Why the USA Must Address Rising Healthcare Costs Now!

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Spending expected to increase from 25 to 40 percent by 2037

[By Staff Reporters]

Rising healthcare costs is exploding with the cost of healthcare currently outpacing inflation with federal health spending expecting to increase from 25 percent to 40 percent by 2037 equivalent to 25 percent of the American economy. With the country still in a recession and all the changes in healthcare reform has brought the issue as one of the hot topics for the fall’s presidential election.

Key Drivers of Rising Healthcare Costs

Hospital care and physician/clinical services combined account for half (51%) of the nation’s health expenditures sparking debates on how healthcare spending can be controlled. Some of the key drivers of rising healthcare costs are:

  • Prescription Drugs/Technology – Pharma is usually the biggest culprit associated with rising healthcare costs; however, medical technology has also been cited as a driver to an increase in overall healthcare spending. Cutting edge technology and drugs can fuel healthcare costs due to development costs and services.
  • Rise in Chronic Diseases – Baby boomers getting older, longer life spans, and the epidemic rates of obesity create an expensive dilemma for the healthcare system. Efforts have increased with the adoption of accountable care and healthcare technology to provide tools for chronic disease management while lowering costs.
  • Administrative Costs – 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).

The Infographic

  • The below infographic, created by The Center for American Progress and featured by Compliance and Safety provides a snapshot of the current state of the American healthcare system
  • This infographic outlines several important statistics relevent to the healthcare spending debate including:
  • The U.S spends 2.5x more on healthcare per capita than other wealthy countries, but yet scores far below these same countries in average life expectancy.
  • The growth rate of healthcare spending far exceeds the growth of our national economy and wages
  • On average, current healthcare premiums cost the American family 16% of their gross income.

A Few Queries to Consider

  • How will ACA affect healthcare spending?
  • Can the adoption of Health IT (e.g. chronic disease management tools, patient remote monitoring, mobile health, and others) improve quality of care without increasing healthcare spending?
  • What role should individual states play in controlling costs?
  • How do we effectively address the low income families?

Assessment

This Infographic highlighted the rising healthcare costs and what could be bought with the $2.8 trillion dollars that Americans spend on healthcare yearly.

Related Links

References:

  1. Congress of the United States, Congressional Budget Office;Technological Change and the Growth of Health Care Spending, January 2008.
  2. Centers for Disease Control and Prevention. Rising Health Care Costs Are Unsustainable. April 2011.
  3. Recent opinions/ reports have focused on the viability of a single-payer system in the U.S. W.C. Hsiao’s article “State-based single-payer health care- as solution for the United States?” explores potential adoption among states, and R. Feldman explores unregulated markets vs. single-payer systems in “Quality of care in single-payer and multipayer health systems.”
  4. 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.
  5. http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx#footnote8

Conclusion

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12 Responses

  1. Patients’ e-records Access Tied with Increased Healthcare Use: Study

    A study of patients at Kaiser Permanente in Colorado found that patient use of Web-based electronic health-record system portals was linked to an increased use of clinical services, including higher rates of office visits and telephone calls to providers. Results of the study are set to be published in an article, “Patients with Online Access to Clinicians, Medical Records Have Increased Use of Clinical Services,” in the Nov. 21st issue of the Journal of the American Medical Association.

    The study looked at healthcare services by nearly 89,000 patients enrolled for at least 24 months with the integrated delivery network from March 2005 through June 2010. These patients were divided into two equal groups: those who were users of the organization’s My Health Management patient online access system and those who were not. Researchers found “a significant increase in the per-member rates of office visits (0.7 per member per year) and telephone encounters (0.3 per member per year) for portal users compared with non-users,” according to a news release about the study.

    Source: Joseph Conn, Modern Healthcare [11/20/12]

  2. The Role of Empathy in Hospital Cost Reduction

    According to Curt Bailey and Traci Entel, the cost-reduction tactics that hospital leaders typically use are neither sustainable nor significant enough to achieve the savings they need to thrive.

    http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=5230001477

    However, well-crafted cost-reduction programs strengthen the emotional bond between employees and the hospital and tear down barriers to change, thereby creating collaboration and innovation.

    Dr. David Edward Marcinko MBA
    http://www.CertifiedMedicalPlanner.org

  3. Messrs. and Mesdames:

    Please find attached link for the December 2012 Edition of Plan Management Navigator.

    http://www.sherlockco.com/seer.shtml

    Because of health care reform and the economy, many health plans are taking steps to optimize their administrative costs.

    This edition of Navigator analyzes the outcomes of those decisions by 24 Blue Cross Blue Shield Plans in two important ways. It summarizes what operating factors contribute to low costs and what mix of activities and functions contribute to the overall low cost structure. While our focus is on the core costs of Account and Membership Administration and Corporate Services, we also touch on such strategic activities as Sales and Marketing and Medical Management.

    Low cost Blue Cross Blue Shield Plans’ core costs are 32% lower than their peers, or by $6.51 PMPM. 94% of the difference is due to staffing ratios that are 31% lower in the core functions.

    Notably, low cost Plans improved their performance year over year. Of the six low cost Plans, four achieved declines in their PMPM tactical costs in 2011. As a group, the six low cost Plans achieved a 3.8% decline in their PMPM costs. This decline is adjusted to eliminate any distortion from changes in the business mix of these Plans between the two measurement years.

    We hope that you find this edition of Navigator of interest. We at Sherlock Company wish you and yours a Merry Christmas and a Happy New Year.

    Sincerely,
    Douglas B. Sherlock, CFA

  4. Five facts about Obamacare and health premiums

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/06/five-facts-about-obamacare-and-health-premiums/

    Obamacare increased premiums – they now average $15,022 for a family – but also netted subscribers rebates.

    Hope R. Hetico RN MHA

  5. Unusual respite from surging health care costs

    Americans kept health care spending in check for three years in a row, the government just reported, an unusual respite that could linger if the economy stays soft or fade like a mirage if job growth comes roaring back.

    http://www.ajc.com/ap/ap/health/unusual-respite-from-surging-health-care-costs/nTphm/

    Ann Miller RN MHA

  6. He didn’t become a doctor to bankrupt his patients

    http://www.kevinmd.com/blog/2013/02/doctor-bankrupt-patients.html

    As essay by Jordan Grumet MD.

    Ann Miller RN MHA

  7. Healthcare prices rose slightly in January

    U.S. healthcare prices increased in January 2013, rising 0.2 percent over December 2012 prices, according to the federal Bureau of Labor Statistics.

    http://www.healthcarefinancenews.com/news/healthcare-prices-rose-slightly-january?topic=21

    Drug costs rose 4%, as well.

    http://www.healthcarefinancenews.com/news/drug-costs-rise-4-percent-2013

    Dirk

  8. Want to cut health costs? Show docs the price tag

    In November 2009, the Johns Hopkins Hospital in Baltimore did something that hospitals rarely ever do. The hospital began showing doctors the prices of the medical procedures they ordered.

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/18/want-to-cut-health-costs-show-doctors-a-price-tag/?utm_source=4.19.13&utm_campaign=11713&utm_medium=email

    For six months, doctors ordering certain lab tests would see the window that you see below that includes both the type of test – and how much Medicare would reimburse for the procedure.

    Read what happened?

    Laura

  9. Physicians encourage patients to be savvy consumers

    Consumer Reports and the American College of Physicians (ACP) teamed up to present a patient-empowerment expo titled “Your Health: Fact Not Fiction” on April 13th, 2013 as part of ACP’s annual meeting in San Francisco.

    http://www.physbiztech.com/slideshow/business/physicians-encourage-patients-be-savvy-consumers?email=MARCINKOADVISORS@MSN.COM&GroupID=90115

    Click through to view a slideshow that gives details on what was covered during the event.

    Ann Miller RN MHA

  10. The Role of Potential Overutilization on Increased Healthcare Spending[A Case Study Regarding Colonoscopies]

    The ever-growing issue of rising healthcare costs and budget deficits has become a routine point of discussion and debate for providers; insurers; consumers; and, policymakers over the past several years.

    http://www.healthcapital.com/hcc/newsletter/6_13/COLON.pdf

    Several healthcare policy associations and industry experts have used the growth in utilization and the cost of colonoscopies as a case study to elicit a compelling view of how unnecessary and overpriced procedures can significantly drive up the cost of U.S. healthcare.

    Robert James Cimasi MSHA AVA CMP™
    via Ann Miller RN MHA

  11. Physician’s Attitudes About Health Care Costs

    85% of U.S. physicians agreed that “trying to contain costs is the responsibility of every physician.”
    76% of U.S. physicians reported being aware of the costs of tests or treatments they recommend.
    80% of U.S. physicians endorsed prioritizing patients’ best interests over issues of cost.

    Most U.S. physicians ascribed “major responsibility” for reducing health care costs to trial lawyers, health insurance companies, and pharmaceutical and device manufacturers.

    In contrast, 59% thought practicing physicians were only “somewhat responsible.”

    Publication Source: Mayo Clinic

  12. Reducing Costs – Here is How?
    [MediBid™ provides affordable quality access and choice in Health Care]

    This Doctor-Patient bidding system introduces true transparency and competition, saying that is makes quality healthcare more accessible and affordable for all.

    http://medibid.com

    MediBid is an online marketplace which reports to be about quality, choice, and value.

    Many insurance companies show you no more than whether your doctor is “in-network” or not. MediBid allows you to see the training, education and experience of the doctor before you make your selection. The doctor’s profile, or bid, will usually include specifics such as how many of your procedure they perform per year.

    Any thoughts?

    Curtis

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