Healthcare costs have been on the rise and are predicted to continue upward. While some healthcare plan costs can be managed through healthcare literacy and intentional health choices, others stem simply from the progress of time and changing trends. Here are four common factors driving up today’s healthcare plan costs.
1. Our Options Are More Limited
Medical providers and insurers have a history of forming mergers and partnerships to benefit one another and improve efficiency. While these decisions are often lauded for helping to drive down prices, it’s equally true that they also lead to hospitals buying their competitors, including independent medical practices, and creating near monopolies on care. By increasing their market share, hospitals and healthcare providers are capable of demanding higher prices. From the insurance carriers’ and group health plans’ vantage points these mergers result in limiting the number of plans offered in their portfolios. Fewer plan options leads to a more homogenous healthcare landscape and less competitive pricing among healthcare providers.
2. The Population Has Changed
It’s as simple as this. People are living longer and more individuals are dealing with chronic illness. As a population ages, it stands to reason that its members will require more medical care. In fact, as the baby boomer generation enters retirement it is anticipated that Medicare will grow by a factor of 1.6 million people each year. In addition to aging, overall healthcare providers are seeing a huge increase in chronic health issues like obesity and connected conditions like diabetes and high blood pressure, as well as an increase in mental health disorders like depression. These chronic conditions lead to a massive increase in healthcare spending.
3. Changes In How Medical Providers Are Rewarded
Most insurers and health plans pay medical providers under a fee-for-service system. “Fee-for-service” refers to a payment system where healthcare providers are paid separately each service provided. When it comes to care, the unfortunate byproduct of this payment system is that it places the emphasis on quantity of patients seen, over the quality of care provided to these patients. An additional result is that the medical industry is incentivized to order more services than those that are strictly needed. Federal law has made efforts to move payments to a flat rate system for specific conditions, reduce repetitive testing, promote efficiency, and lower healthcare spending as a result.
4. Medical Procedures Have Gotten More Complicated
Advances in medical practices, technology, and pharmaceuticals are a wonder, but they’re also expensive. When new medical technology or treatments come to the market, they are tested for safety but there is not always a lot of information on how the latest and greatest compares to the existing procedures. Of course, patients and doctors are interested in trying the newest and most exciting medical advancements and the result is a higher cost compared to the product or procedure that has been replaced.
Addressing Rising Healthcare Plan Costs
The past several months have demonstrated the crucial importance of employee health – it cannot be understated. The best means of addressing rising healthcare plan costs is, first and foremost, to take care of individual health – through personal health choices and in taking advantage of your healthcare benefits to get regular check-ups. Healthcare doesn’t have to be complicated. In fact, Boon offers a solution that is flexible and affordable.
Click here to learn more.
Keep Up with Boon!
Have you heard of our bimonthly newsletter? It’s your source for the latest in industry updates and all things Boon! Sign-up and get the highlights, direct to your inbox.