If rising healthcare costs were clearly due to improving health outcomes, few would be angry. The anger arises from rising fraud, inefficiency, and inertia. Many healthcare workers are paper pushers and the paper pushed is often inaccurate and opaque. Other healthcare workers enforce protocols that slow innovation. And of course mandated regulations, most notably Phase 3 clinical trials, enormously increase costs.
(p. A3) The killing of a health insurance executive in New York City prompted a furious outpouring of anger over the industry and healthcare prices. So just how much have healthcare costs and spending been going up?
The short answer: a lot. National healthcare spending increased 7.5% year over year in 2023 to $4.867 trillion, or $14,570 per person, according to data released Wednesday by the Centers for Medicare and Medicaid Services.
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The 7.5% rise represented a much faster pace of growth than the 4.6% increase in 2022.
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Over the past couple of decades, the price index for what the Labor Department classifies as medical care—which includes visits to doctors, hospital stays, prescription drugs and medical equipment—has risen roughly 40% faster than the overall pace of inflation. Healthcare tends to rise more quickly than overall inflation because of high labor costs in the sector, as well as advancements leading to new and more expensive drugs and treatments. Demand for healthcare is also increasing as the population ages.
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Hospitals are . . . adding billions of dollars in “facility fees” to medical bills for routine care at outpatient centers, according to reporting by The Wall Street Journal. That means patients are often paying hundreds of additional dollars for standard care like colonoscopies, mammograms and heart screenings.
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Employers are shouldering a lot of those costs. For example, the average worker spent $6,296 in premiums for family coverage in 2024, according to KFF [a healthcare nonprofit]. Employers spent $19,276.
But when a company is paying more for insurance premiums for its workers, that leaves it with less money for giving out raises or reinvesting and expansion.
“It’s ultimately all of us who pay for [healthcare] either in the form of lower wages for people who have employer insurance or in the form of higher taxes to cover Medicare and Medicaid,” said Katherine Baicker, professor of health economics at the University of Chicago.
For the full story see:
(Note: ellipses added. The first bracketed words were added by me; the second bracketed word was in the original.)
(Note: the online version of the story was updated December 18, 2024, and has the title “Why Are Americans Paying So Much More for Healthcare Than They Used To?” Where there is a slight difference in wording between the print and online versions, the passages I quote above follow the online version.)
The source for some of the data discussed in The New York Times article appears to have been: