Prescription drugs. This is the fastest growing health care expense, and it is projected to grow at 20 to 30 percent each year over the next several years. There are many newer, more expensive drugs on the market, and the use of these prescriptions is exploding. In addition, with so much television advertising, many consumers ask their doctors for expensive, brand name drugs when there may actually be a generic drug that works just as well.
Costs of some Rx's Prescription Drug Trends Fact Sheet KFF.org
Public Citizen Rx R & D
Myths
Cost of developing new technologies and treatments. Over the past decade, scientists have made significant advancements in the treatment of certain diseases. Unfortunately, just like any new product, the cost of developing these new technologies and treatments is extremely high. Plus, unlike other technology, health technology generally doesn't decrease in price over time. How Changes in Medical Technology Affect Health Care Costs KFF.org
Increased demand for health care. More and more people with medical insurance are relying on the health care system as new technologies and treatments become available. This leads to a greater number of claims for payment by insurance companies, the costs of which are passed back to health care consumers. (articles on how to be an "active consumer") Employer-sponsored coverage consumer demand for broad networks of hospitals and physicians and the easing of restrictions by health plans, coupled with hospital consolidation and a reduction in excess capacity, have increased the bargaining clout of some hospitals vis-a-vis health plans.
"Hospital spending is back with a vengeance, and the likely causes are the retreat from tightly managed care, which has increased demand for hospital services, and rising labor costs,"
The hospital industry says rising costs simply reflect rising demand. "The driving factor is Americans are using more hospital services."
But health insurance companies say hospitals negotiating for money, not simply consumer demand, fueled the increases.
America's aging population. The "baby-boom" generation is entering its peak health-care-using period. In fact, over eighty million Americans will turn 50 in the next 10 years. The cost of providing health care to them will be staggering.
All of these increased costs flow through insurance companies and eventually trickle down to employers in the form of higher medical costs.
"The volatile combination of rising costs, increasing premiums, and a slowing economy have set the stage for consumers to pay more for care and an increase in the number of uninsured Americans," Ginsburg said. heartland.org/upenn.edu/semo.edu/
In the private insurance market, cost containment is largely left to market forces. Insurers compete with one another for customers partly on the basis of price. When the insurers are managed care plans, they have some influence on medical costs through their contractual relationships with participating providers, who may agree to fee constraints because of their desire to be included in the plan's provider networks and to have access to that source of business. Health plans often also implement various utilization controls to limit service use.
Price competition among providers is less intense, since most consumers of health care are covered by insurance and are thus relatively insensitive to provider prices. However, various forms of patient cost-sharing are designed to give consumers incentives to avoid excess utilization and to choose less expensive medical alternatives.
The public-sector buyers achieve cost control primarily through administered prices for providers. The state sets the fees it will pay Medi-Cal providers and health plans participating in either Medi-Cal or Healthy Families, and has other features in place to control utilization.
Although there is no consensus about what proportion of our resources should be devoted to medical care, many believe the present system does not adequately contain costs. Health expenditures have risen more rapidly than wages and represent an increasing proportion of total spending.
20 percent of Californians remain Uninsured More than half of California’s uninsured children are eligible for public health insurance
Health reform is high on the political agenda in California, and things are moving fast. www.CalHealthReform.org was created to help keep Californians up-to-date on the major proposals, analyses, hearings, and news. We also provide resources to help explain the issues and a discussion forum where you can share your ideas.
