A quick roundup of the issues driving the healthcare reform conversation.
Week in Review
CONSUMER COSTS Rising hospital prices are to blame for the increased cost strain on consumers.
Quick takeaway: A new report shows that hospital prices have been rising faster than insurance premiums since 2006.
Digging deeper: The data, published in a recent Health Affairs Scholar report, examined consumer prices for health insurance, hospitals services, and professional services from 2006 to 2023. The analysis shows that the hospital price index rose steadily between these years – outpacing insurance premiums and professional services.
To further understand what’s driving this increase, researchers evaluated the profit margins of hospitals and health insurers. That examination revealed that hospitals (both for-profit and nonprofit) consistently maintained higher profit margins than insurance companies.
What it means: As healthcare costs continue to weigh heavily on American consumers, researchers conclude that high hospital prices are what’s driving rising insurance premiums.
SMALL BUSINESSES Rising healthcare costs are chipping away at America’s small businesses.
Quick takeaway: An increasingly large share of small employers’ payroll costs is now going to covering their workers’ healthcare benefits.
Digging deeper: While the pain of rising healthcare costs is nothing new, according to a new analysis, small businesses are bearing a disproportionate share of that burden.
A typical small business with two or more employees and annual revenues of $600,000 or less, saw 12 percent of their payroll costs going to providing healthcare benefits last year. For businesses with revenues of at least $2.4 million, that figure was 7 percent.
What it means: The analysis adds to the worrying narrative surrounding small businesses’ ongoing struggles with rising healthcare costs. As recently covered, surging healthcare prices have been linked to lower employment opportunities with business owners having to prioritize staying afloat rather than investing in their own growth.
Rx PRICES Prescription drug prices have skyrocketed nearly 40 percent since 2014.
Quick takeaway: Over the past decade, the cost of drugs in the U.S. has gone up 37 percent, far surpassing the rate of inflation.
Digging deeper: Though the price increases have slowed slightly in comparison to previous years, Americans’ out-of-pocket expenses continue to go up, with the average person now spending $16.26 per prescription, with $21 billion already being spent out-of-pocket this year.
The increase has other trickle-down effects as consumers’ deductibles have nearly doubled over this period, with copays also on the rise. Not only that, access to life-saving medication is also being impacted.
What it means: With Americans already buckling under chronically high inflation and interest rates, the continued upward trajectory of prescription drug prices makes the cost of everyday necessities, like groceries, rent, and gas, that much more expensive.
MEDICARE SOLVENCY Lawmakers turn their attention to addressing the financial health of Medicare.
Quick takeaway: Despite acknowledging that the clock is ticking on the program, federal lawmakers have yet to agree on a clear path forward for Medicare’s financial future.
Digging deeper: During a U.S. House Budget Committee hearing last month on federal entitlements, members of the Committee from both sides of the aisle said they supported efforts to bolster the flagging finances of the Medicare program, which now serves more than 67 million American seniors.
With more Baby Boomers aging into the program every day, government actuaries are raising the alarm on a critical funding imbalance, brought on by growth in the number of beneficiaries enrolled in Medicare, while the number of workers paying into the system dwindles.
But, there’s hope.
What it means: A study released last year shows that if Medicare was run like the increasingly popular Medicare Advantage (MA) program, its solvency could be extended by as much as 17 years.
According to the analysis, original Medicare’s inefficiencies are driven by an overuse of services and poorer performance in keeping patients out of expensive hospitals.
Medicare Advantage plans’ focus on care coordination and investment in supplemental benefits ensures seniors enrolled in MA plans save money, have access to enhanced benefits, and enjoy improved health outcomes – all of which could be combined to make Medicare sustainable for future generations.
Spotlight
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