A new study shows that the government’s contribution to the nation’s healthcare tab, already at 45%, is expected to approach 50% within the next 10 years, The Wall Street Journal reports.
Overall health spending in the US is expected to double to $4.1 trillion by 2016, consuming 20% of the nation’s gross domestic product, up from the current 16%, data from the federal study show. By then, the study predicts, the government will be paying 48.7% of the nation’s healthcare bill, up from 38% in 1970 and 40% in 1990.
According to the study’s projections, Medicare spending grew by 22% to $418 billion in 2006, up from $342 billion in 2005. The study said the growth would slow to 6.5% this year, due to scheduled cuts in payments to physicians and smaller payment increases to managed care Medicare Advantage plans, which cover other benefits as well as drugs.
Drug companies have profited from the drug benefit.
In the first seven months of 2006, prescriptions funded by Medicare drug plans accounted for nearly 9% of medicines bought in retail pharmacies, The Journal reported, citing data from prescription data tracking firm Verispan.
One of the biggest winners was Bristol-Myers Squibb. Nearly 14% of US retail prescriptions for its drugs, particularly Plavix, were financed by the Medicare drug benefit during that period, according to Verispan. Medicare funded prescriptions accounted for more than 10% of AstraZeneca’s and Merck’s prescriptions.