Steffie Woolhandler, one of the study's authors and an associate professor of medicine at Harvard University, the factors that drove people to bankruptcy included large co-pays, high prescription drug costs and high deductibles.

The researchers determined that bankruptcy filings linked to health problems rose by 49.6% between 2001 and 2007.

(3/14/09)- Medicare covers nearly 45 million beneficiaries, including 38 million seniors and 7 million younger adults with permanent disabilities. The program is expected to cost the federal government approximately $477 billion in 2009, accounting for 13 percent of federal spending and 19 percent of total national health expenditures

(3/6/09)- According to the results of a study done by actuaries and economists at the Centers for Medicare and Medicaid Services, that was published in a recent edition of the journal Health Affairs, government spending on health care will increase by 7.4% to $1.191 trillion in 2009.

The country's health-care spending is expected to rise to $2.51 trillion in 2009, up by 5.5% from 2008, when expenditures grew by 6.1%. Private sector spending is expected to reach $1.319 trillion this year, up from 2008, when spending in this sector grew 5.4%. Consumer's spending are expected to grow 1.4% in 2009.

Federal and state governments are expected to spend $386 billion on Medicaid in 2009, an increase of 9.6% over 2008. The study did not include the effect of the $787 billion stimulus program which included an additional $87 billion for Medicaid programs

(2/19/09)- Spending on health care totaled $2.2 trillion, or 16% of the nation's gross domestic product in 2007, and the Congressional Budget Office estimates that, without any changes in federal law, it will rise to 25% of G.D.P. in 2025

(2/13/09)- The Centers for Medicare and Medicaid Services (CMS) has expanded to four, from one, the number of guides that can be used to determine and authorize coverage for a drug's use on a particular form of cancer. A judgment under any one of the guides that a drug is effective is sufficient for coverage, and the new guides deem more drugs effective for more cancers than the old guide did.

Last year Medicare spent over $3 billion on cancer drugs, and most private insurers follow Medicare's decisions on these matters.

In a 2007 study that was conducted by researchers at Tufts and Duke universities, the guide used in the old system supported only two of the 14 off-label uses of 6 cancer drugs. Now, however, all 14 can be found in at least one of the four guide books.

Francis Visco, president of the National Breast Cancer Coalition, a patient-advocacy group, said an independent government panel should decide coverage. " A lot of these decisions are being made by associations with conflicts."

One of the four designated guides, published by the National Comprehensive Cancer Network (NCCN), a group of hospitals, relies on panels of experts to review drugs, but many of those experts have financial ties to the drug companies. NCCN also received $230,000 in funding last year from a number of big drug companies.

The Tufts and Duke researchers commented that Drugdex, another one of the guides often had little support in the medical field.

(1/21/09)- Health care spending averaged $7,421 for each person in the United States in 2007, but its growth from 2006 was at the lowest percentage in nine years. Total health spending rose 6.1%, compared with the 6.7% increase in 2006. The report on government spending for health care was published in a recent edition of the journal Health Affairs.

Retail spending on prescription drugs rose 4.9% in 2007 to $227.5 billion compared to the 8.6% increase in 2006 and the 9.4% increase a year from 2001 to 2006. The main author of the report, Micah B. Hartman, a statistician at the CMS listed 3 reasons for the deceleration of drug spending.

Prescription drugs accounted for 10% of all health care spending in 2007, compared to 31% of the total for hospital care and 18% for physicians bills.

Out-of-pocket spending on health care increased 5.3% in 2007 to $286.6 billion. Federal, state and local governments paid for 46.2% of health-care spending in 2007, up from45.3% in 2004.

The drug benefit launched by the government in 2006 cost Medicare $40.5 billion in 2006, and $47.6 billion in 2007.

(10/31/08- With states confronting a weakening economy, enrollment in Medicaid began to rise last year with states expecting even larger increases for fiscal year 2009, according to a new 50-state survey released today by the Kaiser Family Foundation's Kaiser Commission on Medicaid and the Uninsured (KCMU).

With the increased enrollment, Medicaid spending is also rising more rapidly than in the recent past, raising the potential for program cutbacks as states confront the combined impact of more enrollees and fewer available resources.

(7/14/08)- From 2000 to 2007, 478,500 claims were filed with Medicare under the names of 16,500 to 18,2000 dead physicians according to investigators who reported this information to the Senate Homeland Security and Government Affairs committee. These scam artists received over $92.8 million in false payments from Medicare during this period of time.

Herb Kohn, the agency's deputy administrator, said Medicare would soon start receiving the Social Security Administration's Death Master File, and as of May, all claims have to be submitted under a new identification system. The agency has given out two million new numbers to physicians and other providers with the hope that this will help to end this problem.

Last month, the Government Accountability Office told the panel that 27,000 Medicare doctors, hospitals, hospices and nursing homes failed to pay more than $2 billion in federal taxes in 2006.

Senator Carl Levin (D., MICH.) chairs the panel and its ranking Republican is Senator Norm Coleman of Minnesota.

The federal and state governments are the largest third-party payers for nursing home care. Medicare spent $21 billion on nursing homes in 2007, up from $17.6 billion in 2005.

According to the CDC National Health Statistics Report dated June 19, 2008, #1, "In 2004-2006, the majority of persons under age 65 in the United States had private health insurance coverage (67.8%); a much smaller percentage were insured through Medicaid or SCHIP (13,2%), and 16.6% were uninsured." 

(4/18/08)- Total U.S. health-care spending rose to about $2.1 trillion in 2006 and hospital care accounted for about $648 billion, or 31% of the total according to federal figures. More than 90 million Americans have chronic illnesses like diabetes, cancer and heart disease, and 7 out of 10 die from chronic diseases. Most of Medicare's spending on such patients in the last two years of life is for care in hospitals.

An analysis of millions of Medicare records that were studied by researchers at Dartmouth College showed that the greatest percentage of the cost of the last two years of life for patients were incurred in the intensive care unit of the hospitals. It was however the number of visits paid by physicians in this unit, rather than the number of days of the stay that set the higher cost.

The data was compiled in The Dartmouth Atlas of Health Care. According to the figures, spending in the last two years of life ranged from an average of $93,842 for patients who received most of their care at the U.C.L.A Medical Center to $53,432 at the Mayo Clinic's main teaching hospital in Rochester, Minn.

Dr. John E. Wennberg of Dartmouth Medical School, the chief author of the study, said doctors and hospitals that provided more care, or more intensive care, did not necessarily achieve better results for patients.

The researchers analyzed data for more than 90 academic medical centers and focused on five ranked as the nation's best by U.S. New & World Reports

(1/17/08)- Medicare spending increased at its fastest rate in 25 years, but that number is quite deceiving since it included the cost for Part D drug spending for the first time. Total spending came to $7,026 a person in 2006 the latest year for which the data is available, up from $6,649 in 2005 according to a study from the Centers for Medicare and Medicaid Services.

Health care spending in 2006 exceeded $2.1 trillion, which is the highest level it has ever been above. Health care spending represented 16% of the gross domestic product. The results of the study were published in a recent issue of Health Affairs.

Spending on prescription drugs rose 8.5% in 2006, while generic drugs accounted for 63% of all drugs dispensed in the U.S. up from 56% in 2005. Managed care plan spending increased 48% in 2006, which was almost 2 1/2 times the spending in 2005. This growth represents a 25% increase in enrollment in this type of plan and increased payments to the insurers.

"The public share of the spending increased from 28% in 2005 to 34% in 2006, while the private share fell from 72% to 66% according to Aaron Catlin and his co-researchers at the Centers for Medicare and Medicaid Services.

Medicare spending increased to $401.3 billion in 2006 from $338 billion in 2005. Part D spending in 2006 came to $41 billion which was a much lower figure than analysts had initially estimated when the prescription drug law was passed in 2003.

Health spending by businesses grew 5.7% in 2006, to $496.8 billion, the slowest rate of increase since 1997. Retail spending for prescription drugs shot up by 8.5% in 2006 to $216.7 billion from 2005.

Spending for doctors' services grew 5.9% in 2006, to $447.6 billion, which was the slowest rate of growth since 1999. Spending on nursing homes grew at the slowest pace since 1999, rising 3.5% to $124.9 billion.

(11/3/07) The "Survey of Employer Benefits 2007" by the Kaiser Family Foundation and the Health Research & Educational Trust found that employer sponsored health insurance premiums increased 6.1% on average in 2007. Inflation increased 2.6% and workers earnings 3.7%. Interestingly, only 59% of firms with fewer than 200 workers offer health benefits, down from 68% in 2001. In these firms, 37% of the employees pay more than half the cost of family plan premiums and 45% of employers are weighing options that would increase the amount the employee has to pay for health insurance, while 42% are thinking of increasing employees' office-visit co-pays or coinsurance.

The majority of covered workers (57%) are enrolled in PPOs, while 21% are in a HMO. There has been a 1.1 million increase in enrollment in high-deductible plans in 2007, which now stand at about 3.8 million. Can families who do not have money in the bank carry such a deductible?

(9/27/07)- A new study, the results of which were published in the Web edition of the journal of Health Affairs, showed a huge difference in spending on health care among the states. The highest spending state with an average of nearly $6,700 was Massachusetts, with Utah averaging the lowest spending of less than $4,000l per capita.

Trailing Massachusetts, as the highest per capita spenders in 2004 were Maine, New York, Alaska and Connecticut. The lowest spending states were Utah, Arizona, Idaho, New Mexico and Nevada. Per capita spending in Utah was 59% of that in Massachusetts.

Anne B. Martin, an economist at the Centers for Medicare and Medicaid Services (CMS), who was the lead author of the report, said the reasons for the differences included the age and incomes of the population, the concentration of doctors in a state, the generosity of public programs, the extent of private health insurance coverage and the mix of services used by the state.

In some states with high levels of per capita health spending, the federal researchers said, people "receive more comprehensive employer-based health insurance benefit packages."

Experts said that higher per capita spending did not necessarily mean better care.

(9/15/07)- According to a recent survey, health-care premiums for employers and their workers continued to soar in 2007. The total annual cost for family coverage premiums came to $12,106 for the employer and the employee. The survey that was conducted by the Kaiser Family Foundation and the Health Research and Educational Trust, queried 3,078 employers, but the results were based on the 1,997 that responded to the full survey.

The average family premium rose 6.1% in 2007, with the employee now paying on average $3,281 a year for his/her family premium. This is just about double what the worker paid for this coverage in 2000. In 2006, the premium increase represented a 7.7% increase over 2005. This rate of increase continues to be far in excess of the rate of inflation.

Three in four covered employees are in drug plans, with average-out-of-pocket payments of $11 for generic drugs, $25 for prescription drugs in the formulary and $43 for brands not on the preferred list.

Ninety-nine percent of companies with more than 200 employees continue to offer some sort of health-care coverage, while only 59% of smaller businesses offer their employees health-care coverage. Many of the larger companies have cut back sharply on the health-care insurance coverage for new workers in comparison to what is offered to workers who have been with the company for longer periods of time.

(7/5/07)- Medicare and Medicaid payments for physician's services are projected to drop 9.9% beginning 11/1/07. This is unlikely to since many medical professionals feel they would not be adequately compensated for their work. There has never been a year over year cut in Medicare and Medicaid physician's services since the inception of these programs. In all prior years, Congress has always increased the payments for these services. There is no projection at this point as to approximately how much the increase will be.

Since the Medicare and Medicaid formula requires that these programs compensate for the lack of the cut, and in fact there will be an increase of costs, there will have to be an bigger increase of premiums to the beneficiaries in 2008 than in prior years.

(3/24/07)- The Centers for Medicare and Medicaid Services January 2007 report indicates that the overall health spending ($2 trillion in 2005) hit the lowest growth level since 1999. Health care spending grew 6.9% in 2005, 7.2% in 2004, 8.1% in 2003. However, the per capita spending for 2005-$6,697 per person- was up from $6,322 in 2004.

Medicare spent 9.5% more on physician services in 2005, a slight decline from 10.4% in 2004. The total spent was $421 billion, while hospital spending hit $611 billion.

California has 85,921active doctors, with New York State next with 64,118. Rounding out the top five are Texas with 44,014, Florida with 42,906 and Pennsylvania with 34,924. The state with the least amount of active doctors is Wyoming with 960, next is North Dakota with 1,441, follwed by Alaska with 1535, South Dakota with 1622 and Vermont with 1,846.

(3/1/07)- Hospital Costs- In these days of soaring health care costs, it behooves the consumer to know cost estimates for procedures in a hospital. One of the first states to move in that direction is New Hampshire. The New Hampshire Dept. of Insurance and Dept. of Health & Human Services have established a Web site, to bring transparency to health costs. Using claims data compiled from health plans and third-party administrators, the site offers information not only on medical procedure costs, but also data on how much the consumer would pay-out of pocket and how much would be covered by their insurance. It is important to note that the site information is limited to the most common hospital procedures. The site also doesn't list fees and out-of-pocket costs listed by individual physicians.

The concern is always about the quality of the data on the Web site. Statisticians who developed the site attempted to deal with this isue by including a filter that knocks out the highest and lowest 5% of claims for a particular procedure. The figures you see on the site represent the median price of a procedure, including physician billings, lab fees and other costs.

The question one would ask is whether consumers will use this information. A large majority of consumers rely on physician recommendations for hospital choice regardless of the price. Combining this information with hospital procedure ratings would make for a truly informed consumer in control of their medical treatment. It could eliminate some of the "cost shocks" one receives after the end of a procedure. Health plans must provide accurate information and insure transparency so that consumers get the correct information. It will be up to the state organizations to provide oversight in this regard.

(2/25/07)- According to a newly released report from the Office of the Actuary at the federal Centers for Medicare and Medicaid Services the federal government will pick up about 50% of all health care costs within 10 years, from the 45% that it picks up now.

John Poisal, who wrote along with several of his colleagues wrote the report said, "We will continue to face tough questions about how we finance our health care bill," as out-of-pocket spending is expected to grow by 22% to $440.8 billion in 2016 from $250 billion last year.

Medicare spending grew to $418 billion in 2006 from $342 billion in 2005. The authors of the study concluded that by 2016, 32% of those eligible will be enrolled in Medicare Advantage plans, up from the 13.5% in 2005.

Federal and state spending on Medicaid last year was estimated at $313.5 billion, which was about the same amount it was in 2005 even though Medicare provides a drug benefit for low-income Medicaid enrollees.

In the first 7 months of 2006, prescriptions funded by Medicare drug plans accounted for nearly 9% of medicines bought in retail pharmacies, according to Verispan LLC, a Yardley, Pa. firm that collects data on health care spending.

The Medicare drug benefit increased the program's share of the nation's prescription drug spending to 22% last year from 2% in 2005.

The report went on to further conclude that spending on health care will consume 20% of the nation's gross domestic product, up from its current level of 16%

(2/10/07)- About one in every four Americans is covered by Medicare and Medicaid combined. Federal spending for the two programs totaled $554 billion in 2006,or about 21 % of all federal spending.

The total amount of dollars that is spent on Medicare and Medicaid exceeds the total amount of dollars that the federal government spends on Social Security. According to estimates from the CBO, spending on the two health programs are expected to grow at an average of over 7% a year in the next decade.

For comparative purposes, the Bush administration is seeking a record military budget of $622 billion for the fiscal 2008 year that begins on October 1, 2007. That sum includes more than $140 billion for war-related costs.

(1/31/07)- President George W. Bush is hoping to put some reins on the rising cost of Medicare. In doing so, and with other steps that he hopes to be able to take, the White House expects to show a balanced budget by 20012.

The Congressional Budget Office (CBO) estimates that the Medicare program cost about $374 billion in 2006. That represents about 14% of all federal spending. The CBO estimates that it will cost $851 billion by 2017.

(1/19/07)- A report that was issued by the Centers for Medicare and Medicaid Services showed that health-care spending in 2005 slowed for the third consecutive year. Aaron Catlin, an economist at the Department of Health and Human Services, wrote the report.

The study found that the U.S. spent $1,988 trillion or $6,697 per person, on health care in 2005, the latest year for which data are available. The government will likely release new data on the issue next month. The study results were published in the most recent edition of the journal Health Affairs.

The rise in health care spending of 6.9%, down from 7.2% in 2004 was the slowest growth rate since 1999. Households spent 6% of personal income on health care in 2005 compared to 5.4% in 2001.

Home-health care was, by far, the fastest-growing category of health spending. Spending on home-care rose 11%, to $485 billion in 2005, the third straight year of double-digit growth.

Federal and state governments footed 40% of the bill for health services and supplies. This represented a 7.8% increase in 2005 as compared to the 7% increase from the business side of the equation, and 6.2% rise from the individual household of things.

The increase cost for prescription drugs slowed to 5.8% in 2005, compared to the 8.6% increase in 2004 and a peak of 18.2% in 1999. Medicaid drug spending rose 2.8% in 2005 compared with an average annual increase of 15.4% for the program from 1999 to 2004

The rate of increase for hospitals and doctors grew to $249.4 billion in 2005 compared with $235.8 billion in 2004 One in five out-of-pocket dollars went to pay for prescription drugs. Hospitals accounted for 31% of all dollars spent on health care.

Drug manufactures increased prices for band-name prescription drugs an average of 6% in 2005. This of course does not take into account the fact that the percentage increase was much greater for the top 50 selling drugs than it was for the average.

One percent of the population accounted for nearly one-fourth of all health spending, and 5 % of Americans accounted for nearly one-half of all spending. 42 of the states showed slower growth in Medicaid drug spending in 2005 than in 2004.

(1/14/07)- The Medicare Payment Advisory Commission, or (MedPAC

), recommended that both inpatient and outpatient hospital base payment rates for 2008 be increased by 3.7% to cover rising labor and supply costs (the so-called market basket).

This meant that the full commission did not go along with its staff recommendation, which called for a decrease of 65 basis points for the market basket.

MedPac also recommended reducing Medicare indirect medical education reimbursement to teaching hospitals and redistributing the savings to all hospitals that perform well under a quality incentive program.

"Medicare Payment Advisory Commission (MedPAC) is an independent federal body established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program.

The Commission's statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.

The Commission's 17 members bring diverse expertise in the financing and delivery of health care services. Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time.

Appointments are staggered; the terms of five or six Commissioners expire each year. For more information on the commissioner appointment process, please click here. The Commission is supported by an executive director and a staff of analysts, who typically have backgrounds in economics, health policy, public health, or medicine. MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress."

Our thanks to Margo Harrison, a research analyst at the commission for emailing us with this info.

(12/17/06)- Under the Medicare law, physicians who participate in the system are faced with a 5% cut in their reimbursement rates next year. Although this is what the law requires, it has never taken place in prior years, and it won't be taking place in 2007 either. A slight increase will be worked out, and in addition a 1.5% bonus will be paid for the last six months of 2007 for those doctors who participate in the new reporting requirements to help Medicare collect quality-of-treatment data.

(10/6/06)- Health care costs keep on increasing rapidly each year, far outpacing the increase in the cost-of-living, even though the percentage increase may be slowing down slightly. According to the latest survey from the Kaiser Family Foundation and the Health Research and Educational Trust employee health care coverage rose 7.7% this year, more than double the overall inflation rate, and sharply ahead of the increase in the incomes of workers.

The 7.7% increase was the lowest percentage increase since 1999, but the average cost to the employee reached $2,973 annually for family coverage out of a total of $11,481.

The cost of family coverage has risen 87% since 2000, while the consumer price index rose only 18% during that same period of time. This does not include the fact that the amount of the deductible and the premium costs continue to escalate so that the employee is paying more and more for their health care coverage.

In the survey, 3,159 employers ranging in size from three to more than 300,000 employees were contacted in the month of May. Last year's increase was 9.2% according to a spokesman for Kaiser.

Employees pay about 16% of the premiums, or about $3,497 of an average total of $11,793 for smaller employees with fewer than 200 workers in preferred provider networks. Workers in larger companies contributed about $2,628 in premiums, with the employer in these larger companies contributing on average about $11,572.

High deductible plans cover about 2.7 million workers, including 1.4 million in the new health savings accounts

(8/26/06)- Newly released government data shows that between 1996 and 2004, the number of private-sector employees who enrolled in the health-benefits plans offered to them by their employers declined from 87.7% to 81%.

The survey, which was conducted by the federal Agency for Healthcare Research and Quality polled more than 45,000 separate offices, plants and work-sites. The drop-off is largely attributed to the fact that companies have sharply increased the premiums, deductibles and co-pays that the employees must contribute.

Last year, families paid an average $226 in monthly premiums according to the Kaiser Family Foundation, a non-profit health-policy research group based in Menlo Park, California.

(1/16/06)- Health spending by both the public and private sectors grew 7.9% in 2004, the most recent year for which complete information is available. Even though this is the smallest increase since 2000, when it grew at a 6.3% pace, it is almost twice the Consumer Price Increase, the most widely used measure of inflation, which grew at a 3.3% pace in 2004.

These figure come from a study from the National Health Statistics Group of the Centers for Medicare and Medicaid Services (CMS). Breaking this number down further, it means that $6,280 was spent for health care purposes in 2004 per person in the U.S. in 2004.

Spending on prescription drugs grew 8.2% in 2004, the first year of single-digit growth in that sector in a decade. The study attributed this drop to the greater use of generic drugs. Andrea Hofelich, a spokeswoman for the Generic Pharmaceutical Association, a trade group, said patients received generic drugs for 53% of the prescriptions written in 2004. Because the cost of generic drugs is so much less than it is for brand name drugs, spending for generics accounted for only 12% of the drug spending in 2004

Hospital spending grew at a rate of 8.6% in 2004 compared to an average of 8.2% in recent years. Spending on payments to doctors grew at a 9% rate, which was the highest, recorded since 1991. Medicare spending on doctors rose 11.1% up from an increase of 8.8% in 2003

Payments to independent home health agencies have been rising more rapidly than any other category of health spending. It increased 13.3% in 2004 to $43.2 billion. Medicare spending for home care rose 19.3% in 2004, partly because of rapid growth in home-based hospice services.

Spending on care provided by skilled nursing homes rose 4.3 % to $115 billion in 2004, of which Medicaid pays 44%. Medicaid spending on nursing homes rose just 3% in 2004, compared with an increase of 5.3% in 2003.

Total Medicare spending rose 8.9% in 2004 to $309 billion, while total Medicaid spending rose by 7.9% to $290.9 billion for the same year, which represented 15% of national health spending in 2004.

Spending for doctors' services climber by 11.1% up from an increase of 8.8% in 2003 to $399.9 billion

(5/29/05)- As we all know numbers can be very confusing at times. One of the more confusing numbers that we face in trying to determine how fast medical costs are rising is the fact that there is no proven criteria to judge the numbers against. We often hear that the Dow Jones Index has risen or fallen for a given day, so we know the measurement that all experts are using in arriving at that figure.

The Millimen Medical Index (MMI) is a new index that has been set up by Milliman Human Resources a consultant company to try and arrive at a mathematical model to be used to judge how much medical costs are rising or falling each year. According to this index the average family of four with an employer sponsored health plan will spend more than $12,200 on medical expenses in 2005, which is up from $8,400 a year in 2004.

Employees share of the overall cost has remained at about 17% since 2001, but since the cost number has been rising every year, this in turn means that the employers are spending more of the company's earnings as its share of the employers health benefits. Overall cost rose 9.1% so far in 2005

According to the study that was used to compile the index the average family of four spent roughly $2,035 in out-of-pocket expenses in 2005, up from $1,925 in 2004, and $1,480 in 2001. The biggest expenditure was in hospital expenses which accounted for 45% of the total, followed by physicians costs at 37% and pharmaceuticals at 15%.

The database that Milliman used was culled from information on more than 15 million people's medical records. The data reflects only costs for actual medical care provided mostly by "preferred provider organizations (PPOs)". The numbers do not include premiums paid for health-care coverage.

In a separate development the National Center for Health Statistics reported that American women now have a life expectancy of 80.1 years. American men have a life expectancy of 75.8 years. Americans' life expectancy is now at a record 77.6 years. With this growth in longevity being a major plus we must also take into consideration how we are going to take care of the medical situation for our aging fellow Americans. We must take good care of our seniors who have done so much for all of us.

2/2/05)-According to federal health officials Medicaid payments to nursing homes grew just 1% in 2003, to $51 billion, following an increase of 8.1% in 2002. Medicare payments to nursing homes "increased only 1.3% in 2003, following three years of rapid growth that averaged 16.2% a year between 1999 and 2002."

The report from the CMS found that health spending in the U.S. averaged $5,670 a person in 2003, up $353 from 2002 with the total bill coming to $1.7 trillion in 2003. Retail sales of prescription drugs totaled $179.2 billion in 2003, and are still growing faster than overall national health spending. Prescription drugs accounted for 11% of the overall national health spending. Consumers dipped into their own pockets to the extent of $53.2 billion of the $179.2 billion that was spent for drugs. The data appears in the January/February issue of the journal of Health Affairs.

Payments for private health insurance, in the form of premiums, increased 9.3% in 2003. Spending on Medicare grew by 5.7% in 203 to $283.1 billion, compared with an increase of 7.6% in 2002. Growth in spending on Medicaid slowed to 7.1% in 2003 compared to the 12.1% rate in 2002.

The Medicare Payment Advisory Committee (MedPAC) has voted to recommend a 2.7% increase in Medicare payments to doctors for next year. The 17-member commission's opinion is passed on to Congress, but Congress does not have to follow the recommendations of the Committee. The Committee is composed of health policy experts, economists and providers of care. It makes its annual report to Congress in March.

The increase in payments to doctors is less than the expected increase in doctors' costs, but is quite different than the cut of 5% that was called for under the Medicare formula for payments to doctors in 2006. If Congress does not act on this measure, payments to doctors will be cut for Medicare as per the formula.

Under the new Medicare law, hospitals would receive a 3.2% increase in 2006 based on an official estimate of those costs, measured by the "hospital market basket index." But the Committee said that Congress should reduce the payment increase to 2.8% for inpatient and outpatient hospital services. "Hospitals that have high costs and high rates of increase in costs may not meet the congressional standard of efficient providers," said Glenn M. Hackbarth, the chairman of the committee.

The committee voted to freeze Medicare payments to nursing homes and home care services. Daniel Sisto, president of the Healthcare Association of New York State, which represents 220 nonprofit hospitals, said, "We are outraged."

The commission also expressed concern about the proliferation of imaging equipment and services in doctor's offices. It said, that Congress should direct the secretary of health and human services to set national standards for doctors who perform or interpret diagnostic imaging studies billed to Medicare. The committee also recommended an 18-month extension of a law that generally prohibits doctors from referring Medicare patients to new specialty hospitals in which the doctors have financial interests. That ban is scheduled to expire on January 1, 2007.

Medicare spends $13 billion a year on home nursing. Medicare has raised payments to nursing homes by 2.8% for the current fiscal year, and by 2.3% for the current fiscal year.

(1/2/05)- Medicaid spending totaled over $300 billion last year in combined federal and state spending. There are more than 50 million beneficiaries who are on Medicaid. Medicaid spent over $34 billion on prescription drugs in fiscal year 2003.

"Prospects for retiree health coverage are slowly disappearing for America's workers, and retirees who have it will be paying more, " said Drew E. Altman, the president of the Kaiser Foundation, which conducted a survey with Hewitt Associates, a compensation benefits firm, that showed how this problem is escalating.

Companies are requiring retirees to pay a larger share of premiums and other health costs. The survey examined benefits at 333 large companies with 1,000 or more employees. For a typical worker who retired this year at the age of 65 or more the annual premium for health benefits was $1,212, about 24% higher than the comparable figure for 2003.

About 8% of the large private employers took action in the last year to end all subsidized health benefits for future retirees, and another 11% said that they would do so next year. Companies are requiring the retirees to pay a larger share of the premiums, increasing the co-pays and in some cases eliminating the coverage for the retiree's family.

The ability of the employer to cut the health benefits depends on the terms of the document that establishes the health plan. So far the courts have upheld the right of the employer to cut and even eliminate health benefits for retirees as long as the document that formed the basis for founding the plan specifically allows them to do it.

(12/7/04)- It costs the federal government about $473 billion a year to run the Medicare and Medicaid programs. This accounts for about one-fourth the U.S. governments spending, with about $300 billion of that amount being spent on Medicare. The projected 2005 spending by Medicare according to figures from the CMS is as follows;

Please see our other articles on this topic:

Medicare and Prescription Drug Coverage-Part I 
Medicare and Prescription Drug Coverage-Part II
Medicare and the Cost of Prescription Drugs-Pharmacy Benefits Managers-Part III
Crossing the Border to Obtain Cheaper Prescription Drugs-Part IV
Prescription and Generic Drug Costs- Part V of a V Part Article
Medicare and Prescription Drug Costs- Part VII


by Allan Rubin
updated May 7, 2020

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