KEY TAKEAWAY:Health care is one of the largest costs for people in retirement. Fidelity annually estimates what a 65-year old couple, retiring in the current year, will need to cover health care and medical expenses throughout retirement. The 2017 estimate is $275,000, a six percent increase over last year’s estimate of $260,000.
Brand-name pharmaceutical companies and health insurers increased their profits in the second quarter of this year, while hospitals and drug distributors had a more difficult run, according to a review of financial documents for 58 publicly traded health care companies.
Drug companies continue to raise their list prices for branded drugs despite the public furor , so they naturally maintained their status as the most profitable sector in health care. Insurers also collected higher profits because fewer people are going to the hospital or doctor, which results in more money staying in their pockets.
- Thirteen companies recorded net profit margins of at least 17% in the second quarter of this year, and almost all of those margins were higher when compared with the same period of 2016. Of those 13 companies, 12 were pharmaceutical firms. Gilead Sciences, the manufacturer of pricey hepatitis C and HIV drugs, had the largest profit margin at 43%.
- The big five health insurers — Aetna, Anthem, Cigna, Humana and UnitedHealth Group — each scored higher second-quarter profit margins compared with 2016. Cigna’s was the highest at 7.9%.
The cost of healthcare has risen much faster than inflation alone can explain. Healthcare spending in 2007 came to $7,700 per person in the U.S., and by 2015 that number had risen 29% to $9,990 per person. The Centers for Medicare and Medicaid Services project that health spending will continue to increase at an average rate of 5.6% per year for the next 10 years. How can the average American afford to spend that much on healthcare?
For 2016, families who didn’t receive an Affordable Care Act subsidy paid an average premium of $833 per month, or $9,996 per year. Given that the median household income for 2015 (the latest year for which census data is available) was $55,775, these families are paying an enormous percentage of their annual income in insurance premiums.
A new survey finds 55 percent of Americans regularly take a prescription medicine — and they’re taking more than ever.
So let’s face facts: this is unsustainable. These statistics only will serve to add more fuel to the fire of politicians who say that we need a single payer. It could be that pharma companies are trying to “get as much as they can” , while they can.