What’s Driving Rising Health Care Costs?

At the recent Republican Presidential Debate, candidate Mike Huckabee called for a war against “a war on chronic diseases like cancer, heart disease, diabetes, and Alzheimer’s” and declared them “the things that are really driving medical costs in this country.”  This following on the heels of a recent study showing there is broad support for more federal funding for cancer research – maybe Huckabee read our article.

Not surprisingly, the Partnership to Fight Chronic Disease agreed with Huckabee and issued the following statement following the Republican Presidential debate, “With half of all American adults struggling with at least one chronic condition, and almost one in three living with multiple chronic conditions, it is increasingly clear that the number one cause of death, disability, and rising health care costs must be addressed and should be a primary focus of discussions on health care.”

They hope Huckabee’s statement will serve as a call to action for other candidates to take a comprehensive look at how improving the nation’s health can serve as an important catalyst not just for the next term but more importantly, for the future of our U.S. economy. As they say, “there is simply no doubt that if we were healthier, we would be wealthier.”

But as usual, nothing with health care is that simple. According to a report conducted by PBS News Hour and Kaiser Health News in 2012, there is no one villain in the battle against rising health care costs. But the costs are something we can no longer ignore. Currently, the United States spends more on health care services than any other country, exceeding $2.6 trillion, or about 18 percent of gross domestic product. Most years, medical spending rises faster than inflation and the economy as a whole. Many factors — and nearly everyone — contributes to those increases.

According to their study here are some of the ways you or your medical providers play a role, based on a recent report from the Bipartisan Policy Center, a think tank in Washington, D.C.

Bad news: We’re growing older, sicker and fatter.

As we get older, we tend to need more medical care. The baby boom generation is heading into retirement, with enrollment in Medicare set to grow by an average of 1.6 million people annually. Additionally, nearly half the U.S. population has one or more chronic conditions, among them asthma, heart disease or diabetes, which drive up costs. And two-thirds of adults are either overweight or obese, which can also lead to chronic illness and additional medical spending.

We want new drugs, technologies, services and procedures regardless of the cost.

Medical advances can help us get well, avoid disease and delay death, but they also drive up spending. Much new technology comes on the market after being tested only for safety or whether the new treatment is comparable to existing ones or even placebos. Patients and doctors often demand the newest treatments, even if there is little or no evidence that they are better. Prices for newer treatments are often higher than for the products they replace.

We don’t have enough information to make decisions on which medical care is best for us.

While medical journals, the Internet and the popular press are awash in health information and studies, professionals and patients find there is no broad standard for evaluating individual treatments, or how specific treatments compare with others. Even when evidence shows a treatment isn’t effective, or is potentially harmful, it can take a long time for that information to actually change how doctors practice or what patients demand, the report says. Additionally, Americans vary widely in how they view end-of- life issues, with some desiring every possible medical intervention to stave off death in every situation, no matter how small the possibility of success.

Our hospitals and other providers are increasingly gaining market share and are better able to demand higher prices.

While mergers or partnerships among medical providers or insurers may improve efficiency and help drive down prices, consolidation can also have the opposite effect, allowing near-monopolies in some markets and driving up prices, the report says. Increasingly, hospitals are buying up rivals and directly employing physicians, creating larger medical systems.

We have supply and demand problems, and legal issues that complicate efforts to slow spending.

Malpractice premiums and jury awards are part of what drives spending. A larger problem, although hard to quantify, is “defensive medicine” — when doctors prescribe unnecessary tests or treatment out of fear of facing a lawsuit, the report says. Fraudulent billing or unnecessary tests by medical providers seeking to “game the system” are another concern.

Finally, the report notes that state laws sometimes limit the ability of nurse practitioners or other medical professionals, who are paid less than doctors, to fully perform work for which they are trained. The U.S. faces a shortage of primary care doctors, so more advanced practice nurses and others will be needed to help care for patients who gain insurance coverage under the federal health law. Conversely, the U.S. has a higher ratio of specialists than other countries, which can serve to drive up spending. Specialists have more advanced training than primary care doctors, and are paid far more.

Hopefully, health care will continue to be an important part of the debate during the 2016 election and real discussion can take place about how to address these concerns. But its clear that there is not going to be a silver bullet.

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Lindsey McCoyLindsey McCoy MPA, is an Executive Medical Recruiter and former CEO in the not for profit sector.

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