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Groundbreaking Study Shows Why Fixing Healthcare Costs Is Still a Top Priority

And repealing the Affordable Care Act certainly won't magically lead to better outcomes.

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The greatest rip-off in the world is getting worse. According to a groundbreaking study released last week ( PDF), the cost of employer-based health insurance – which covers a majority of the population -- has risen at twice the rate of inflation during the Great Recession, even while Americans have come to use less medical services.

It is a tragic irony that even as Washington debates whom to screw over to cut the Phantom Menace of our federal deficit, it has so far failed to address the single most important factor driving those deficits over the long term (if we paid the same for health care per person as the 30-plus countries with longer average life expectancies, we'd be looking at budget surpluses). It's a problem that also leads to tens of thousands of unnecessary deaths annually, creates some of the worst health outcomes in the developed world, makes American firms less competitive in the global marketplace and contributes a great deal to wage stagnation for the middle class and the working poor.

In 2009, the Democrats passed a series of insurance reforms misleading dubbed “healthcare reform.” Many of those reforms were valuable tweaks to our private insurance system, and while many Americans are wary about the law as a whole, when asked about the specifics, most of the law's parts are quite popular.

But Congress didn't reform the healthcare system in a way that would significantly "bend the cost curve," and the new study – which uses insurance industry data that was made available to the public for the first time (other studies extrapolated from Medicare payment data) – shows that the costs of medical services continue to climb much faster than the economy – or wages – are growing.

Chapin White, a senior researcher at the Center for Studying Health System Change, told Kaiser Health News that the report shows that working people covered by their employers "are paying more and getting less" because hospitals and other medical providers "just seem to be able to raise prices faster than general inflation."

In some areas – like ER visits, outpatient surgery and mental health services – prices have increased at five times the rate of inflation.

But the study also shows that the rate of increase in healthcare costs has slowed during the downturn compared to their staggering climbs during the decade prior. If our healthcare system were growing more efficient, that would be good news, but while there is some evidence that Obamacare is in fact beginning to reduce costs to some degree, the bigger story is that many Americans are simply foregoing services.

Because while healthcare costs – and insurance premiums – continue to climb, an ever-larger share of the burden of those costs has been shifted onto the backs of working people. A recent study found that half of those respondents who had been sick during the previous year thought that the “quality of care” they'd received was a problem, and three in four identified rising costs as a serious issue.

As economist Jared Bernstein notes, “we’ve got recession-induced falling incomes bumping into faster growing prices for health services. Add in increased cost-shifting from employers to workers and you’ve got a pretty good recipe for lower overall spending.”

Compounding the madness is a push by the right – and some on the left – to roll back those insurance reforms passed after a year of bloody political combat. Forget for a moment about the lifetime and annual caps on out-of-pocket expenses, the requirement that preventive care be covered without co-pays (which should eventually result in some cost containment), the provision allowing young adults to stay on their parents' plans or closing the “donut hole” that requires seniors to pay a big chunk of their prescription drug costs out-of-pocket. Just consider that 10 million low-income Americans – people largely priced out of the market at present -- will be eligible for single-payer public healthcare as the threshold for Medicaid eligibility goes up by 50 percent. (According to one study, 75 percent of low-income workers lack health insurance.)

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