A report released by AARP found that manufacturer prices for all 25 brand-name prescription drugs most commonly used by Medicare beneficiaries rose by an average of 9.7 percent in the 12-month period ending in March. The 9.7 percent increase is the largest AARP has reported since it began tracking the prices in 2002. The report found that the price of generic medications dropped 9.7 percent during the same period and that the average annual cost for a single brand-name medication was $2,190.

From the report:

A key question is how the cost of the Medicaid expansion will be financed. This brief provides the details of how the federal government and the states are expected to split this responsibility. Overall, the Congressional Budget Office estimates the federal government will finance the vast majority, approximately 96 percent, of the increase in Medicaid coverage attributable to the health reform legislation over the next ten years. While all states will see large increases in federal financing, the actual share of coverage financed by the federal government for any given state will vary based on factors such as the state’s Medicaid “matching rate,” coverage decisions prior to enactment of reform, and the rate at which eligible people participate in its Medicaid program. In general, states that have the furthest to climb in terms of meeting the new eligibility requirements will see the largest increases in federal financing.

One practical financing issue that will need to be addressed arises because, beginning in 2014, the federal government will pay much more for coverage of “newly-eligible” Medicaid beneficiaries than for people “alreadyeligible” for Medicaid under the rules in place December 1, 2009. As a result, states in the future will need to track whether someone qualifies for Medicaid under rules from 2009 versus under the expansion created by health reform. From a state administration perspective, it will be important for states to find ways to claim the appropriate matching rate without simultaneously complicating enrollment procedures.

Full report:  Financing New Medicaid Coverage under Health Reform: The Role of the Federal Government and States (PDF | 227.6 KB)

Kaiser Family Foundation. (2010). Financing new Medicaid coverage under health reform: the role of the federal government and states.