Spending for Medicares prescription drug program and greater enrollment in Medicare Advantage plans accounted for an 18.7% increase in Medicare spending in 2006, the fastest rate of growth in 25 years and double that of just a year before, according to a new report released by CMS actuaries and published in the journal Health Affairs. All told, Medicare spending rose to $401.3 billion in 2006, up from $338 billion in 2005.
But spending for Medicaid fell for the first time by 0.9%, after many of the dual eligible beneficiaries were shifted out of the federal-state program and into Medicare.
In 2006, overall healthcare spending rose 6.7% to $2.1 trillion, or $7,026 per person. Thats a slight increase from 2005 when spending grew at 6.5%its slowest rate since 1999.
Retail spending on prescription drugs grew to 8.5% after six years of slower growth, in part due to the wider coverage Part D has afforded its beneficiaries. In 2005, spending on prescription drugs grew to 5.8%. But the actual implementation of the program also led to a spike in administration and net costs at the federal agency, increasing to 8.8% in 2006 from just 3.6% a year earlier.