Being sick is expensive, even for the insured.
Healthcare is costly for the average American.
Health insurance premiums, deductibles, copays, medications, surgeries, and other treatments add up fast. If it feels like it’s harder now to afford all those medical expenses than it used to be, you’re not wrong.
Based on an analysis of the Bureau of Labor Statistics Consumer Expenditures report (1984-2017), the average American household spent approximately twice as much on healthcare in 2017 as they did in the 1984. This comparison was adjusted for inflation.
Our national economy is also feeling the strain from rising healthcare costs. In 2018, the US spent more than $3.3 trillion in annual healthcare expenditures.
17.8% of America’s GDP was made up by national health expenditures in 2019. That’s the highest percentage in the developed world.
Unfortunately, personal and national health costs are projected to continue to rise.
Why is healthcare so expensive in the United States?
No. 1: Treating people over the first 10 days and last 10 days of their life.
Huge progress has been made in our ability to save premature babies and extend the life of the elderly. However, these innovative procedures are very expensive.
The sickest 5 percent of the population consume 50 percent of the total healthcare costs. In contrast, the healthiest 50 percent only consume 3 percent of the nation’s healthcare costs.
The US gives care even if the prognosis is poor. The same approach is not used in some other countries.
Overall, quality of care excels in many areas in America. Despite this, the US has worse population health outcomes – lower life expectancy and higher maternal and infant mortality rates – and worse access to care than other wealthy countries.
No. 2: Rise of malpractice lawsuits.
Doctors are likely to over-test, ordering $1,000 MRIs and $1,500 colonoscopies. This may be done to protect them from getting sued, even if they don’t think they are needed. This is called “defensive medicine.”
As a side note, from my experience, the same impulse to test does not seem to be the case for autoimmune diseases, such as celiac disease or Hashimoto’s. Yet, these tests cost far less than an MRI or colonoscopy. They also have the potential to save the patient and our national economy a huge amount of money through gaining an accurate diagnosis and effective treatment plan.
In response to the rise in malpractice lawsuits, medical malpractice insurance premiums have gone up. This means our doctors have to pay significantly more for the same level of protection.
This spike in cost to our healthcare providers, has the potential to profoundly affect the healthcare system. Premiums may influence physicians’ decisions to join or leave their profession, their choice of medical specialty, and which state to work in. This may create the potential for underserved patient populations in certain specialties or geographic areas.
Both rising malpractice premiums and defensive medicine practices may contribute to rising health insurance premiums for patients.
No. 3: Less price competition.
In other industries, such as consumer electronics, consumers price shop for the best value computer or TV. In contrast, most people don’t pay for each individual doctor appointment, lab test, or medical procedure. Patients only pay a set copay, while the insurance company pays the rest.
This is, of course, assuming you have insurance and are going to an in-network provider and receiving services that are covered by your specific health insurance plan.
For my family, we see a lot of out-of-network providers. I’d certainly prefer to see in-network providers, but often they don’t exist in my area or don’t provide the types of services we need. This makes our out-of-pocket expenses annoyingly high.
I’m sure many of you can relate.
The same medical services, procedures, and medications are costing Americans up to twice what people in any other developed country pay.
The US leaves drug pricing to market competition. In other countries, drug prices are regulated more or less by their governments. As a result, pharmaceutical companies are making the most money from the US market.
Physicians’ salaries are also much higher in the US than in other wealthy countries. Double or more depending on the specialty.
Finally, healthcare administration costs are another significant factor driving up American healthcare spending compared to other countries.
No. 4: Increasing rates of preventable chronic diseases.
Chronic diseases are the leading cause of death and disability in the US. One out of every two adults have at least one chronic illness, most of which are preventable.
Depending on your disease or diseases and the type of health insurance you have, this can translate to hundreds or thousands of dollars spent each year in out-of-pocket expenses.
90% of all healthcare spending in 2017 was for people with chronic and mental health conditions. Yet, only 3% of the US healthcare budget is spent on preventing diseases each year.
Those without health insurance, tend to delay seeking medical support until the problem becomes severe. As a result, the uninsured are more likely to use emergency rooms as primary care physicians.
Preventing or better managing the symptoms caused by chronic diseases can reduce the significant costs to both patients and our national economy.
An unhealthy diet and modifiable lifestyle choices are the leading cause of chronic disease. They also increase your risk of developing common mental health concerns, such as depression and anxiety.
3 Tips to Save You Money
No. 1: Do your research when shopping for health insurance.
Compare plans to make sure you’re getting the most comprehensive health coverage they can afford. Ask your HR department if they can help advise you. Consider hiring a health insurance broker to help you find the best health insurance plan for your needs. They work for you, not the health insurance company. Some brokers may charge fees, but typically, they make their money off the insurance company by commission.
No. 2: Use a health savings account (HSA) to supplement your current insurance.
Most high deductible health insurance plans offer you the option to use an HSA. If you have a low deductible plan, you may have a Flexible Spending Account (FSA) instead. Some employers also offer their employees the option of using a Health Reimbursement Arrangement (HRA).
An HSA/FSA/HRA can help you pay tax-free for out-of-pocket expenses such as copays and deductibles. As of 2017, Health Coaching is also a reimbursable expense!
Talk to your HR department or call your health insurance company directly to find out how you can set up an HSA/FSA/HRA and start saving.
No. 3: Invest in your health so you don’t have to pay for your illness.
This means taking care of both our body and mind.
When we are healthier, we don’t get sick as often. As a result, we do not have to go to, and therefore pay for, sick visits or specialists’ appointments as often.
We also reduce our risk of developing preventable chronic diseases. And we reduce the severity of the chronic diseases we already have. In turn, our dependence on pharmaceutical medications, costly treatments, and risky surgeries also reduces.
Most of us find ourselves prioritizing every other part and person in our lives before ourselves. Our health sits at the bottom of the priority list for too many of us. This is particularly true for mental health concerns.
Let’s stop this needless suffering. Because you’re worth it!
“This program not only helped me to learn about nutrition, but as the name implies, it helped me to gain balance in ALL layers of my life– from nutrition to finances, personal relationships to physical activity.”Nicole J.
Health coaches serve an important role that is not currently being filled by our medical model. I help you implement the dietary and lifestyle modifications needed for better health and greater happiness.
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The National Bureau of Economic Research. (n.d.). Do Medical Malpractice Costs Affect the Delivery of Health Care? Retrieved October 17, 2019, from https://www.nber.org/aginghealth/fall04/w10709.html.
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Disclaimer: I am not a doctor. This blog post is general information only and is not to be substituted for medical advice, diagnosis, or treatment.