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Health Care Costs Higher Than Half Of Country's Income By 2037: Study
Health insurance will cost more than the median income of an American household by 2037 -- and that's the best-case scenario, two doctors contend in a new study.
The reason: Wages for U.S. workers are stagnating and health care costs are rising so quickly that even if the health reform law enacted two years ago by President Obama works as advertised, health insurance premiums will surpass income for many Americans in the coming decades, according to an article published in the journal, Annals of Family Medicine (h/t U.S. News and World Report).
Under a less rosy scenario, insurance costs will reach the tipping point in 2033, Richard Young of John Peter Smith Hospital in Forth Worth, Texas, and Jennifer DeVoe of Oregon Health Sciences University in Portland, who conducted the study, found.
Things are going to get worse without more aggressive efforts to rein in health care spending, they say:
If health insurance premiums and national wages continue to grow at recent rates and the U.S. health system makes no major structural changes, the average cost of a family health insurance premium will equal 50% of the household income by the year 2021, and surpass the average household income by the year 2033. If out-of-pocket costs are added to the premium costs, the 50% threshold is crossed by 2018 and exceeds household income by 2030.
Meanwhile, fewer workers are getting insurance from their jobs and those who do have coverage are paying higher premiums while also seeing their benefits cut back and their out-of-pocket costs grow. Health care composed 17.3 percent of the entire U.S. economy in 2010 and grew faster than gross domestic product by 2.4 percent from 2000 to 2009, the study says. Almost 50 million Americans had no health insurance in 2010, according to the U.S. Census Bureau.
Obama's health care law aims to fix that last problem. By 2021, health reform is projected to provide insurance to 24 million people through "exchanges" that allow them to find coverage and to qualify for financial assistance. In addition, the law would provide coverage for 17 million people through the Medicaid program for the poor, according to the Congressional Budget Office.
In a similar study DeVoe published in 2005, she projected that health insurance premiums would outstrip median income eight to twelve years sooner. But the reprieve isn't because anything good happened in the meantime, Young and DeVoe say in their new paper.
Health care costs are still growing, though the rate slowed in recent years, in large part because because people without jobs or insurance went without medical care during the economic downturn. At the same time, those who had jobs had less money to spend on health care as average household income declined from $50,300 in 2008 to $49,800 in 2009, the study says.
Obama's health reform law contains myriad policies designed to slow escalating health care costs. The law cut Medicare payments to hospitals and other medical providers and created financial incentives for health insurers, doctors, hospitals, and others to band together to reduce waste, improve care, and save money. Health reform will also impose a tax in 2018 on the most expensive insurance plans in an aim to encourage people to buy cheaper coverage.
Young and DeVoe are skeptical about health reform's impact on costs and favor cutting "administrative overhead" in the health care system, namely profits earned by health insurance companies.
Re: Health Care Costs Higher Than Half Of Country's Income By 2037: Study
THANK YOU!
I'm not sure about this, but I would bet if you looked back over the past say 100 years, you would not see physician salaries correlating very strongly with the cost of the delivery of health care. Meaning, health care costs/insurance costs have skyrocketed. As the wife of an FP/Sports medicine doc, I can tell you that doctor salaries have not.
Above Us Only Sky
While I am against "death panels" there will need to be big changes for real reform to take place.
Unfortunately most systems that I can think of will provide better care for those that can afford it and a minimum safety net for the masses. Of the EU countries' plans I know about (I am not an expert), I like Germany's plan best that has this aspect of a private insurance system for people who can afford to pay it.
I like the German system as well - sorta a hybrid between public and private.
I have always thought there should be age restrictions on some types of treatments - eg - knee replacements should not be given to an 80-year old obese person. Or my 90 year old grandma maybe doesn't need a 4th round of chemo. Kwim? But I totally understand the slippery slope argument too.
I don't nessarily think cuttings salaries of doctors is the best approach, I do think salaries of many physicans have risen at greater rates than those of RNs and other healthcare professions that give direct care.
I wouldn't mind seeing more medical schools open to produce supply of doctors which I know may result in less lucrative salaries. This is the same approach that nursing, pharms, and many other healthcare providers have taken and I don't believe care has suffered because of it.
Making medical school less competitive is not the way to solve the health care crisis. Lowering standards is never the answer.
Doctors are an easy target because even the lower paid ones make more than the median US salary. But that line of thinking is a trap. It takes us off track. The primary problem is that Americans are living longer and they aren't healthier during those long lives. Secondarily, and related to that, is the fact that regardless of whether you have Medicaid or BCBS, you are completely divorced from what it costs to provide YOUR health care. Not what your premiums are, but what it actually costs to get an x-ray, get a pap, get a cholesterol check. The problem is insurance companies. Doctors are not the problem. Doctors make "a lot" of money relative to the general population, but even a seven figure brain surgeon is getting paid fairly for his training, intelligence, and responsibilities.
While I'm not targeting docs because they make more I am trying to explain that there concerns about lack of reimbursement and conditions are similar in all direct care professions. While I understand the "watering down argument" of more medical schools I think we are a safe distance from having unqualified students entering medical schools, especially with the levels of PCPs that study off shore and our foreign born/educated. I strongly believe that a combination of making medical school affordable so students don't come out with $100K+ of debt and making more spots available is a good step.
While I understand that insurance companies have plenty of blame, is is true that they are one of the few parts of US healthcare that basically provides a cost savings service (whether it's offset by profits is another story). They do negotiate prices and control cost by regulating services, which is what will need to be done at one time or another.
http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx
Over half the money is going to hospitals, doc & clinical services.
According to my Canadian GP, all your money is going to the insurance companies. My GP is adamantly against private health care (he actually tours speaking against it in Canada) and has numerous studies to show how private health care actually raises costs instead of lowering them because of the cut insurance companies take.
However, we certainly have our own health care crisis here with wait times and a lack of funds, so I'm not sure that insurance companies are the only ones to blame. Just part of the problem.
I agree with SBP (la piscina?!) that one of the biggest problems is we live too long and aren't healthy enough.
I'm not saying they aren't making huge salaries. Some of them definitely do. But they deserve to.
As far as where is money going, a lot of it goes to insurance company administrative costs (somewhere between 7-30% of the dollar depending on the kind of plan you have and the size of your group), a lot of it goes to provider administrative costs (because hospitals and doctors spend enormous amounts of time interfacing with insurance companies just to get reimbursed). And a lot of it does go to doctors because we as Americans, spend a shitton on healthcare because we would rather take a pill than take a walk. I know that's over simplifying it, but this problem is largely one of spending too much money, not charging too much money. Broken record but: $300 BILLION a year spent on obesity related health care complications. $2 million is the average amount of money a person spends on health care in the last SIX months of life.
I also do not buy into the notion that insurance companies actually save us money. They do not. The result of people mentally compartmentalizing their ER visit as a $50 co-pay instead of a $2500 adventure into waste is the problem with insurance companies. As is the fact that it reduces competition between physicians by creating a shield that separates patients from "the market."
I suspect that with extremely few exceptions (cardiology + nephrology) physician salaries are not rising in step with the cost of healthcare. We are drawing on it more but we want it to cost less. That is the problem.
Sources:
http://voices.washingtonpost.com/ezra-klein/2009/07/administrative_costs_in_health.html
http://www.commonwealthfund.org/Publications/In-the-Literature/2011/Aug/US-Practices-Spend-Four-Times-as-Much-as-Canadian.aspx
http://www.hschange.com/CONTENT/851/#ib1
http://www.usatoday.com/news/health/weightloss/2009-11-17-future-obesity-costs_N.htm
http://www.cbsnews.com/2100-18560_162-6747002.html
So the mess still comes down to this: We're living a long time; we're not necessarily healthy during that time; we want to live forever; we want someone else to pay for all of it.
Also anyone who thinks insurance companies are saving us money needs to read "The Critical Condition." It's a short book, and easy read, and for people interested in the topic of HCR or insurance reform, it's really kind of mindblowing.
http://www.amazon.com/Critical-Condition-ebook/dp/B000FC2IQM/ref=sr_1_13?ie=UTF8&qid=1332792480&sr=8-13
It is very touchy... and could quickly get racist, sexist, if people are open to making a criteria age. For example... I personally would rather my tax money go towards paying for a knee replacement of a 70 year old that has good other health, has paid taxes, has no drug/alcohol abuse issues, and is all around an upstanding citizen... than to pay for a 35 year old obese, smoking, meth head to get a heart transplant.... but that is my values. My concern is whose values are going to be on a death panel. The US is made of such divergent views... I am very scared of what the ultimate "worthiness" scale would be and what do you do if you really disagree with it. This concept rocks my values to my core.
Why do we have to choose? Why can't we refuse care to both the 70 year old AND the meth head (who, BTW, would not be fat. Just sayin'.)
I am loling at the thought of an obese meth head.
At any rate, I cannot understand the idea that care should be rationed according to people's ability to pay for it. That the 35 year old obese, smoking meth head should be able to get a heart transplant as long as he can pay for it, but the 10 year old whose parents work at McDonalds shouldn't.
Yup. Personally, I'd always rather see a senior citizen who is otherwise healthy receive medical care than someone who's own actions (obesity, smoking, etc.) are what's driving up their health care costs. The senior citizen may benefit from the care for less time, but someone who continues to make the same poor health choices is going to be a cost drain for a long, long time.
My first choice, though, is reforming overtreatment.
agreed-- was rushing... obese meth head makes so sense... point is that someone who is making life choices that are causing their health problems.
I don't want any sort of rationing! Not by way of paying, age or anything else. If we have to ration... I personally would want the person's overall health to be a factor, their risky behaviors (ie- are they smoking, taking drugs, abusing alcohol, etc... problem with this is what about not sticking to a low-salt diet with HBP... that is risky behavior as well, but how do you monitor and can you imagine the backlash). I do think that if you are able to pay for it and your doctor beleives you are a good candidate, that it seems useless to have that person have to follow any panels advice. The point of a panel is to reduce costs, so if the person is not using an insurance company or the public systems (medicare, medicade) how can we make them not get the treatment? If you say that the panels are the all knowing end alls even if you can self pay... then they are not about driving down cost, but about social engineering... and forcing a value that old people are worthless upon others IMO.
Smokers are cheap though because they die young. But I agree with everything else you're saying. Probablem is, it's not the healthy 70 year old getting knee replacements that are a problem. They're a nice example to make people feel warm and fuzzy about grandpa, but the reality is that there are a ton of 85 year olds getting CABG procedures, and that sh!t should stop. My 86 y.o. FIL just got a pacemaker. I think when your 86 y.o heart wants to stop, you should probably let it. Because you're 86. And not 5.
Do you feel this way about organs right now? If a wealthy person does cocaine, smokes and eats poorly without exercising, should he be able to just buy an organ and bypass the list if the panel decides he's not an appropriate candidate for the organ?
did you miss the part about a doctor thinking you are a good candidate? Doctors are guided by the hipocratic oath right... so they should only be oking procedures that will help, not harm.
Regarding organ donation... there are currently no regulations about eating poorly and exercising... so someone who does both can get a heart transplant as long as their doctor and the transplant board ok it. Do I think that alcoholics should be able to get livers, or smokers lungs... that is a loaded question. I first and foremost think that it should come down to what is the prognosis of the person when they get it... what is the change for that person to keep doing it (like have they relapsed 20 times or were they an alcoholic for 5 years and stopped recently)... the transplant boards do make value judgements and right now... I think it is crazy that you can be obsese, eating bon bons and get a heard transplant, but not smoking and get a lung... assuming all other health conditions the same... yet that is how I beleive it is. So-- while I don't think anyone with money should be able to buy an organ, no... I do think that our transplant panels make value judgements.
Oh- by the way... unfortunately if someone really wanted to, they can go outside of the US and "buy" many organs, such as a kidney. I certainly don't advocate for this, but it is possible.
What I think is different about let's say a knee replacement than a kidney transplant... is that I do think you should be able to "buy" a knee replacment if you are just old ... it does not take away an organ from anyone, so there is no real driver for why that should not be allowed... also in a way it is an elective procedure by definition-- ie) you can live without a good knee.
A kidney transplant is different because there are a fininte # of kidneys available.