An average American man spends a hefty amount on healthcare each year. On top of that, healthcare costs have been skyrocketing each year since 1950. In the current era, availing of medical services is no less than a luxury. Premium increases, higher deductibles, copays, and soaring prescription drug prices are some of the reasons for an increase in healthcare costs. Moreover, during the COVID-19 pandemic, a sudden spike was seen in healthcare expenses. While one can expect an increase in healthcare costs during a pandemic, there are other factors as well that drive the increasing healthcare expenses.
Here Are The Reasons Why Healthcare Costs are Soaring
1. Doctors are paid for quantity, not quality
Medical insurance, including Medicare, involves paying doctors, hospitals, and other medical providers under a fee-for-service system that reimburses each test, procedure, or visit. This means the more services provided, the more fees paid. This gives rise to a high volume of redundant testing and overtreatment, including for patients with a low potential for improved health outcomes.
Moreover, the US medical system isn’t integrated, which means there is a lack of management and communication between healthcare providers on a patient’s care. The unintegrated system can lead to a lack of coordination, resulting in patients receiving duplicate tests and paying for more procedures than they truly need.
2. Increasing expenses with newer technology
Technology has played a significant role in transforming the medical sector. With medical advances, improving health and extended life have now become possible. However, with more advancements in technology, healthcare has also become expensive. The newer technology has led to an increase in spending on medical treatments. According to the studies, Americans tend to associate more advanced technology and newer procedures with better care, even if there’s little to no evidence to prove that they’re more effective. This assumption leads both patients and doctors to demand the newest and often most expensive treatments and technology available.
3. There’s a lack of information about medical care and its costs
Despite having access to a wealth of information online, there is no consistent or efficient method to comprehend treatment options and the cost of care. Even though this is how we purchase healthcare, we would never buy a vehicle without comparing models, features, gas mileage, out-of-pocket costs, and payment options. Even when hospitals make service prices accessible, they are frequently difficult to navigate and comprehend. The No Surprises Act was approved by Congress in January 2022 to lessen this lack of openness.
The Act seeks to improve patient experience and control costs of expensive medical conditions by reducing unexpected medical bills under private health insurance plans and fostering better pricing transparency.
Conclusion
While there’s no single reason to blame the increase in healthcare costs, understanding a few critical factors can keep you informed and aware of options so you can make sound insurance decisions.
