Core healthcare costs such as hospital care and doctors' services are expected to rise at relatively modest rates of 6% to 7% a year over the coming decade, the report found. The problem, according to the authors, is that those rates are 1 to 2 percentage points higher than the growth forecast for the overall economy.
"That is a very significant point," said Ron Pollack, executive director of Families USA, an advocacy group that supports coverage for the nearly 47 million people in America who are uninsured. "As healthcare spending increases faster than earnings, it means more and more people will find healthcare unaffordable and join the ranks of the uninsured and underinsured."
The report also marks the first time that such long-range cost estimates take into account the Medicare prescription benefit launched last year. The benefit is administered through private insurers -- a feature that many Democrats consider wasteful, arguing that Medicare could get lower prices by negotiating directly with drug companies.
The report's verdict on the drug benefit was mixed.
Overall, it found that the private plans had done a good job of obtaining discounts from manufacturers, helping hold down spending growth even as more seniors were buying medications. But it also found that Medicare's discounts are not as deep as those available under the Medicaid program, which does not rely on private intermediaries.
More significantly, the report found that the Medicare drug benefit has led to a dramatic shift in who pays the bill for drugs. Government is now picking up about 40% of the national tab, compared with 28% in 2005, before the benefit went into effect. That could become a problem because the prescription program lacks its own stable source of long-term financing.
"As the nation moves from more traditional sources of insurance
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ricardo.alonso-zaldivar@latimes.com
