Government to pay nearly half of health costs within a decade

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Federal analysts forecasted that federal, state and local governments will be paying approximately half of U.S. health costs by 2014 -- a shift largely reflected by the new Medicare prescription drug benefit, a Wall Street Journal report today said.
The government will pay 49 percent of health costs by 2014, up from current Medicare estimates of 46 percent.
An estimated $67 billion in drug spending will shift to Medicare from private insurers and Medicaid when the Medicare drug benefit begins in 2006.
"The public sector will feel more deeply the financial burden associated with supplying healthcare benefits to Medicare and Medicaid enrollees," federal analysts wrote in an article published by the journal Health Affairs.
States will pay a portion of the drug costs incurred by beneficiaries eligible for both programs and the federal government will pick up the tab as more Medicare beneficiaries, who have been paying out of pocket for their prescription drugs, sign up for the new benefit.
The Medicare drug benefit is predicted to create an initial rise in prescription drug use by Medicare beneficiaries and a minor rise in spending on medications.
In the drug benefit's first year, total spending on prescriptions is expected to grow nearly 12 percent. Drug price growth, including the Medicare drug benefit, will account for 2.4 percentage points of the surge, the Wall Street Journal report said.
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