Health Care Costs
The Invisible Cost Shifting
In an effort to control costs, the federal government has reduced its reimbursement rates for Medicare and Medicaid to doctors and hospitals. The reduced Medicare and Medicaid payments have resulted in an increasing cost shift to private insurance. A California study on health care insurance premiums concluded that 9.5% of the insurance premium cost was directly related to recouping losses from the low Medicare and Medicaid payments. The uninsured also influence the premium cost. In 2007, 45 million non-elderly people in the United States were uninsured, even though 80 percent of them were from working families. According to the State of Oregon, the average unpaid health care cost of an uninsured adult is $852 annually. As a whole, the uncovered 45 million people generated nearly $40 billion in uncovered health care costs. Federal and state governments paid a portion of that but the rest was shifted to health providers and insurers. While you don?t see these shifted costs as an item on your premium, they have an impact nonetheless.
Tests, Procedures and Administration
A study by the consulting firm McKinsey's Global Institute examined health care spending in the United States. It found significant costs related to out-patient test and procedures. When new diagnostic technologies become available, they can add to costs. At the same time, they may reduce some costs by improving health outcomes. Prescription drug costs are also significantly higher in the US than other countries. The study also highlighted the costs of administration. The multiple players in the health care system generate a dizzying array of plans, processes, information technologies and computer systems in both the private and governmental sectors. The result is a very inefficient system. The inability to easily share information, even within the same entity, creates duplication of effort and greater chance of error. Additionally, these incompatible systems require highly complex processes, with an army of specialists at provider, employer and government levels to administer and support them, adding to higher administrative cost.
Controlling Costs
While governmental and private organizations grapple with the factors of cost shifting, there are programs aimed at the administrative part of the problem too. The federal government has several programs tasked with helping create more efficient information sharing among all participants in the health care system. The ability to share information more easily will result in lower administration costs and better health outcomes over time.
Aligned with the federal government efforts to develop better information sharing are Consumer Directed Health Care programs designed to reward people for accessing the resulting information on quality, outcomes and cost.
Developing and publicizing this data will eventually enable consumers to compare hospitals, doctors, treatment regimens, outcomes, etc. and choose which option offers the best result in both outcome and cost, helping mitigate the rise in health care costs in the future.
In addition to streamlined administration and better decision tools, there is also the need to maintain or improve overall health. One of the best ways to affect cost is to reduce use of costly services. Many employers have been instituting wellness programs to help employees maintain a higher level of health as well as manage and control chronic health issues. It isn't all about costs. A healthier employee base is a more efficient one. And those with chronic health challenges who are more involved with their health choices have been shown to have better outcomes. All of which have an impact on the over all costs.
Consequently, while costs may still rise as health care reform is being debated, there is much that can be done now. Taking advantage of wellness programs, making better personal choices, and the information already available to make the best health care decisions, can help limit the growth of health care costs in the interim.
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