'Health Care Spending Growth Slows'

This from GoozNews.

But Respite May Be Temporary

Health care spending grew at a pace only slightly higher than the overall economy in 2006, the second straight year of moderate growth, according to the latest data from the Center for Medicare and Medicaid Services.

The nominal growth (actual dollars) was 6.7 percent, slightly higher than 6.5 percent in 2005. If you subtract out inflation, you get real growth of about 3.5 percent, which is only a half percentage point higher than overall economic growth in 2006.

However, everything isn't rosy. We now spend over $7,000 per person on health, and it absorbs 16 percent of gross domestic product. Prescription drug spending continues to soar, although the 8.5 percent increase in retail drug spending is much less than the 13.4 percent average annual growth between 1995 and 2004. . . .

The report said drug prices were relatively tame -- up just 3.5 percent on average. But it's clear that the failure to give Medicare the right to negotiate drug prices is having a major impact on spending. As noted above, drug spending on Medicaid, where the law mandates that drug companies provide the lowest available price, got transferred to Medicare, where the sky is the limit.

As I've noted many times in the past, only through the alchemy of Washington politics can a benefit for seniors be transformed into a price support program for industry. . . .