Healthcare Costs Up…Again!
Well, the least efficient industry in the U.S. is making news again, but for all the wrong reasons. You guessed it – healthcare costs are going up again. According to the U.S. Labor Department, spending on healthcare rose in August 2016 by the largest amount in more than 30 years. In August 2016, the price of medical treatment went up by 1%. Although that seems like a small and innocuous number, compounding that 1% monthly adds up pretty quickly. “If that 1% rate were sustained each month, you’d see 12% growth for the entire year, and that would be very concerning,” said Geoffrey Joyce, director of health policy for USC’s Schaeffer Center for Health Policy and Economics. The overall cost of hospital services increased 1.7% that same month – which is the most it has gained in eleven months.
Meanwhile, prescription drugs aren’t getting any cheaper. By now, I am sure that one would have to be hiding under a rock to not have heard about such high profile prescription pricing abuses such as Mylan jacking up the price of its EpiPen by 500% and the pricing atrocities of Turing and Valeant, just to name a few of the high profile cases. But, what most people don’t know is that most pharmaceuticals, including generics, get annual price increases that defy any sense of reason or market reality.
Meanwhile, many Americans are paying more out of pocket for healthcare because they are opting for more health insurance plans that have higher deductibles. “We’re definitely seeing growth in higher-deductible plans,” said Matthew Rae, a senior health policy analyst for the Kaiser Family Foundation. “If you’re using healthcare services, you certainly might be paying more.” Twenty-nine percent of all U.S. employees now have high-deductible plans. That is a 32% increase from two years ago, according to Kaiser. Rae expects this trend to continue, partly because more employers offer intend to offer health savings accounts medical benefits. A little more than half of all workers who are covered by an employer-sponsored health insurance plan have an annual deductible at of at least $1,000.
Federal law prohibits Medicare from negotiating drug prices for its 55 million beneficiaries and is, therefore, forced to pay whatever drug makers can get away with. California Proposition 61, the Drug Price Relief Act. would require that state health programs such as Medi-Cal pay no more for pharmaceuticals than the VA, which can negotiate with drug companies.
Overall, the United States spends $3 trillion every year on healthcare – which is about 17% of total GDP. Other developed countries spend around half of that.