Insurers blame prescription drugs. Drug companies blame research and development. Hospitals blame doctors’ fees. Doctors blame malpractice law-suits. Members of Congress blame each other. And, it seems they all blame Medicare recipients for wanting affordable access to the latest and best health care.
The problems are growing:
- Supplemental health insurance premiums for Medicare-aged retirees increased more than 17% from 2002 to 2003 and 88% over the past five years.
—Towers Perrin Health Care Cost Surveys, 10/02/02.
- Hospital outpatient costs currently are one of the fastest growing sectors of the health care system surging at more than 16% in 2001.
—Journal of Health Affairs, 9/25/02.
- Spending on prescription drugs grew more than 17% in 2001, the fourth year in a row. With the recent release of a number of major generics, however, those costs are expected to “moderate” to 13%—the first time since 1996.
—National Institute of Health Care Management Foundation, 3/29/02 and Steve Cigich, actuary with Milliman USA, 10/23/02.
The huge increases are unsustainable. Congress tried and failed repeatedly in 2002 to enact a Medicare prescription drug benefit. The GOP favors legislation that would provide subsidies to insurers to get them to provide prescription drug insurance. Democrats, on the other hand, tend to favor the traditional approach of Medicare paying claims sent in by Medicare beneficiaries or their providers.
Neither approach, however, has proven effective in the past at slowing health care inflation. Both provide the services satisfactorily when reimbursements are high enough. When reimbursements are too low, however, providers simply discontinue service as millions of seniors learned when many Health Maintenance Organizations (HMOs) quit Medicare in recent years. The same is also true under fee-for-service Medicare where many doctors quit accepting new Medicare patients because they say reimbursements are too low.
On the other hand, when payments to providers are too high, higher premiums, co-payments, and other out-of-pocket costs gouge Medicare beneficiaries. Demands are placed on the federal budget because more revenues are required to pay claims.
In our Senior Survey, starting on page 6, please take time to let us know how health care inflation affects you and give us your feedback on key proposals to fight the high cost of prescription drugs.
Source: “Finger Pointing Can’t Settle Who’s to Blame for Health Costs,” Julie Appleby, “USA TODAY,” 8/22/02. “Growth in Medicare and Out-of-Pocket Spending,” The Urban Institute, December 2000.
For a related story see, “Unprecedented Health Care Increases Predicted for 2003,” at http://www.tscl.org/NewContent/101617.asp.
February 2003
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