Health Care Costs Rise Nearly 6 Percent Nationwide: Report

Health care costs are rising for private health insurance companies, Medicare and patients, new studies show.

Health care costs are rising at an ever-increasing pace, according to a new report.

Health insurance companies and Medicare paid 5.8 percent more per capita for health care services in the past year, according to Standard & Poor's Financial Services. Spending grew in every category of health care reviewed by S&P, which examined costs for the year ending February 2012. Costs are expected to increase at a faster rate over time, the report says.

Private health insurance spending on health care grew nearly three times as quickly as spending by Medicare, the report on the S&P Healthcare Economic Composite Index shows. Private insurance costs rose 7.7 percent compared to 2.7 percent for Medicare. Private insurers' hospital costs increased by 8.4 percent, which was more than four times faster than Medicare's (h/t Milwaukee Journal Sentinel).

The discrepancy between the costs for Medicare and private health insurance companies comes down to the prices hospitals, physicians and other medical providers charge, said Paul Ginsburg, president of the Center for Studying Health System Change, a Washington-based research organization. Medicare, as well as Medicaid, is reducing the fees it pays as a budget-cutting measure and hospitals that have the market clout are raising prices for private insurance plans, Ginsburg said.

Health care spending in the United States increased by a factor of 10 since 1980 and reached $2.6 trillion in 2010, according to the Centers for Medicare and Medicaid Services. Families, employers and government programs are bearing the burden of rising health care costs, which are making health insurance too expensive and driving up the number of Americans who are uninsured. Joblessness and the poor economy are forcing many people to go without needed medical care.

Costs also grew for people who get health insurance from their jobs, according to Thomson Reuters. Health insurance premiums for workers rose 3.8 percent during the fourth quarter of 2011, compared to a year before. Hospital costs again led the way, increasing 5.6 percent, based on insurance claims data analyzed by Thomson Reuters.

So far, big private health insurance companies' bottom lines are doing just fine, however. UnitedHealth Group, the largest U.S. health insurer, had low costs during the first quarter of this year because cash-strapped customers received fewer health care services, the Minneapolis Star-Tribune reported. UnitedHealth Group's profit rose 3 percent to $1.4 billion compared to the first three months of last year, the company announced Thursday.

The health care reform law enacted two years ago by President Barack Obama aims to rein in escalating health care costs through a variety of policy changes. The law slashed Medicare payments to hospitals and other health care providers by $455 billion through 2019 and includes rules linking fees to improvements in efficiency, safety and quality of care. Health care reform also includes a tax on the most expensive health insurance plans that begins in 2018 and is designed to encourage employers and workers to choose less costly policies.

Comments

[forestlady]

01:52 PM on 12/11/2012

In a couple of years, after we've all been eating a diet of mostly GMO foods and virtually everyone has health problems, it will be interesting to see how the for profit health care insurers will react at the extremely high cost of paying for everyone's bad health with tumors, etc. I wonder how that will turn out, will there be a war between Monsanto and United Healthcare et al?

[Jerry Lammers]

11:14 AM on 04/21/2012

If you want health care costs to stop rising, you have to make people pay their own way. As long as the vast majority of costs are paid by 3rd parties, there is absolutely no incentive for health care providers to be cost competitive. To be effective, while not perverting the pricing mechanism in the health care marketplace, all health insurance (public and private) must be limited to covering the catastrophic costs associated with rare events.

[RMosesNJ]

12:24 PM on 04/23/2012

Just ignoring the problem though.

[forestlady]

01:49 PM on 12/11/2012

Or we could just eliminate the for=profit health care insurers. In Switzerland, everyone is mandated to pay for health care but it's only $35/month because everyone pays for it. It's the for=profit health care insurers that are making the cost of health care skyrocket and it's been that way for decades.

[JoeMomma]

10:19 AM on 04/21/2012

This is great news. Hopefully costs will get so high that only the 1% can afford it. And then we will get single payer.

[JoeMomma]

10:15 AM on 04/21/2012

Why are our medical costs rising so fast? Because we are eating poisons. And if we do it long enough, we will get cancer and heart disease. Simple solution? Eat fruits and veggies exclusively. It will change, and extend, your life.

[Alux]

01:52 AM on 04/21/2012

Who cares?

With Obamacare, the 1%ers will pay for all your plastic surgery, as much as you want. Everything else too!

We will be completely protected from the effect of rapidly rising health care costs.

Won't We?

[VikingQuest]

08:54 PM on 04/20/2012

"Health insurance companies and Medicare paid 5.8 percent more per capita for health care services in the past year"

The "affordable" part of the ACA is coming . . . maybe . . .

[catbite]

07:17 PM on 04/20/2012

Health care costs are growing out of hand, and practitioners spend less and less time with patients. I went to a specialist yesterday who refused to listen to me and said I probably had cancer. $$$$ I cancelled my follow up. I pay too much for lousy advice.

[forestlady]

01:53 PM on 12/11/2012

Oh geez, I hear you. I've had way too many experiences like that with M.D.s It took 15 years for them to figure out I had low thyroid and during that time I could barely function - for 15 years. Finally, after years of research, I was able to figure it out for myself and even then they wanted to give me the wrong meds, the synthetic stuff just doesn't work as well as the natural dessicated thyroid, which M.D.s strongly discourage - because it doesn't come from big pharma.

[ECJIM 3ABTPA BONHA]

06:59 PM on 04/20/2012

I hate to image what this is all coming to. Higher health care, stagnate wages, higher food and gas prices and less and less crappy jobs. "There's a storm coming"

[Drama Llama]

12:30 AM on 04/21/2012

We can only hope the storm comes.. It has already come to soo many countries where citizens are tired of their Government..

I think in the US it will not happen though.. I call it the LATTE theory.. Which is as long as the majority of Americans can afford their $4 latte everyday they can care less if the rest of the country is unemployed , broke , and dying of sickness.

This country would riot more if all the Starbucks closed than if we all lost our jobs lol

[authorized-user]

04:00 PM on 04/20/2012

Of course health care costs are rising, where are the cost controls???

[hellothereandhere]

05:04 PM on 04/20/2012

Cost controls and regulations cost too, but if they would cost less than the rise of healthcare costs than we might win on it.
The problem is that, on top of this, the cost controls and regulations can be bought too !

[VikingQuest]

08:55 PM on 04/20/2012

You should really look into the history of cost controls and what they actually do.

[BowZam03]

03:54 PM on 04/20/2012

Under an individual plan, I currently pay $3400 a year for catastrophic coverage. I never meet my deductible, so every medical expense is out of pocket on top of my premium. I feel our politicians on both sides are bought and paid for and as such will never put forward any reform that is in the best interest of the general population until we get the money out of politics. I would like to see the employer based system dismantled so every individual would be responsible for their own insurance. Prices would come down on both the insurance side and the medical services side if each individual knew exactly what their health coverage was costing them. Healthy people would probably do what I did, pay out of pocket for minor illness and have catastrophic coverage for major illness or accidents. I know that everybody gets all defensive when mandates are discussed, but if we are going to be a society that accepts the moral obligation of treating people regardless of their ability to pay, I do not have a problem accepting a mandate for some minimal level of catastrophic coverage. If everybody was in that pool, the premiums should be very affordable. I believe having everybody responsible for their own coverage, monitoring their own costs and managing their own health would bring costs down. It would also make our businesses more competitive and allow real wages to grow instead of just going to increasing premiums.

[hellothereandhere]

05:11 PM on 04/20/2012

"every medical expense is out of pocket" besides basic routine screening, you're not the only one...

It makes one wonder where all this money the employers already pay the insurers for, goes to.

[Drama Llama]

12:37 AM on 04/21/2012

Most companies we deal with now a days only provide high deductible plans for their employees so really a lot of people are being forced into catastrophic high deductible plans where they pay for everything up to 4 or 5 thousand dollars a year. It scares me to think of disbanding company plans because that is where the pool averaging comes in.. If you are in a company with 1000 people the insurance can gauge statistically how many serious illnesses, how many cases of cancer, how many broken arms, pregnancies, will occur and average out everyone's premium accordingly. If everyone had to go out on their own and get it companies could attack a persons health record.... They preach the pool but look at car insurance.. You get dropped if you have a DWI, then you have to go in a high risk pool and pay twice as much.

[FanMeNot]

03:47 PM on 04/20/2012

Exactly where in the Affordable Health Care Act is the cost containment measures?

[RMosesNJ]

12:26 PM on 04/23/2012

The GOP negotiated them out.

[treabeton]

03:11 PM on 04/20/2012

Health care is bankrupting the nation. Cost increases are obscene. The country needs a blue-ribbon bipartisan task force to address this issue. It needs to be a top priority and needs to address the long term structural imbalances in our current health care system.

And once the recommendations are in, we need to enact the necessary legislation, unlike the Simson Bowles debacle.

It's time to put country and the health of our citizens first. Partisanship has brought our country to a stand still. It's time to get moving again.

Will changes to the Affordable Care Act halt the rapid rise in health care costs? Assuming it is not ruled unconstitutional. If it is, then we certainly need the bipartisan task force.

[hellothereandhere]

05:25 PM on 04/20/2012

Healthcare providers want to live a high life on sick people's behalf.

[StopMakingSense2]

03:09 PM on 04/20/2012

It's been rising at double the rate of inflation for decades! And as fewer and fewer could afford it and more and more were thrown off the rubepublican solution has been? *******crickets*********
And when someone actually tries to do something about it OMG its the end of the world! Conservatives create problems they don't solve them! How did those wars in Iraq and Afghanistan turn out? Failures again..... Well I do give them credit for consistency!

[MissouriModerate]

05:00 AM on 04/21/2012

"Consistency is the hobgoblin of little minds." I think Emerson might have been the one who said that...I'll have to go look it up. It is true.

[WESTFIELD]

03:09 PM on 04/20/2012

I really don’t believe most Americans understand what a scam the American health care system is and why the costs are through the roof. We’ve all heard of the $10 aspirin charge, but what is the reason behind this?.

The reason is because the for profit health insurance companies and the health care providers, and drug companies are all part of this crazy game that they all play. The doctors, hospitals, pharmacies all know that the health insurance companies will never pay whatever they invoice. They will pay only a fraction usually a third of the invoice. Therefore they maximize whatever they charge knowing that they will only receive a third. That is why hospitals charge $10 for an aspirin because in the end they know they will get a dollar or two for it.

As an example, I went to fill a prescription and they said it would cost me $25 with my insurance. However I asked if I was to pay out of pocket without the insurance what would be the cost. They said $8. Now I realize I’m able to pay out of pocket for this but this is an example of the game that goes on.
So when one hospital is charging 5k for a blood test which in reality is probably a few hundred dollars, everything costs more and no wonder the costs spiral to the madness that we see today.

It doesn’t happen anywhere else in the world

[BowZam03]

04:08 PM on 04/20/2012

My personal example: at 36, covered under my husband's employer, I received prenatal care. I was labeled "high risk" for my age, given genetic testing, extra ultrasounds, fetal monitoring. It seemed like every test cost $500. I added up all the bills and it was over $25K including delivery. We paid 10%. Fast forward four years. Husband changed careers so we were on an individual catastrophic plan that did not include maternity. I end up pregnant again. I find a women's clinic that has a cash program. It is not means tested (I would have made too much) so it is probably the ACTUAL cost to provide prenatal care. Suddenly at 40, I was no longer high risk, didn't need all those tests, etc. The total cash package cost $4300, including the hospital delivery.
People covered under their employer usually have no idea what is being charged and the incredible waste in the system. Until they do, our health care system will remain broken.

[Pasadenan]

08:11 PM on 04/20/2012

With your original plan you had no reason to question the neccessity of expensive and maybe unneccessary tests . People with skin in the game will hold down costs.
Some of those tests such as ultrasound , genetic tests , and fetal monitoring mught not be safe for the fetus anyway.

[Drama Llama]

12:42 AM on 04/21/2012

I have a heart condition and went for my yearly cardiologist appt.. I had an EKG, Bloodwork, an office visit and an echochardiogram.. Since I have a high deductible plan I had to pay $1760 out of my own pocket.. Two months later I got the EOB from the insurance company and their negotiated rate for all of it was $960.

Worse than that I got sent for an MRI and was charged almost $3600 at the time of the procedure only to have the insurance company have a negotiated rate of $395... So if I did not have insurance I would of had to pay $3600 for that? You would think the Dr would give me a break for allowing him to not have to deal with processing that insurance garbage and getting cash money up front.

[First Blast]

03:01 PM on 04/20/2012

Has insurance company executive pay risen along with it?

[wtf is this]

11:38 PM on 04/20/2012

& profits too.