Economic Snapshot | Retirement

Medicare can’t keep pace with drug costs

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for March 20, 2002.

Medicare can’t keep pace with drug costs
Throughout the late 1990s, prescription drug spending has far outpaced growth in all other health care services. Drug costs have grown 15%-20% annually, compared to about 6% growth in overall health care spending. While prescription drug spending slowed in 2000, rising by 17.3% compared to 19.2% in 1999, it remained the fastest growing component of health care services.

Rising prescription drug costs underscore Medicare's gaps

The rapid increase in the cost of prescription drugs hits the elderly who rely on Medicare particularly hard. Although two-thirds of Medicare beneficiaries have at least some drug coverage, that coverage has been both expensive and increasingly unstable. The 38% of beneficiaries without prescription drug coverage must pay the full costs out-of-pocket, costs that are increasingly burdensome since prescription drug prices have increased far faster than the income of the elderly.

This week’s Snapshot by Ellen O’Brien.

Check out the archive for past Economic Snapshots.

See related work on Retirement

See more work by Ellen O’Brien