Health Care Costs are RisingAccording to a 2012 reportby Health Care ConsultingFirm Milliman, Inc. The cost to insure a family of four under an employer- provided group health insurance plan will likely rise to $20,000 this year. Rising health care costs for 2012 will mark the fifth consecutive year that health care costs will rise between 7% and 8% annually.
How Much did the Governmentspend on Health Care in the past?According to the KaiserFamily Foundation. The U.S. government spent more than $2.3 trillion on health care in 2008, more than three times the $714 billion spent in 1990. In 2008, U.S. health care spending averaged $7,681 per person.
Source: Martin A.B. et al., “Growth In US Health Spending Remained Slow in 2010; Health Share of Gross Domestic Product Was Unchanged from 2009,” Health Affairs, 2012. How is the U.S. health care dollar spent? National Health Expenditures, 2010 Total = $2.3 Trillion Hospital care and physician/clinical services combined account for half (51%) of the nation’s health expenditures. Source: Martin A.B. et al., “Growth In US Health Spending Remained Slow in 2010; Health Share of Gross Domestic Product Was Unchanged from 2009,” Health Affairs, 2012. .
What are some of the factors thatlead to high Health Care Costs? 1. Cost Shifting 2. Fee-for-service model 3. Life-Style Behaviors 4. Medical Technologies 5. Prescription Drug Costs 6. Medical Malpractice 7. Administrative Costs
What is Cost Shifting? Cost Shifting is when a person pays little or nothing for medical care. Then their payment is given to insurance companies or the government to pay. Cost shifting drives up taxes for everyone and it drives up insurance costs for those who are insured.
Cost Shifting (Continued) Studies show that customers who are in debt contribute to annual combined medical bills of $65 billion dollars. This leads to unfairly driven costs which insurance companies and the government have to pay.
Fee for Service Model Health Care providers are not paid by health outcomes or prevention of disease. Fee for service is a payment model where services are unbundled and paid for separately. Fee for service gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care
Fee for Service Model (Continued)According to the Centers forMedicare and MedicaidServices The fee for service model has contributed to the pure waste of 20 to 40 percent of all U.S. health spending. This is due to over treatment, lack of care coordination, failed care delivery, excess administrative costs, inflated health care prices, fraud and abuse.
Life-Style Behaviors Many Americans are plagued by unhealthy lifestyle behaviors including lack of routine exercise, weight control, poor nutrition, and tobacco use. As a result, nearly half of American adults suffer from chronic diseases, or diseases that are unlikely to go away and that require lifelong treatment.
Life-Style Behaviors (Continued) According to Highmark Inc., Americans could dramatically help themselves by taking control of their own health and that of their children to avert the development of chronic diseases. Health care costs can be reduced through healthy Lifestyles.
Medical Technologies Advancements in medical technology has provide many benefits. But at the same time, repetitive or unnecessary diagnostic tests and procedures are driving up the cost of health care.
Medical Technologies (Continued) According to the US Department of Heath and Human Services Over the past decade: MRI /CT / PET scans have tripled Hip Replacements up by a third Knee replacements up by 70% Kidney transplant rates up by 42%
Medical Technologies (Continued) According to a 2008 analysis by the Congressional Budget Office, new advancements in medical technology has been the most important factor in driving the rise of Health Care costs. What new medical advancements and costs will be available in the future?
Prescription Drugs The Centers for Medicare and Medicaid services report that Prescription drugs expenditures make up 11% of our overall national health care spending and project that figure to reach 14.5% by 2012.
Medical Malpractice Medical malpractice costs are rising and physicians need to factor those costs into their patient fees to protect themselves. The Congressional Budget Office (CBO) estimated that medical liability insurance premiums for all physicians across the country increased an average of 15 percent between 2000 and 2002. The CBO estimated that medical malpractice costs account for less than 2 percent of the national health spending.
Administrative Costs At least 7% of health care expenditures are estimated to go toward for the administrative costs of government health care programs and the net cost of private insurance (e.g. administrative costs, reserves, taxes, profits/losses). Some argue that the mixed public-private system creates overhead costs and large profits that are fueling health care spending.[
Patient Protection and AffordableCare Act The Patient Protection and Affordable Care Act, also known as health care reform, will impact the entire American health system and nearly every American. Commonly called Obamacare, this act is a United States federal law signed by President Barack Obama on March 23, 2010
Obama Care – Health Care Costs The estimated cost of Obama care doubled in just two years from $940 billion to nearly $2 trillion, according to the Congressional Budget Office (CBO). Repealing Obamacare isnt enough. We need to fix the main problems with our health care system - high costs and the lack of availability of insurance coverage to many Americans.
Uninsured Children Contribute to Health Care Costs
Health Care Statistics In 2007, nearly 50 million Americans did not have health insurance, while another 25 million were underinsured. (Source: Commonwealth Fund Biennial Health Insurance Survey 2007) The amount people pay for health insurance increased 30 percent from 2001 to 2005, while income for the same period of time only increased 3 percent. (Source: Robert Wood Johnson Foundation) The total annual premium for a typical family health insurance plan offered by employers was $12,680 in 2008. (Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2008) Healthcare expenditures in the United States exceed $2 trillion a year. (SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group;) In comparison, the federal budget is $3 trillion a year.
Health Care Statistics (Continued) The number of people who are underinsured has grown 60 percent to 25 million over the past four years. The fastest growing segment of the underinsured are middle and upper income families. The rate of underinsured for those with incomes of $40,000 or more nearly tripled, to 11 percent. The highest rate of underinsurance is in families with incomes under the poverty level (about $20,000), at 31 percent.
Health Care Statistics (Continued) Health care expenditures in the United States are the highest of any developed country, at 15.3% of GDP. The country with the next highest spending is Switzerland, at 11.6% of GDP. (Source: Organisation for Economic Co-operation and Development) The United States does not spend health care money efficiently. An estimated one-third of 2006 health care expenditures, about $700 billion or nearly 5% of GDP, did not improve health outcomes. (Source: Congressional Budget Office) Prescription prices for drugs still under patent protections (as opposed to generic medications) are about 35% to 55% higher in the United States than they are in other countries. (Source: Congressional Budget Office)
The Complex Task of Determining Health Care Costs The complex way that the United States pays for health care often obscures the consequences of health care cost growth for most American families," said the studys co-author Dr. Arthur L. Kellermann, director of RAND Health, in the news release. "This makes the challenge of controlling health care costs that much harder."
The Future????????? This year, states will start cracking down on double-digit rate hikes with the hope of containing premiums by 2014. Nearly everyone will be required to purchase health insurance. Some experts question whether the new push will work.
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