Healthcare spending in the U.S. has been growing relentlessly over the last decades, becoming one of the major contributors to the nation’s long-term fiscal deficit. Even worse, healthcare spending is growing 2.4% faster than the country’s GDP, making it almost impossible to manage in this barely recovering economy. From 2002 to 2012, annual contributions for family coverage plans practically doubled. In 2011 alone, the U.S. spent 2.7 trillion dollars on healthcare, amounting to almost 1/5 of the total economy, which leaves little room for other federal government priorities like social security or other federal government roles. According to the National Health Expenditure Accounts (NHEA), the numbers for 2010 and 2009 are almost identical.
So, what are the reasons for the exorbitant rise in healthcare costs? A thorough examination by Carrington College of a variety of available data revealed that the 7 most significant causes for increasing healthcare costs are new medical technology, provider price inflation, low primary care use, high spending on specialists, aging population, increase of chronic illnesses, and fraud. These factors drive your health insurance premiums up remarkably.
As medical technology progresses, medical expenditures rise. New treatment methods and state-of-the-art equipment are believed to account for roughly half of healthcare spending since the 1960s. However, advanced quality of care isn’t necessarily the root of expensive health insurance premiums. The New York Times describes how the U.S. spends by far the most on medical care while actually not providing better care: a basic colonoscopy that costs a few hundred dollars in most other developed countries can easily run a few thousand dollar here. Health care providers negotiate fees by leverage on the market, which leads to price inflation and high premiums. Too many Americans’ also don’t have a primary care physician who can act as a gatekeeper to more expensive specialists. Moreover, the growing aging population and resulting greater prevalence of chronic illnesses translates into medical expenditures of 1 trillion dollars per year. Lastly, healthcare fraud is estimated to cost the U.S. economy billions dollars, though it is impossible to know exact numbers.
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For a more detailed description of these factors and concrete examples of how they affect your premiums, view the infographic below:
