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'Marketplace' Report: Government and Health Care

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'Marketplace' Report: Government and Health Care

'Marketplace' Report: Government and Health Care

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This is DAY TO DAY from NPR News with a program note here. Our friends from Marketplace have a new space in this show and it's right here.

You know Marketplace normally comes toward the end of the hour. From now on they'll be here. The topic today: health care, because in the next decade Americans are expected to double our spending on health care.

By the year 2016 there are estimates that we will spend 20 cents of every dollar on medical costs. And a new study out today says the government is going to be picking up a bigger share of that tab.

Marketplace's Amy Scott joins us. Amy, welcome here and what is behind the rise in spending?

AMY SCOTT: Well, a few different factors. First, there's inflation - and we all know about that. Just today, in fact, the government reported that medical costs rose last month by the fastest rate in 15 years.

The study you mentioned was published today in the magazine Health Affairs. It's written by staff from the federal government's Centers for Medicare and Medicaid Services. And it says by the year 2016 health care costs are projected to rise by more than four percent a year.

But that's not the only reason we're spending more. We're also using more services. John Poisal is one of the authors of the study. He says incomes have been rising over the last few years and that drives people to spend more on their health.

Mr. JOHN POISAL (Centers for Medicare and Medicaid Services): As incomes increase by 1 percentage point, typically expenditures for health care increase by 1.4 percentage points. And so as more services become available, as treatment thresholds lower - such as in the treatment of high cholesterol -that use rate goes up.

SCOTT: So you've got a little more money in the bank. Maybe it's time to fix that knee that's been bugging you. But income growth is actually projected to slow down in the next few years, so that trend could reverse.

CHADWICK: And this is the reason that the government is going to be picking up more of our medical costs?

SCOTT: Well, a big part of that is the new prescription drug coverage that kicked in about a year ago - Medicare Plan D. A lot of seniors who either weren't buying prescription drugs or were doing it through private insurers are now spending government money. And then there are the baby boomers.

The leading edge - as they're called - will soon become eligible for Medicare, and within a decade Medicare alone will pay for 20 percent of all health care. Government sources - both federal and state - will cover nearly half of all Medicare costs - or medical costs, rather. And that's about two trillion dollars we're talking in tax payer money.

CHADWICK: So what does this study say we should be doing?

SCOTT: Well, the study's authors are government employees, so they're not about to express any opinions about all this. But their data is bound to fuel the debate over how to fix the system. You know, some Democrats have been lobbying for a single payer system, where the government is that single payer.

But advocates of universal health care says as long as you have multiple private payers out there, the administrative costs are just going to keep growing and you're not going to have the benefits of a single payer system.

CHADWICK: Thank you, Amy. Amy Scott of Public Radio's daily business show, Marketplace from American Public Media.

CHADWICK: DAY TO DAY returns in a moment.

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