| There is a consensus going on right now that | | | | increases in the price per episode of inpatient care, |
| healthcare will be better in terms of access because | | | | despite a continuing reduction in the amount of inpatient |
| of recent legislation that will go into effect in 2014, I | | | | care, have contributed to medical inflation. As overall |
| have been in the health insurance business for many | | | | hospital utilization continues to decline, fewer patients |
| years and now more than ever; I just don't buy it. In this | | | | must carry the load of a greater portion of each |
| article I explain the trends in healthcare cost just to | | | | hospitals total overhead. Both the utilization and the |
| give consumers a look at the bigger picture. | | | | cost of ambulatory care (hospital outpatient and |
| Here is what I think on health care cost: | | | | physicians office) are increasing at a rapid pace. In the |
| Rising health care cost are a global phenomenon, | | | | United States, most surgery that should be done on an |
| constituting a major problem in both social insurance | | | | ambulatory basis is done that way. The number of |
| and voluntary employer-provided health plans, | | | | visits to physician's offices and of test taken with |
| especially in developed countries. Many governments | | | | expensive equipment has risen dramatically. |
| are exploring the possibility of shifting more medical | | | | The shift to outpatient surgery has been accompanied |
| expense cost to employers and individuals. In contrast | | | | by an increase in the volume of these procedures. |
| to the United States, most other developed countries | | | | More individuals are having outpatient operations than |
| have some broad national health insurance scheme for | | | | was the case when such operations were available |
| individuals of all ages. In these countries, employers | | | | on an inpatient basis only. Another source of the cost |
| commonly offer supplemental medical expense plans | | | | increase stems from the nature of supply and demand |
| to provide employees with higher quality medical care | | | | for medical services. As mentioned earlier, the demand |
| that available from the normal health insurance | | | | for services is frequently controlled by the provider. |
| providers. | | | | Research indicates typically abused procedures in the |
| Medical Care Cost Trends | | | | United States include C-sections, hysterectomies, heart |
| In the United States, the rate of increase in health care | | | | bypass surgery, and imaging diagnostic procedures. |
| expenditures throughout the past two decades was | | | | Cost shifting, another component of increased cost in |
| significantly higher than the rate of inflation, population | | | | employer-sponsored health plans is the result of other |
| growth, and overall increase in Gross Domestic | | | | payers not reimbursing providers at levels sufficient to |
| Product (GDP). During much of this period, increases in | | | | recover cost and make profit. Medicare, the federal |
| health care cost were at rates two times that of | | | | insurance program, limits the amount it will pay to |
| inflation. Health care cost accounted for about 14 | | | | hospitals and other providers for the elderly, for the |
| percent of U.S. GDP. Other countries, even those with | | | | disabled, and for patients with end-stage-renal disease. |
| universal health care systems, spend less on health | | | | Hospitals and physicians tend to make up for the lost |
| care than the United States. Although all indications | | | | revenue by increasing fees to others. Any person or |
| point to demand and cost continuing to increase in the | | | | organization that is actually paying charges ends up |
| future, employees, employers, providers, and politicians | | | | with a higher bill. Bad debts, indigent care, inadequate |
| have all become concerned with doing something | | | | Medicaid reimbursement, and discounted rates for |
| about controlling cost. Despite all the recent efforts to | | | | contracting health maintenance organizations (HMO's) |
| control cost, there is mounting evidence; however that | | | | and preferred provider organizations (PPO's) also add |
| health care inflation will continue to grow. | | | | to the cost shifts of the noncontracting plans. As a |
| Causes of Health Care Inflation. | | | | result, there have been rate increases to |
| As individuals live longer, they consume more and | | | | non-negotiated hospital rates. This is why some plans |
| more medical services. Across all demographic groups, | | | | experience 20 percent inflation whereas others |
| demand has increased for quality health care and | | | | experience single digit increases. Other factors |
| state-of-the-art treatment. The U.S. population age 75 | | | | increasing cost include excess hospital capacity, |
| and older is projected to increase four times faster | | | | varying medical practice standards, overuse of |
| than that of persons under age 65. Many of the elderly | | | | specialist physicians, a focus on acute care versus |
| have chronic, disabling illnesses. Institutional care is | | | | preventive care, and fraud. |
| anticipated to increase, and hospital and nursing home | | | | If you cannot afford major medical coverage and are |
| care is expected to consume an even larger share of | | | | in need of healthcare we can help. There are many |
| personal health care spending. As discussed earlier, the | | | | alternatives out there in the market place such as mini |
| rapid advances in sophisticated, expensive diagnostic | | | | medical insurance policies and medical discount plans |
| and therapeutic technology have helped fuel the | | | | that can work out for you, if these products are |
| growth in health care expenditures. Also, dramatic | | | | properly explained. |