Trends in Healthcare Costs
Over the last three decades, the healthcare sector has grown rapidly. This has been necessitated by a growing population and their increasing demand for healthcare as well as the increasing complexity of illnesses presented within the healthcare sector. On the other hand, he globalization issues have also necessitated that the healthcare adapts to the needs of a more diverse population and hence growth (Kaiser Family Foundation, 2016). This growth has been tremendous and there is no doubt that the costs of care have been affected significantly. In the 1970s, the cost per individual was estimated at $356 but this has risen to an approximated $4, 967 in 2014. The costs for care as at the 1970s comprised up to 7.2%of the GDP while as at present the costs for healthcare comprise around 17.9%of the GDP (HCCI, 2016).
It is important to recognize that these increases in costs over the years have been associated with an increasing utilization of healthcare services based on population trends. The rising quality of care services has been mentioned as a significant influence that has driven care costs to higher levels. While this is true is some instance, there are other issues that have played an equally important role. On one hand are the issues of inflation, the prices of drugs, the hospital care costs as well as the associated costs of medical devices (Kaiser Family Foundation, 2016). Each of these issues may have impacted on costs of acre other due to the accompanying legislation, overregulation or the tax-associated costs that are gradually transferred to the patient. For instance, between the year 2000 and the year 2011, the medical devices associated taxation of up to 2.3% was seen to have a cumulative impact on the costs of care as ultimately it was catered by the patient (HCCI, 2016).
The Affordable Care Act 2010 was seen as a perfect platform on which the costs of care would be trimmed so that it is easily affordable to the less disadvantaged groups. However, the issue of insurers was not well addressed by legislation or policy such that the power of the insurers has significantly increased since the adoption of the ACA. There was little regulation as to how the federal government would control and regulate the healthcare sector so that the insurance providers did not commercialize the sector. However, it has turned out that the insurers are the major beneficiaries of the ACA especially due to the failure to have a control mechanism between the insurers and the healthcare providers (Chandra, Holmes & Skinner, 2013). In essence, a big gap was left that would allow the two parties; insurers and the healthcare providers to collude to make profits at the expense of the patient. As opposed to the expected situation where the insurance companies would compete and therefore ensure lower prices for the patients, it has turned out that they have owned the market, dominated it and now determining its fate and the associated policies (Wilensky, 2012).
The federal government through the Center for Medicare and Medicaid services has not been in a position to manage the impacts of the highly commercialized market controlled by the insurance companies and the healthcare providers. Apparently, there are many plans from which the patients can choose a health insurance plan but the variations in prices have been significantly high meaning that costs between plans are numerous (Kaiser Family Foundation, 2016). Patients have therefore been subjected to a position where the available options are many but they can only access those within the lower costs due to high premiums for instance on those plans that cover for prescriptions. The out-of-pocket costs have been increasing with an approximated spending rate of up to $810 per individual as at 2013 with projections of up to 2.2% in net spend per individual in subsequent years if the market is not controlled (Chandra, Holmes & Skinner, 2013).
The recession period was characterized by a shift to Medicaid and most people had to remain without coverage especially due to job losses. This meant that there was less utilization of the healthcare services for the period between 2011 and 2013. However, in subsequent years, and with the effects of the recession fading, coupled with the emergence of the Baby Boomers generation enrollees in Medicare have increased substantially at the expense of private plans (Chandra, Holmes & Skinner, 2013). Apparently, Medicare spending has slowed for this period due to a healthier and younger group of enrollees who need fewer of these services. With Medicare gaining its place once more and as the baby boomers generation advances in age, there is a possibility that these services will be utilized more aggressively. At such a point, the federal government is set to gain more control of the sector and therefore ensure stability. At present, the costs of care are a burden to the patients and the federal government is on a tight fist due to the power of the insurance companies (Wilensky, 2012).
References
Chandra, A., Holmes, J., & Skinner, J. (2013). Is this time different? The slowdown in healthcare spending (No. w19700). National Bureau of Economic Research.
HCCI. (2016). 2014 Health Care Cost and Utilization Report | HCCI. Retrieved from http://www.healthcostinstitute.org/2014-health-care-cost-and-utilization-report
Kaiser Family Foundation. (2016). Health Spending: Trends and Impact | The Henry J. Kaiser Family Foundation. Retrieved from http://kff.org/slideshow/health-spending-trends-and-impact/
Wilensky, G. R. (2012). The shortfalls of “Obamacare”. New England Journal of Medicine, 367(16), 1479-1481.
