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 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?
This Infographic highlighted the rising healthcare costs and what could be bought with the $2.8 trillion dollars that Americans spend on healthcare yearly.
- ACA Is A Tax Cut for the Middle Class Infographic
- 3 Areas Where ACA Will Accelerate Technology Innovation
- Image credit: Newsday by Walt Handelsman
- Congress of the United States, Congressional Budget Office;Technological Change and the Growth of Health Care Spending, January 2008.
- Centers for Disease Control and Prevention. Rising Health Care Costs Are Unsustainable. April 2011.
- 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.”
- 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.
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