Facts on the Cost of Health Insurance and Health Care Part 1

August 26th, 2009 by admin

By several measures, health care spending continues to rise at a rapid rate and forcing businesses and families to cut back on operations and household expenses respectively.

In 2008, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.1 Total spending was $2.4 TRILLION in 2007, or $7900 per person1. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.1

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.2

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

National Health Care Spending

  • In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.1
  • Health care spending is 4.3 times the amount spent on national defense.3
  • In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.1
  • Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.3
  • Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.4

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Employer-sponsored healthcare premiums could double in 10 years

August 21st, 2009 by admin

A recent report produced by the Commonwealth Fund found that over the past decade, insurance premiums have been growing much more quickly than income in the United States, so much so that employer-sponsored health coverage for families increased by 119 percent between 1999 and 2008. An even scarier finding: The report determined that rates could jump by 94 percent in the coming decade–to $23,842 per family.

The states with the highest premium costs for families–just over $13,500–included Indiana, Massachusetts, Minnesota and New Hampshire. Idaho, Iowa and Hawaii were all at the lower end of the spectrum, averaging $11,000 per family.

The report found that currently, 18 states have premium rates that are equal to or greater than 18 percent of the average income for a household. These types of increases are not sustainable for families or employers.

With health spending projected to double in the next ten years if we stay on our current path, middle and lower income families are at high risk of losing their coverage.

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Hospitals suffering from fewer paying patients that take longer to pay, stock market investment losses, and tighter credit from banks

March 25th, 2009 by admin

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Now, because of the recession, many U.S. hospitals are being squeezed by tighter credit from banks, stock market investment losses and many patients have become recently unemployed or otherwise lost their insurance or are now underinsured.  Many are not paying their bills.

All of these conditions have begun to trigger more hospital closings as well as layoffs, cost-cutting in the delay of purchasing new technology and stopping or delaying building projects.

The most susceptible are rural hospitals and big urban hospital in areas with excess empty hospital beds and a lot of poor patients, or the underinsured/uninsured patients.

Hospitals in the United States, employ approximately 5 million people, are reporting that investment returns are down due to the stock market, patient visits have lessened and profitable diagnostic procedures (as in MRI’s) and elective surgeries (as in joint replacements) are declining as people with inadequate insurance or high deductibles delay care. But many of those patients are turning up later at the Emergency Room, seriously ill. This makes it tough for hospitals to lay off nurses and doctors.

All those problems are aggravating their financial status: low reimbursements from commercial insurers and high labor and technology costs. The rising number of people with high-deductible health plans is increasing unpaid patient bills.

In the past year, patients and insurers have been paying hospital bills more slowly due to the economy. As a result, some hospitals want start demanding up-front payments for elective procedures. The problem with this is Medicare, Medicaid, and most commercial insurance contracts do not allow this type of practice to occur.

The cost of borrowing will likely be higher for everyone.  Hospitals borrow for everything from expansions and equipment to payroll and supplies. Hospitals will have to look to other options for huge expenses.

Some hospitals are deferring millions in equipment purchases, shifted management meetings to free facilities and adopted employee suggestions to save millions more.

Some hospitals are doing well financially if they are in control of their expenses. Many closings and bankruptcies are increasing.

Hospitals have to cut costs by outsourcing services like housekeeping, security, coding staff, transcription, and trimming staff through layoffs, and hiring freezes. Since there are many staff shortages many hospitals are trying not to touch patient care jobs — nurses, pharmacists, physical and occupational therapists and X-ray technicians.

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