Cut Costs by Reducing Redundant or Inefficient Activity

J Roberts

What’s the parallel between the world’s largest car manufacturer -Toyota – and the American Healthcare System?  Read on to learn how total quality management and improved operational efficiencies can reduce waste and decrease spending in our healthcare system.

By Mark Graban and Rob Harding August 09, 2011

Enlist your employees to help find and eliminate waste in your organization’s processes.

Many hospital CEOs, including John Toussaint, M.D., the former CEO of ThedaCare, and thought leaders, including Donald Berwick, M.D., M.P.P., administrator for the Centers for Medicare & Medicaid Services, estimate that 30 to 50 percent of all health care spending can be described as waste — activity that provides no benefit to patients. This adds up to more than $1 trillion a year in the United States. Instead of merely slashing reimbursements or providing less care, there is a clear opportunity to do more — and provide the right care — with less waste and less spending.

The word “waste,” or muda in Japanese, is one of the most commonly used terms in Lean management, which is based on the Toyota Production System. According to Toyota, there are eight types of waste, each of which can be translated directly into health care:

Lean’s Eight Types of Waste

Examples of Waste Found in Hospitals

Defects

Lost or mislabeled laboratory specimens

 

Overproduction

Medications sent to inpatient units in 24-hour batches, leading to wasted medications if orders

Change

Transportation

Moving patients a long distance from the operating room to recovery

Waiting

Patients waiting weeks for an appointment, or waiting hours to be seen in the emergency department, resulting in exacerbated conditions

Inventory

Expired supplies due to overstocking and poor rotation of inventory

Motion

Staff walking in excess because high-use surgical instruments and packs are not grouped together in perioperative services

Processing

Staff writing or entering the same patient information into multiple forms or software screens

Human potential

Nurses dragging bags of dirty linen down the hallway; staff members unengaged in improvement activities

In health care, Lean teaches us to engage all staff members in a never-ending search for waste, making quality and process improvements that benefit patients, leading to lower costs. Reducing waste is very different, in mindset and practice, from traditional cost cutting, as Lean waste reduction looks at how the actual work is performed rather than focusing on spreadsheets, budgets and financial benchmarks. Reducing errors, improving throughput, reducing staff frustration — all of these tactics reduce costs.

A Lean Perspective on Waste

Traditional organizations might see that 60 percent or 70 percent of their expense is direct labor cost. This realization often leads to the idea that the clearest path to cost reduction is to eliminate people (again, often based on benchmarks). Lean methodology takes a different view: Waste reduction cannot be used to drive layoffs, as that would put an end to staff engagement in the improvement process — a core Lean principle.

Leading health care organizations that actively employ Lean tactics, including ThedaCare, Denver Health and Avera McKennan, all have “no layoffs due to Lean” commitments with employees. Engaging people to reduce waste through process improvement has led to significant savings at these organizations — more than $54 million at Denver Health, for example — along with quality and access improvement, thanks to a culture of collaboration. (more…)

Read More

Insurance mandates again hike costs

J Roberts

Recent government mandates in the state of Connecticut raise the cost of insurance for all. While the act aims to offer more comprehensive services, it may, in actuality prove as a disservice by raising the overall cost of insurance to the states residents.  Read on to learn more.

By Greg Bordonaro

While tax increases, paid sick leave and union concessions took up most of the attention during the recent legislative session, lawmakers passed a flurry of new health insurance mandates that will raise the cost health insurance for employers.

In all, seven new mandates — some of which business lobbyists have fought for years — passed the legislature and have been signed into law by Gov. Dannel P. Malloy.

A health insurance “mandate” is something for which an insurance company or health plan must offer coverage, and whose costs typically get passed onto employers.

Health mandates have been a hot political issue in Connecticut for years. The business community has long voiced opposition, citing costs. But supporters say cost concerns are overblown and that the benefits outweigh the price.

The divide illustrates a central issue in the broader health care debate. The question of how to control health care costs, while also mandating adequate coverage that prevents and treats illnesses effectively, has been difficult to answer.

New mandates passed this year:

• Expand coverage requirements for certain patient clinical trials, breast MRIs, colonoscopies and prostate cancer screenings;

• Increase the maximum annual coverage for ostomy-related supplies from $1,000 to $2,500;

• Require coverage for bone marrow testing;

• And place new restrictions on insurance companies that require the initial use of over-the-counter drugs for pain treatment.

“It is a fundamental truth that as you add benefits you increase costs,” said Keith Stover, a lobbyist for the state’s health insurance industry. “The math isn’t that complicated.”

According to a report by the Council for Affordable Health Insurance (CAHI), which is funded by the insurance industry, Connecticut had 59 mandates at the end of 2010, making it the fifth most demanding state.

While mandates make health insurance more comprehensive, they also make it more expensive, requiring insurers to pay for care patients previously funded out of their own pocket. Those expenses often get passed onto employers through higher premiums.

(more…)

Read More

Employee wellness programs help companies deal with rising healthcare costs

J Roberts

One way corporate America is tackling the rise in healthcare costs is by offering an employee wellness program.  Many are offering incentives to employees in terms of gifts and rewards for employees who become actively engaged. The benefits are worth the investment as employers are encouraging employees to take an active role in maintaining their health.

KePRO Industry News

Many employers’ healthcare costs are soaring as a result of the high prevalence of chronic diseases. This is cutting into profit margins and making it difficult for companies to expand. In order to address the situation, many businesses are looking to employee wellness programs.

For example, a group of business leaders in Oregon and state health officials recently joined forces to form the initiative Wellness@Work, according to Oregon Business. The project provides companies with an online resource that they can use gauge their employees’ levels of wellness and consider new initiatives to improve well-being.

“We’re hoping businesses will bring together a committee of employees from all departments to make changes to their workplaces,” Dawn Robbins, the state’s worksite wellness coordinator, told the news source.

She added that despite fears over the cost of the initiatives, most businesses see a significant return on their investment in employee wellness. In fact, the Wellness Council of America estimates that most will experience a return of $3 for every $1 invested.

This could help businesses handle the dramatic rise in healthcare costs that are expected to occur this year and beyond.

Read More

Be Prepared!

J Roberts

Be Prepared…Your House or Your Health? Today health care is everywhere — in the CEOs office and around the kitchen table. Five years ago it was in neither place. Does this mean that consumers are prepared for the tsunami of health care change coming? This article by our friends at Allexian Consulting describes some very real issues and some innovative models emerging to help consumers.

James D. Calver

Allexian LLC

Be Prepared!

The average consumer, Joe or Jane, age 25 or older, makes $32,000 per year, does not have a college degree, drives a car, lives in his or her own home, and holds a white-collar office job. They can tell you their grocery bill, the price and quality of food, their car price and monthly payment, their mortgage payment and house value. Ask Joe or Jane how much their health care costs —  the cost of treatments, the cost and quality of their plan, are they getting a fair price and you’ll get a blank stare.

In 2014 Joe and Jane are going to be hit by a health care tsunami. The average mortgage payment today is $700/month with $1000 of annual home maintenance on top of that. The price of health care for many families will exceed the cost of owning a home and become the biggest single expense a family has each year.

Consumers are unprepared.

For 50 years consumers have outsourced their health care. Employers chose employee health care plans and (mostly) paid for them. Physicians treated disease conditions paternalistically. Payers administered plans and guided consumer choice of their physicians.

Consumers need to in-source their care and take control.

The numbers are big. Between now and 2014, 30 million new consumers will be coming to terms with new health care programs. Surveys show that many employers will scrap their own health care plans and “dump” their employees into exchanges. The total number of consumers dealing with health care change will be far bigger than the 30 million from last year’s reform. We estimate that this will be north of 40 million consumers.

What does in-sourcing health care mean? It means taking control of all the key decisions of your own heal care. Choosing a plan, checking prices of treatments, being sure you’re getting a fair price, etc. Consumers need tools and information to manage their health care decisions.

What tools? What information? To answer these questions it is useful to compare other more familiar buying decisions — groceries and homes. When we buy groceries, we want to know the price in advance of getting to check out. We want to know the quality too. When we buy a house, we want to know the quality and price of the house, the cost of the mortgage, how much the utilities and taxes are and the general condition of the neighborhood. We also want to know how much ‘house’ we can afford and if we are getting a fair price. We get help from brokers in negotiating a fair price and get comparable house prices from Zillow and other rersources.

Buying health care isn’t exactly like buying groceries, nor is it exactly like buying a house. But it is has much in common with the two together. When you buy a health care plan, you want to know the cost and quality of the plan. You have to find a physician, you’d like to know the quality of the physician, patient experiences and quality of care. Some patients like to research their disease conditions. You want to know how much treatment is going to cost and if you’re getting a fair price (before you get to check out). You may want help negotiating a price for a big clinical treatment or procedure.

Some of these tools and information are available already. New growth business models are emerging.

Buying a Health Plan — Exchanges

Individual states will either run the exchanges themselves or outsource to a third party. Exchange businesses can charge a modest fee for operating the service that matches a consumer with a health care plan.  eHealthInsurance is a broker of health care plans. They advertise low plan rates and based on input from the consumer recommend a plan and estimate of monthly payment. From personal experience, this payment and what the health insurers eventually charge can be much higher — this is explained in the small print.

While coverage cannot be denied for pre-existing conditions, the insurers have latitude to charge more in monthly premiums for these conditions. The unwary consumer is in for some nasty surprises.

We recommend that exchanges use crowd-sourcing technology, in the style of Angie’s List, Amazon and eBay to provide reviews and feedback on plans. This information will help consumers make better and more informed decisions.

Researching a Disease

The availability of clinical information has undergone a tectonic shift. For the first time since the medicine men of old began treating ailments, all medical knowledge is available today via the web to a consumer. That shift contributes to the drive away from paternalistic clinical practice. Enlightened consumers of care use WebMD, Mayo, Cleveland Clinic and many others to research diseases and treatments.

Today 30% of consumers visit a medical web site before visiting a physician. That number is trending upwards annually. We think that creating a consumer pay model here will be difficult. For over a decade consumers have not paid directly for access to this information and we don’t think that will change.

Researching Physician Quality of Care and Patient Experience

The best physician web information services focus on aggregating publicly available information on a physician — where they went to school, published papers, malpractice law suits, etc. Some companies, like Angie’s List, have attempted to capture patient experience. At their best these sites provide information of marginal value. Comments on care are unstructured and not attributed to a particular treatment or regimen.

Outcomes information as a measure of quality of care and meaningful patient experience remain elusive for the consumer today. We believe that there is promise in Vestar’s acquisition of Colorado based HealthGrades, the health care ratings company. Vestar also owns Press-Ganey, the hospital patient rating group. Also, new companies like DocInsight that deliver information on the patient experience show promise.

Estimating Treatment Costs?

Shopping for routine health care should be like buying groceries. NexTag, the web aggregator of prices for many technology and popular consumer items has been successful over the last decade. Castlight.com is a growing service provider that can help consumers understand the status of their health plan, i.e. how much they have to spend before meeting their deductible and provides local pricing information across providers for many routine treatments.

This step toward price transparency has far reaching ramifications and inserts supply and demand pricing pressure into local markets. Physicans pay for referrals and pay to be listed.

Naysayers will rant that it’ll never work and physicians will never sign up. Those same naysayers said the same thing about airlines and hotel groups 10 years ago. Today Travelocity, Orbitz and Expedia have a valuation in excess of the major airlines and hotel groups combined!

Getting a Fair Price

This is another area of great promise. MedicalCostAdvocate.com helps consumers negotiate better prices for treatments with payers and takes a percentage of the savings. Society wins with lower cost care which in turn will force efficiencies in providers. Patients win with lower health care expenses.

Summary

Health care is about to undergo turmoil and change like never seen before. Surfers wait for “The Wave” and the Wave is coming.  Businesses need to incubate new growth and revenue models that help the consumer be prepared.

Read More

Out-of-Network Rates

J Roberts

By ANNA WILDE MATHEWS

Wall Street Journal

Patients beware: Your out-of-pocket expense for healthcare may increase. Learn about what many large insurers are doing when it comes to paying for doctors and hospitals that are not in a plans network. It could prove to be very costly to the average consumer. All the more need to obtain and advocate who can help negotiate your medical bills

Consumers know they will have to pay out of their pockets if they use medical providers outside their insurers’ networks. But because of a little-noticed change, they may find themselves with even bigger bills than they expect.

Several major insurers are now using rates based on Medicare fees to calculate payments for out-of-network providers. Those amounts are often a lot lower than what doctors and hospitals actually charge.

The upshot: Providers may bill patients for the difference. What’s more, that bill comes on top of whatever patients owe in deductibles or co-payments.

New York entertainment attorney Mark D. Sendroff says he knew he’d get a bill when he went to an out-of-network surgeon for a shoulder operation last summer. But he was shocked when his AetnaHealthinsurance plan paid only around $1,000 of the surgeon’s approximately $30,000 charge — and part of the payment was his deductible. “It was absolutely crazy,” he says.

Mr. Sendroff thought the plan was going to pay his doctor based on a “usual and customary” rate that’s supposed to represent a typical charge for his area. Instead, the insurer pegged the doctor’s reimbursement to 110% of the fee paid by Medicare. Mr. Sendroff appealed the decision, and after he contacted the New York attorney general’s office, Aetna agreed to pay more, he says.

Aetna says some of its plans began basing out-of-network payments on Medicare rates in late 2009, and typically they pay a percentage above the government program’s fees. In New York, the company says it warned insurance brokers the new system might generate bigger out-of-pockets, and mentioned the issue in a summary for potential customers. Aetna declined to comment on Mr. Sendroff’s case, citing privacy rules, but said $30,000 was “well above the average charge” for such surgeries.

Health Care Service, the nonprofit parent of Blue Cross and Blue Shield plans in Illinois and Texas among other states, began phasing in Medicare-based fees last year. Cigna says employers are increasingly opting for plans that pay a set percentage above Medicare.

Insurers say Medicare is a reasonable basis for reimbursement. An Aetna spokeswoman says the Medicare based payments are a “more consistent way of paying and keeping the premium down.” Health Care Service says the Medicare method helps “increase transparency for providers and members.”

For patients, the safest financial path is to use insurers’ networks. When this isn’t possible, they need to do their homework before getting treatment by talking to their providers and insurers. It’s best to get billing codes for each service and run them past the health plan, says Ida Schnipper of Health Champion, a patient-advocacy firm.

Patients also should watch for unexpected out-of-network providers. For instance, an in-network hospital might have out-of-network anesthesiologists. If they do get stuck with a charge they didn’t see coming, they can appeal to the insurer and also try turning to a state regulator for help. Providers also sometimes negotiate discounts with patients.

Starting in August, consumers can turn to a new usual-and-customary medical charge database operated by Fair Health, which will be available at fairhealthconsumer.org. Currently, the site only has dental fees. The nonprofit says it expects a growing number of insurers to use its data.

Read More

Cancer costs put treatments out of reach for many

J Roberts

Medical costs are on the rise again. Read about the high costs of cancer treatments that are unfortunately becoming more and more out of reach, not only for the uninsured, but for the insured as well.

By Debra Sherman

(Reuters) – The skyrocketing cost of new cancer treatments is putting advances in fighting the deadly disease out of reach for a growing number of Americans.

Cancer patients are abandoning medical care because the costs are simply too high and medical bills — even among the insured — are unmanageable and put patients at a greater risk of bankruptcy, studies show.

“There’s a growing awareness that the cost of cancer treatment is unsustainable,” said Dr. Lee Schwartzberg, an oncologist who did a study examining the factors that contributed to patients quitting their oral cancer drugs.

Cancer is one of the most costly diseases to treat, largely because many patients are treated over a long term, often with expensive new drugs that are complicated to produce and not available in generic form. As insurance companies cut all benefits, reimbursements on cancer treatments have also declined.

“When it’s an expensive drug, we have to have the hard discussion about a very substantial out-of-pocket payment. I ask: ‘Do you want to spend this money for an average improvement of just a few months of life?’ I’m very uncomfortable having those discussions because I want to focus on the patient getting better,” Schwartzberg, medical director of the West Clinic in Memphis, Tennessee, said in an interview.

Schwartzberg’s and other cost studies presented at the American Society of Clinical Oncology (ASCO) annual meeting come as U.S. lawmakers battle over ways to reduce the national debt, including cuts in healthcare funding. (For full ASCO coverage, see [ID:nN05141382] )

ASCO president Dr. Michael Link, a pediatric oncologist, said access to healthcare should be a national priority.

INSURMOUNTABLE BARRIERS

“We’re thrilled with what we consider to be breakthroughs and wonderful new therapies … yet the barriers for some patients to get them is insurmountable. It is an indictment of how we take care of patients in the United States,” Link said.

Cancer is the second-leading cause of death in the United States, after heart disease. The incidence is expected to increase with an aging population.

The costs for cancer care topped $124 billion in 2010 in the United States, led by breast cancer, according to the National Cancer Institute (NCI). That number is expected to rise as more advanced treatments — targeted therapies that attack specific cancer cells and often have fewer side effects — are adopted as the standards of care. The NCI projects those costs to reach at least $158 billion by 2020.

Until recently, almost all cancer drugs were administered intravenously. Today, about a quarter of them can be given orally, which means fewer visits to the doctor. But pills are often more expensive, have higher co-payments, and are reimbursed by insurers at lower rates than IV drugs, he noted.

Using a database of pharmacy claims paid by private insurers and Medicare, he found, not surprisingly, that those with higher co-payments quit their drugs more often.

Patients with co-payments of more than $500 were four times more likely to abandon treatment than those with co-payments of $100 or less, Schwartzberg said. Claims with the highest co-payments had a 25 percent abandonment rate, compared with 6 percent for co-payments of less than $100.

“Prices of drugs can’t be set so outrageously high,” he said. “We have a problem with cancer care … All stakeholders have to get together and compromise to translate this great science into great patient care without breaking the bank.”

Dr. Yousuf Zafar, an internist at Duke University Health System, did a separate study on the impact high medical bills have on patients’ cancer treatment. (more…)

Read More

Healthcare Costs Rise, But at Declining Rates, According to S&P Indices

J Roberts

Healthcare Financial Management Association

Perhaps we’ve seen an end to double digit increases with respect to healthcare costs. According to a recent study by Standard and Poor’s costs continue to rise but at a slower pace. What’s interesting about the report is that the Federal Government is doing a better job at containing rising costs than commercial insurers.

The average per capita cost of healthcare services covered by commercial insurance and Medicare programs continued to rise in the 12-month period ending in March, but the rates of increase have slowed down since the index hit its all-time peak in May 2010, according to the Standard & Poor’s (S&P) Healthcare Economic Composite Index.

The 5.77 percent increase in March nearly matched the lowest annual growth rate in the six-year history of the index, which recorded a 5.76 percent increase in June 2007. Since the all-time high of 8.74 percent in May 2010, the index has declined 2.97 percent in 10 months.

“It is apparent that the rates of increase in healthcare costs continue to slow down,” said David M. Blitzer, chairman of the S&P Index Committee. “While there has been some volatility within months, the general trend has been a slowdown. Costs for Medicare patients are being better contained than those covered under commercial insurance plans.”

The indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to Medicare patients and patients covered under commercial health insurance programs. The annual growth rates are determined by calculating a percentage change of the 12-month moving averages of the index levels compared with the same month of the prior year.


Read More

Care costs continue brisk growth in 2011

J Roberts

Another study revealing the ever increasing rise in healthcare costs. Tell us something we don’t know. Will costs ever level off and maybe even decrease or is that just wishful thinking? At this point, I’ll take no increase over the double digit rise in premiums and the greater out-of-pocket expense. Americans continue to pay more and get less. What’s wrong with this picture?

By Tom Murphy

AP Business Writer

Health care costs have more than doubled for some American families over the past nine years, and they show few signs of dropping, according to a

The employee portion of costs paid for a family of four covered by the most common form of employer-sponsored health insurance will climb to a projected $8,008 this year from $3,634 in 2002. That amounts to an additional $84 a week from household budgets for health care.

Preferred provider organization plans are the most common form of employer-sponsored coverage.

The rise in health care costs is slower in 2011 compared to recent years, but they are still rising much higher than costs in other consumer areas, said consulting actuary Lorraine Mayne, one of the report’s authors.

“We don’t see anything on the near-term horizon that’s going to bend that downward,” she said.

The consulting firm compiled its annual health care cost measurement, known as the Milliman Medical Index, by studying provider fees, benefits and average health care use in all 50 states. Health care costs include insurance premiums for health care and other costs that come out of an employee’s pocket like co-payments, deductibles and co-insurance payments.

Employers still pay most of the total health care cost for families, but Milliman said the portion paid by the worker reached an all-time high of almost 40 percent this year.

Counting employers’ contributions, this year’s total health care cost for a family of four more than doubled to $19,393 from $9,235 in 2002. The 2011 figure represents a 7 percent increase compared to 2010.

Health care costs are rising mainly due to price increases in categories like pharmacy, inpatient or outpatient hospital care and doctors’ office visits. Mayne said these charge increases are a bigger factor than changes in health care use.

The national health care overhaul, which started unfolding last year and aims to eventually cover millions of uninsured people, had virtually no impact on health care costs for this year, Mayne said. She also doesn’t see the new law having any “direct, immediate impact” on the trend.

The Milliman report revealed nothing surprising to Helen Darling, CEO of the National Business Group on Health, a non-profit organization that represents large employers on health care issues. Darling, who was not involved in the study, said it offers more evidence of the “serious economic and financial dysfunction of the health care system.”

“The health care system continues to outstrip everything in its growth,” she said, noting that the economy “simply can’t support this kind of expense.”

Milliman said the total for health care costs varies around the country and doesn’t represent the total for all health care plans. Variables like costs and use can differ for government-sponsored Medicare and Medicaid coverage or other forms of commercial health insurance.

Read More

Control of health costs up to you

J Roberts

By Robert Nelson WORLD-HERALD STAFF WRITER

Medical Cost Advocate is in the news. This time CEO, Derek Fitteron talks with a reporter from the World Herald about consumer medical liabilities. Read on to learn how Medical Cost Advocate can assist you in reducing some of those large medical bills.

I recently had part of my neck rebuilt with corpse bone and titanium. A week ago, the itemized bill arrived for my surgery.

At the end of page 4, I found the “sub-total of charges”:

$48,303.44.

The only charge that seemed to have any connection to any free-market reality was about $15,000 paid to the world-class spine surgeon.

Well, OK, the nurses certainly deserved to be paid well. And the room was comfortable and modern. From arrival to departure, my stay was Nebraska-friendly with German-like precision.

And I guess the fellow who managed to keep me between oblivious and oblivion during surgery should be well compensated also.

But still, outrageous.

Especially when you start digging into the “smaller” charges.

I paid $369 for what must have been a very special dose of vitamin D. Something that covered my feet was $149.28.

I see a $16 charge for a pill I have been taking every night for several years at a cost of 8 cents per pill.

Seventy-five itemized charges.

Including $1,200 for each of six titanium screws used to bolt down two small titanium plates that cost $4,918.

Feeling disconnected from the free market, I went online, joined a medical trade organization, identified the eight pieces of medical-grade titanium alloy in my neck and then emailed one of the manufacturers of the equipment in China – Zhejiang Guangci Medical Device Co. – requesting a price quote.

I’m not a doctor, or an international importer, but I’m pretty sure my sources in China could get me identical parts to those in my neck for under $50.

It’s apples to oranges for all sorts of reasons, not the least of which are the huge costs of making sure safe objects are put in your body by the right people using the right equipment.

Still, I feel ripped off.

“A lot of what you’re seeing in that bill is you paying for all the people who can’t pay,” said Derek Fitteron, president and CEO of Medical Cost Advocate localhost/wp1, a New Jersey-based company made up of health care attorneys who negotiate with providers to lower the bills of patients they represent.

“Most of the problem really isn’t greed,” he said. “You’ve got a host of reasons that drive even those providers with only good intentions to give you bills that look outrageous.

“You might notice that some of those numbers that seem outrageous to you are even a negotiated price that your insurer has agreed to.

“That doesn’t mean a provider isn’t going to try to make you the person who covers the extra costs they’re seeing or the debts they aren’t getting paid,” he said.

His company makes its money because his staffers know the wholesale prices and going rates for all things medical.

His people argue with the provider. Then, like an attorney who wins a settlement for a client, his company takes a percentage of the money it saved the client.

Fitteron said that controlling outlandish medical costs ultimately is up to the consumer. You need to study the details of your health coverage. You also need to discuss with the provider the costs of a procedure prior to having the work done, he said.

“It’s the old adage: Five different people walk into the hospital with the same problem, and all of them pay vastly different amounts to get the problem fixed,” he said. “You have to be a smart and savvy shopper to be the one who pays less.”

Less? I asked. Seems like the wrong word choice considering the huge numbers.

“That’s a relative term,” he said. “That’s ‘less’ of an increasingly huge amount of money.”

Read More

Why Health Care Costs Keep Rising: What You Need to Know

J Roberts

ABC News

By HUMA KHAN

The below article provides some insights as to why healthcare costs continue to rise. Check it out!

Republicans and Democrats may disagree on what a health care bill should include, but both parties agree that dramatically rising health care costs need to be contained.

The U.S. government spent more than $2.3 trillion on health care in 2008, more than three times the $714 billion spent in 1990, according to the Kaiser Family Foundation. In 2008, U.S. health care spending averaged $7,681 per person in 2008.

To put that into perspective, the United States spends twice as much on health care as it does on food, according to the McKinsey Global Institute, even though the prevalence of disease is relatively less than in comparable countries.

At the same time, for consumers, premiums continue to rise sharply. Since 1999, they have increased 131 percent for employer-sponsored health coverage, according to Kaiser. Stories of families facing unaffordable premium hikes can be found across the country.

“Health care costs are partly so high because they have been increasing rapidly,” said Stuart Guterman, assistant vice president for the Commonwealth Fund’s Program on Payment System Reform. “There’s a long list of factors like technology and the organization of health care that doesn’t promote efficient and effective care.”

Despite President Obama’s bipartisan health care summit last month, both parties continue to bicker about what should be included in a health care bill, with each side presenting its own argument on what specific health care costs should be contained.

Some experts argue that while the health care bill, as proposed by Obama and congressional Democrats, expands benefits and seeks to implement insurance reforms that would open up coverage to a wider scope of people, it does not address the core issues behind rising health care costs. Proponents of the legislation argue that it is a start and creates the foundation for sustainable changes in the long term.

Here are some of the drivers of cost increases: (more…)

Read More