Health Care Spending Levels Off: Temporary Blip Or Start of a Trend?

The following post originally appeared on the TIME Moneyland blog.

The nation’s health care bill rose by less than 4% in both 2009 and 2010. In 50 years, health care spending has never increased at such a slow pace. Could this mean that, after a half century of eye-popping inflation in health care expenditures, efforts to rein in costs are actually working?

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Medicare and The President’s Plan to Reduce the Deficit—Cuts That Make Sense

Some of the largest cuts in President Obama’s proposed package of Medicare savings target areas where Medicare does, in fact, over-spend. Unfortunately, these are the reforms that Congress is least likely to adopt. In each case a powerful lobby representing those who profit from Medicare’s largesse will howl, and many legislators may well bow to their wishes. Nevertheless, it is useful for the President to call attention to areas where Medicare can save money—without cutting benefits.

  • Prescription Drugs: The President’s plan would save $135 billion over ten years, starting in 2013, by requiring that drug companies provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries enrolled in the Part D Low-Income Subsidy program. In the past, I have written about the drug industry’s double-digit profit margins. In theory, the industry needs these margins in order to innovate. In fact, the number of new and effective drugs coming out of the pharmaceutical industry has slowed in recent years. Too often, they focus on creating “me too” drugs that they know will find a large market.

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