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Posted On November 11, 2018

What’s Driving Healthcare Costs So High?

Insurance contracts that limit providers, enable facilities to conceal fees, and allow hospitals to charge more are driving healthcare costs beyond reasonable limits in the United States. When insurance providers make secret deals with hospital systems, it is the patients who suffer, often with substandard care.

Hospital Care is the Greatest Driving Cost

In the United States, the single driving force of increased healthcare spending is the cost of hospital care. Hospital costs continue to skyrocket and cost consumers more than $1 trillion a year. It is startling that between 1960 and 2016, hospital costs have grown three times faster than the economy’s inflation rate.

Smaller hospitals are forced to charge higher fees while struggling to survive as insurers direct their subscribers to larger health systems where they have negotiated lower fees for care that is not always the best available. But with lower fees, many hospitals impose extra charges called facility fees.

Physician and Clinical Services Pushes Prices Higher

As hospitals consolidate and hospital systems acquire physician offices, emergency clinics, and outpatient surgery centers, prices soar. The costs of these services have increased by almost 23 percent since 2000. This is because contracts with insurers allow hospitals to charge higher prices for these out-of-hospital services. And because the hospital owns these healthcare facilities, they often tack on facility fees to their medical bills, too.

Prescription Drug Prices Continue to Rising

It takes billions of dollars to bring a prescription drug to market between research, development, and testing to gain FDA approval. Typically, prices will be higher during the first few years a drug is on the market. Prescription drug prices have experienced the highest growth rate with prices rising 69 percent since 2000.

As drugs come off patent and move to generic status, the costs should actually be lower, but that is not the case for many. There is often no way for consumers to determine the exact costs of prescription drugs, however, because the pharmaceutical industry may offer discounts or rebates to the insurer. Unfortunately, those discounts do not necessarily trickle down as savings to consumers.

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