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More Evidence Healthcare Cost Inflation is Still with Us

May 28, 2012

I’ve seen a few commentaries that suggest healthcare inflation is slowing. There are different opinions about the root causes – merely a consequence of the general economic slowdown vs. a true change in utilization patterns.

Two recent reports suggest that costs healthcare inflation is not really slowing and is still greater than the general inflation rate and the growth of the GDP.

The first is a study by the Health Care Cost Institute, which found that prices for hospitals, outpatient centers, and other providers drove up healthcare spending at double the rate of inflation during the economic downturn, even as patients consumed less medical care overall.

The second is by the Employee Benefit Research Institute, which found that the percentage of workers with employer-based insurance in nearing the 50% mark. The percent covered dropped from 60.4% in 2007 to 55.8% in 2011. No surprise here: cost was listed as the main reason coverage was dropped. (To put this in a larger perspective, something like 80% of workers had employer-based health insurance in the 70s or 80s).

Scads of evidence points to the reality that the same healthcare service, procedure, drug, hospital day, etc. costs more in the U.S. than other developed countries. This reality doesn’t change by payment model across Europe. This means the fundamental change that must occur to lower U.S. healthcare costs isn’t to change the name on the check paying for the service: HMO, PPO, high deductible insurance, Medicare, or whatever.

The change that must occur is for Americans to start telling healthcare providers, “No, I’m not buying your product or service because it costs too much.”

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One Response to More Evidence Healthcare Cost Inflation is Still with Us

  1. Tracie Updike MD on May 30, 2012 at 10:32 pm

    An xray of my foot at a fee for service free standing radiology place was 46.00 but at the orthos office same xray was 143.00. CBC cost about 50 bucks but if I have it put on my account 5 dollars. What is wrong with this picture.

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