Annual Healthcare Costs of $10,348 per person
United States health spending rising to 5.3% in 2018 is a reflection of higher prices of medical goods and services, and increased costs of Medicaid. In 2016, U.S. healthcare costs were $3.3 trillion. That staggering number accounts for 17.9% of the GDP. Even more striking, is that this translates to an annual healthcare cost of $10,348 per person in 2016 versus just $146 per person in 1960! Healthcare costs have risen faster than the annual income of most people! What is driving the massive increase in costs and care? The answer is government policy and chronic diseases.
According to a Princeton University study, the average American uses the same amount of health coverage compared to residents of other countries, but they pay significantly more than them. U.S. hospital prices are 60% higher than European hospitals. Also, government efforts to reform health care and cut costs raised them instead.
Government policy:
Between 1960-1982, healthcare costs rose by up to 14.1% in large part due to health insurance expansion. With more people covered than ever before, the demand for health services increased. With this new demand came more research and innovation resulting in higher quality, but more expensive technologies.
President Nixonโs HMO Act of 1973, provided millions of dollars in funding for HMO plans and a requirement for employers to offer them whenever available. With other financial policies unrelated to healthcare by Nixon, double digit inflation ensued and health care costs rose at double digit rates in turn. Similar rises in healthcare continued well into the 1990โs with the expansion of Medicaid coverage, and higher prescription drug and home health care costs.
Fast forward to the early 2000โs, with the 2003 Medicare Modernization Act. This act added Medicare Part D to cover prescription drug costs (which continue to rise), resulting in 17.6 million people by 2016 on the newly created Medicare Advantage program. Again, the costs rose faster than the cost of Medicare itself! Many people are without a primary care physician due to Americaโs reliance on corporate private health insurance. Uninsured patients who visited emergency rooms because they had โno other place to go for healthcareโ cost hospitals $10 billion a year. These costs to hospitals were thus passed on to Medicaid.
Chronic Diseases:
The epidemic of preventable chronic diseases in the United States is the second cause of rising health care costs. Heart disease is the leading cause of death in the United States; the silent killer. The three other leading causes of death in the United States are stroke, cancer, and chronic obstructive pulmonary disorder. All of these are preventable and would cost less to treat if they were caught in time. Sadly, most of the time they are not caught in time due to the staggeringly high costs for healthcare, doctor visits, etc. With poor nutrition, smoking rates, and obesity rates all rising in the United States as well, these chronic disease rates will continue to expand. Diabetes, another rising epidemic in the United States has an average cost of $26,971 per family and $7,900 individually (5 timers more than a healthy person).
As the population continues to age; specifically the baby boomer generation, there will be a heavier reliance on healthcare which will further the trend of increased costs. More healthcare workers and support staff, such as home care, senior living, and chronic disease checkups will be needed to supplement this coming issue.
