Cost Of Health Care Rising Even More

Doctor with stethoscope in hand on hospital background

Worried about how much you’ve been spending on health care? You should be.

Hoping things will stabilize and costs will be brought under control? Good luck with that.

Several different studies released this month paint a much dimmer picture than even the direst of critics of the country’s health care woes imagined.

Americans under age 65 who were insured through their employer spent more than ever before on health care in 2016 according to the Health Care Cost Institute (HCCI)’s annual Health Care Cost and Utilization Report.

Currently American families spend about 18 percent of their gross domestic wages on health care and services. According to the journal Health Affairs, that number will rise to 20 percent shortly. Health spending for the more than 150 million people who receive insurance through their employers was $5407 per person in 2016, a 4.6 percent increase over 2015, according to a new analysis from the HCCI, a nonprofit funded by the insurance industry.

Particularly worrisome is that spending is accelerating. According to the Huffington Post, national health expenditures increased by just 3.8 percent annually from 2008 through 2013.

But analysts at the Centers for Medicare and Medicaid Services expect health care spending to rise by 5.5 percent annually over the course of the coming decade.

“There is no one villain in the battle against rising health care costs,” according to newsletter Kaiser Financial News.

“Most years medical spending rises faster than inflation and the economy as a whole. Many factors—and nearly everyone—contribute to those increases. Analysts have identified several causes, and one is the system itself. We pay our doctors, hospitals and other medical providers in ways that reward doing more, rather than being efficient,” Kaiser concluded.

Worse, though, is the demographics of the country lends itself to rising health care. We’re living longer, and more senior citizens are working than ever before. Even worse, we’re growing older, sicker and fatter, Kaiser pointed out.

According to “The Faces Of Medicare,” published by the Kaiser Foundation, as we get older, we tend to need more medical care. “The baby boom generation is heading into retirement, with enrollment in Medicare set to grow by an average of 1.6 million people annually. Additionally, nearly half the U.S. population has one or more chronic conditions, among them asthma, heart disease or diabetes, which drive up costs. And two-thirds of adults are either overweight or obese, which can also lead to chronic illness and additional medical spending.”

Given the situation with health insurance premiums—they rise by an average of 10 percent annually—and the fact that Obamacare seems to be collapsing under its own weight, it is unlikely there will be any magic elixir to reel in medical costs.

Assuming the projections made by the Centers for Medicare and Medicaid Services, which is part of the U.S. Department of Health and Human Services, are right, health care spending will rise more quickly than incomes between now and 2026. That means health care spending will place an ever-greater strain on employers, government programs, and eventually individuals, through some combination of higher premiums, higher taxes, and higher out-of-pocket expenses.

Harvard economist David Cutler notes in a Health Affairs essay, “There are mountains of evidence to suggest that a big chunk of American health care spending is wasteful, whether because it goes to administration or to care that doesn’t make people better.”

“Americans also pay the highest prices for their medical goods and services, which means not just more expensive drugs and devices, but also larger fees for doctors and hospitals,” Cutler wrote.

The pace of spending growth picked up as the economy strengthened and Obamacare took full effect, in no small part because so many millions of previously uninsured people suddenly had insurance.

And as health care gets ever more expensive in relation to income, not just poor, but even middle-class people, will not be able to afford it without greater financial assistance than they receive already and that means Medicare, which is already hemorrhaging under the weight of the added load.

Today, Medicare covers almost million people with disabilities who are under age 65, or 16 percent of the Medicare population. That’s more than double the rate in 1973, and more than double what was expected.

“Despite the progress made in recent years on value-based care, the reality is that working Americans are using less care but paying more for it every year,” said Neil Brennan, president of HCCI.

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