Who is to blame for high healthcare costs?
If Not Doctors, Then What? The truth is that there is not one single factor making healthcare more expensive. Culprits include (but are not limited to) technology, administrative expenses, pharmaceutical costs, and lifestyle choices. New technology is vastly improving healthcare equipment, but of course, it's not free.
Premium increases, higher deductibles and copays, and soaring prescription drug prices result in spikes in total healthcare costs. According to the Centers for Medicare & Medicaid Services (CMS)1, in 2022, healthcare costs skyrocketed to $4.4 trillion.
Higher administrative burden on providers — for example, general administration, human resources, and quality reporting and accreditation — represents an additional 15 percent of the excess. This makes administrative complexity the single biggest component of excess U.S. spending estimated in this study.
Why Are Healthcare Costs Rising? A 2023 study by the Peter G. Peterson Foundation blamed rising prices on three big factors: population growth, population aging, and rising prices for healthcare products and services.
In fact, U.S. healthcare spending is estimated to hit $6.2 trillion by 2028. Consumers are frightened and quick to place blame. Much of this blame is landing on physicians and insurance companies. While all facets of healthcare play a role in its cost, physicians and insurance companies aren't the main culprits.
The cost of health care can lead some to put off needed care. One in four adults say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost. Notably six in ten uninsured adults (61%) say they went without needed care because of the cost.
The prospective payment system (PPS), enacted by Congress in 1983, sought to control hospitalization costs by paying hospitals a fixed rate based on the patient's diagnosis during admission (payment was based on diagnosis-related groups) (Social Security Amendments of 1983) (Public Law 98-21).
The largest shares of total health spending were sponsored by the federal government (33 percent) and the households (28 percent).
There are many possible reasons for that increase in healthcare prices: The introduction of new, innovative healthcare technology can lead to better, more expensive procedures and products. The complexity of the U.S. healthcare system can lead to administrative waste in the insurance and provider payment systems.
CMS sets fee schedules for medical services through Prospective Payment Systems (PPS) for inpatient care, outpatient care, and other services. As the largest single purchaser of medical services in the U.S., Medicare's fixed pricing schedules have a significant impact on the market.
How can the US reduce healthcare costs?
In summary, we must reduce the cost of health care in the US. We can do this by developing a health care system that emphasizes prevention rather than disease management. To do this we must encourage more physicians to be adult generalists and we must provide them with new skills.
Healthcare System Performance Ranking
Key findings: “The top-performing countries overall are Norway, the Netherlands, and Australia. The United States ranks last overall, despite spending far more of its gross domestic product on health care.
Many healthcare providers are willing to work with patients to develop payment plans and negotiate bills, especially for the uninsured or underinsured. Patients can also explore options for financial assistance or charity care through the healthcare provider or other organizations.
Most of the developed nations control healthcare costs using government intervention by negotiating for lower costs for pharmaceutical drugs, equipment, and hospital care. However, the United States continues to lead the remaining nations in health expenditures.
Hospitals don't want to be stuck with unpaid bills, and they know after the procedure is completed, people may not pay what they owe. The hospital can send them to collections or file a lawsuit against the patient. 2 But obtaining payment upfront is a more effective method of ensuring that the bill gets paid.
While these difficulties are rising across income brackets, families with low to moderate income appear to be burdened the most. The report finds that more than half of working-age adults earning less than $40,000 a year reported problems paying medical bills or being in debt from medical expenses.
Health care costs began rapidly rising in the 1960s as more Americans became insured and the demand for health care services surged. Health care costs have also increased due to preventable diseases, including complications related to nutrition or weight issues.
Unmet social needs, environmental factors, and barriers to accessing health care contribute to worse health outcomes for people with lower incomes.
If you look at the numbers, there simply isn't enough spare money in the budget to be able to afford to put every citizen on a Medicare/Medicaid program. However, if a deeper look is taken into other programs and tax breaks, affordability is possible.
Quality, affordable health care is the foundation for individuals to lead productive and fulfilling lives and for countries to have strong economies. Universal health coverage (UHC) is about ensuring that people have access to the health care they need without suffering financial hardship.
Would lowering healthcare costs help the economy?
We estimate that slowing the annual growth rate of health care costs by 1.5 percentage points would increase real gross domestic product (GDP), relative to the no-reform baseline, by over 2 percent in 2020 and nearly 8 percent in 2030.
Authorized by Title XIX of the Social Security Act, Medicaid was signed into law in 1965 alongside Medicare. All states, the District of Columbia, and the U.S. territories have Medicaid programs designed to provide health coverage for low-income people.
To live up to the ideals put forth in our constitution, equality of access to health care is a critical building step, and health care should be considered a fundamental basic human right.
Hawaii is the top state for health care in the U.S. It has the best health outcomes in the country, with low preventable death (630 per 100,000 people), diabetes mortality and obesity rates.
Personal health care expenditures—which account for the largest shares of total national health expenditures— are outlays for goods and services relating directly to patient care, such as hospital care, physicians' and dentists' services, prescription drugs, eyeglasses, and nursing home care.