Full implementation of the new Medicare prescription drug benefit contributed to an 18.7 percent increase in Medicare spending in 2006, the fastest rate of growth since 1981 and double the rise in 2005. In fact, in 2006, Medicare spending rose to $401.3 billion, up from $338.0 billion a year earlier, according to the Centers for Medicare and Medicaid Services’ (CMS) annual health spending report appearing in the January-February 2008 issue of Health Affairs.
Meanwhile, Medicaid spending fell slightly for the first time since its inception in 1965, to $310.6 billion in 2006 from $313.5 billion in 2005. The 0.9 percent drop was largely attributable to the transfer of drug coverage for people who are dually eligible for Medicare and Medicaid coverage, say CMS analysts.
Most other major health services and public payers experienced slower spending growth in 2006. Personal healthcare spending grew 6.6 percent in 2006, compared with 6.8 percent in 2005. Healthcare price growth accounted for more than half of the growth in 2006. Read the abstract.
