Health Care CostsHR Resource
April 3, 2013 — 2,092 views
The health care industry is a billion dollar industry. It is common knowledge that health care costs are escalating on a daily basis. But not many people are aware of the factors that are driving the costs up and the trends in health care costs. Understanding these factors will give you a clear idea as to what kind of insurance policies you can buy. Here are some interesting facts and trends on healthcare costs.
The Insured and the Uninsured
It is a well-known fact that more than 20% of the population in the US is under-insured and no one has been able to get an accurate measure of the population percentage with uninsured costs. Before you wave it off as ‘not my problem’, think about this. Uninsured and under-insured people drive up healthcare costs, reduce the number of healthy working people, limit tax revenues, etc. All these ultimately fall on your shoulders, albeit indirectly. So, it is important that every person should have proper insurance with the right facilities.
Some Healthcare Cost Trends
A leading insurance company conducted a survey recently and it showed some interesting trends about healthcare costs. This included the costs of the entire population, insured, uninsured, and under-insured. The survey showed that 33% of the total healthcare costs are directed towards clinical and physician services. 20% of the total healthcare costs go towards hospital’s in-patient treatment, while the out-patient spending in the hospitals account for 15% of the total healthcare costs. Prescription drugs scores the second place in terms of the total healthcare spending accounting to around 28% of the total healthcare costs. This leaves out 5% of the total costs. This was termed as miscellaneous or ‘other medical costs’ by the surveying company.
The company also reported that the total cost is growing by almost 11-15% a year with the percentage fluctuating on a regular basis.
Factors Driving Healthcare Costs
Here are some of the key factors that are influencing healthcare costs.
- Pay per service method: Insured and non-insured people pay doctors and hospitals on a pay-per-service method. The more services you avail, the more you pay. This leads to people with insurance and money being over-treated and tested repetitively without need. The uninsured and under-insured do not get the required treatment.
- Decrease in quality of lifestyle: Although the general awareness about well-being is good, we are becoming unhealthy by the day. Unhealthy lifestyles are promoting diseases indirectly.
- Need for the latest and best procedures and services: Are you willing to stick to an old established procedure even if it will cure you, if a new and better one is available? No. You say I am paying insurance premium and I deserve the best. In a way, you are right. But this will also mean that the costs grow exponentially on a regular basis.
- Tax benefits on insurance: Since you get tax benefits when you buy insurance, you go for the costliest and the best one. Also, since you have a host of benefits your insurance gives, you tend to overuse those services. Even for a small issue, you seek over the top treatment. Since your insurance company covers you and gives you the right to avail those services, the hospitals are duty-bound to give them to you.
The aforementioned are only a few main factors of the long list of factors that are causing your healthcare costs to grow at an exponential rate. As a responsible citizen of the country, make sure that you use the privileges you have carefully, so that everyone can get the healthcare they deserve.