The problems with rising healthcare cost in the US can be partly attributed to an aging population that has been struggling with the wrath of chronic diseases. Another thing to worry about at this moment is that the GDP growth rate is lagging behind healthcare spending.
According to a CMS report, healthcare cost will eat up a major share of the GDP at nearly 20% by 2025. In 2015, the amount spent was $3.2 trillion. This is equal to $9,990 per person and 17.8% of the GDP. An increasing overall spending on health and related services is making us poorer but nowhere has it seemed to slow down even after a decade.
In this article, you will learn about 6 major problems that are fueling healthcare cost and their potential solutions. Before we move forward, let’s have a quick look at the projected capital spending on health and related services through 2016-2025.
- Over the 2016-2025 period, total healthcare spending is expected to outpace the GDP growth rate. Going by the numbers, health spending is projected to grow 1.2 percentage points faster than Gross Domestic Product (GDP) per year over the 2016-25 period. As a result, the health share of GDP is expected to witness a jump from 17.8 percent in 2015 to 19.9 percent by 2025.
- Presuming the Affordable Care Act (ACA) will last until 2025, the percentage of Americans getting insured is projected to increase from 90.9 percent in 2015 to 91.5 percent in 2025.
- Interestingly, health spending saw a decline from 5.8 percent in 2015 to 4.8 percent in 2016. The major reason being a temporary setback on the expansion of the Affordable Care Act. In the same period, Medicaid spending growth slowed down from 9.7 percent to 3.7 percent. Likewise, private health insurance spending growth was down to 5.9 percent in 2016 from 7.2 percent in 2015.
- In 2017, overall spending on health is expected to grow by 5.4 percent. The major driver of this growth is an increased spending in Medicare and private health insurance.
(Source: National Health Expenditure Fact Sheet, CMS.gov)
These Factors are Fueling Healthcare Cost Growth in the US
- Uncoordinated healthcare system. In fact, our healthcare system is much unorganized. As a result, overtreatment of a health condition has become a common thing. Take an example, if you have a health condition that requires a medical test, there is a chance that you may have to take the same test several times. Obviously, this is going to create a hole in your pocket. In order to address the problem of overtreatment (or more precisely unnecessary treatment), doctors and medical systems are welcoming electronic health records in their practice, which is a positive sign.
- An aging population and burden of chronic illnesses. It is natural that old people are more likely to require frequent healthcare services. But what’s not natural is that many of them are obese and have more than one chronic illness. In fact, about 50 percent of US population has one or more chronic conditions. Most notably, asthma, heart disease, and diabetes. Obesity which affects two-thirds of adults is a key risk factor for all these health conditions. What’s the solution? Shed some pounds, watch your diet and engage in suitable physical activity regularly.
- Rising cost of new drugs, technologies, and services. With the advancement of health science, many new drugs, technologies, and services are making their way into the healthcare system. While this is a good thing from most perspectives, you have to pay a hefty amount to leverage the benefits. In order to streamline the cost, you should assess a new treatment’s benefits against the cost. It is necessary because many new treatments are comparable or even less efficient than the existing treatments.
- Limited resources to facilitate the choice of medical care. We have a number of choices when it comes to selecting a health service or treatment. Unfortunately, we lack sufficient information that helps us make a better decision while choosing a medical care. In fact, there is no standard source that informs patients about the cost-effectiveness of a medical service and available options. Consequently, patients often end up paying more for a service which they could have used for a lesser amount.
- The monopoly of hospitals and providers. Big hospitals and medical insurers command a high level of authority when serving the patients. Mergers and acquisitions in thehealthcare industry are, no doubt, a good thing if you consider increased efficiency and better care. But the increasing control of big organizations can backfire as well. As a result, they have a tighter control over the healthcare cost and patients are left with fewer options.
- Uncertainty about the illness. Many illnesses that have vague symptoms or long-lasting nature are yet another reason why the healthcare cost is skyrocketing. If you and your doctor are not sure about the illness, you will have to take multiple tests and procedures that will ultimately add numbers to the bill. In another common practice called defensive medicine, doctors order multiple tests in an attempt to protect themselves from possible legal problems.
Want To Know More?
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