A while ago, I opened a new box of cereal and noticed that there were far fewer flakes than usual. The plastic bag inside was barely three-quarters full.
This was not a manufacturing error.that was an example Shrinkflation.
After years of rising prices (to compensate for rising supply chain costs and labor costs), manufacturers of packaged goods began to face customer resistance. So rather than keep raising prices, big brands started giving Americans less of everything from cereal to ice cream. Fire-grilled hamburger–I hope no one notices.
This kind of covert stinginess doesn’t just happen in grocery stores or drive-thru lanes. It has been present in American medical practice for over 10 years.
What happened to medical prices?
After the passage of the Medicare and Medicaid Act in 1965, health care spending began to make up an increasingly large portion of the nation’s health care spending. GDP.
In 1970, health spending accounted for only 6.9% of US GDP. This number jumped to 8.9% in 1980, 12.1% in 1990, 13.3% in 2000, and 17.2% in 2010.
This trajectory is normal in developed countries. Most countries follow a similar pattern: (1) productivity increases, (2) the total value of goods and services increases, and (3) citizens receive better care, newer medicines, and access to doctors and hospitals. Demand more access, and (4) people will pay more for more health care.
But does more expensive care lead to better care and longer lives? As it did in the United States from 1970 to 2010. Life expectancy has increased by nearly 10 years because healthcare costs (as a percentage of GDP) have increased.
After that, American medical care reached a plateau.
In 2010, something unexpected happened. Both of these upward trend lines, medical inflation and life expectancy, have leveled off.
Health spending still consumes about 17% of U.S. GPD, the same as in 2010. Meanwhile, life expectancy in the United States in 2020 (using pre-pandemic data) 77.3 years—The number was about the same as in 2010. 78.7 years.
How did this plateau come about?
stingy with US medical costs
With the passage of time, Affordable Care Act of 2010, health policy experts had hoped that expanding health insurance coverage would lead to improved clinical outcomes, leading to fewer heart attacks, strokes, and cancers. They believed that fewer life-threatening medical problems would reduce health care costs.
That didn’t happen. True, medical inflation has slowed to match GDP growth, but the cost reductions were not due to higher quality medical care, advances in pharmaceuticals, or a healthier population. Instead, it was driven by being stingy.
And as a result of being frugal, The US fell far behind Globally comparable on measures of life expectancy, maternal mortality, and deaths from avoidable or treatable diseases.
To illustrate this, here are three situations in which being stingy lowers health care costs but leads to worse public health.
1. High deductible health insurance
In the 20th century, traditional health insurance included two copays. Patients pay a small upfront fee at the point of care (clinic or hospital), then pay a portion of their medical costs and usually pay the total amount. hundreds of dollars.
Both of these numbers began to skyrocket around 2010, when employers adopted high-deductible insurance plans to offset rising premiums (the amount insurance companies charge for coverage). Under this new model, workers would pay large sums out of pocket, up to $7,050 for individuals and $14,100 for families, before health insurance coverage kicks in.
Insurers and businesses argue that high-deductible plans force employees to be “more proactive” and encourage them to make smarter health care choices.
But instead of promoting smarter decisions, these plans make treatment so expensive that many patients avoid getting the medical help they need. Almost half of Americans I ended up in debt because of medical expenses. Additionally, 15% (23 million people) of people with employer-sponsored health insurance have experienced poor health because they have delayed or omitted needed treatment because of cost.
And when it comes to Medicaid, the government-run health care program for individuals living in poverty, the fees paid to doctors and hospitals are dramatically lower than with private insurance.
As a result, even though the nation’s 90 million Medicaid enrollees have health insurance, more and more doctors are not accepting them as patients, making it difficult for them to receive medical care.
2. Cost shift
Unlike private insurance companies, the U.S. government unilaterally sets the price at which it pays for medical care. And in doing so, the financial burden is shifted to employers and uninsured patients, leading to stinginess.
To understand how this happens, remember that hospitals pay the same amount for doctors, nurses, and drugs, regardless of how much they are paid (by the insurance company) for a patient’s treatment. please. If the amount reimbursed to some patients does not cover the cost, other patients will be charged additional fees to make up the difference.
Twenty years ago, Congress enacted a law curb federal spending on health care. This resulted in Medicare paying significantly less for inpatient services. As a result, private insurers and uninsured patients are now paying double, and in some cases triple, Medicare rates for hospital services. Kaiser Family Foundation Report.
These soaring prices result in high out-of-pocket costs for individuals with private insurance, hefty bills for the uninsured, and the strain on millions of Americans. Masu. Withholding necessary tests and treatments.
3. Delay or denial of care
Insurance companies act as a link between those who pay for medical care (companies and governments) and those who provide it (doctors and hospitals). Selling insurance requires designing a plan that (a) payers can afford and (b) healthcare providers will accept.
When health care costs skyrocket, insurance companies must either raise premiums proportionately or find ways to lower health care costs that payers find unacceptable. More and more insurance companies are choosing the latter option. The most common approaches to reducing costs are: disregard prior permission.
Although originally promoted as a tool to prevent the misuse (or overuse) of medical services and drugs, prior authorization has become an obstacle to providing good health care. Insurance companies know that busy doctors are reluctant to recommend expensive tests or potentially difficult treatments. Even if they do, patients who are tired of waiting Approximately 1 in 3 chance of abandoning treatment.
This power relationship creates a vicious cycle. One year costs go down, but the next year the medical problem gets worse, so the third year you have to cut costs even more.
The true cost of medical stinginess
Federal actuaries predict that health care costs will increase by an additional $3 trillion over the next eight years, consuming nearly 20% of U.S. GDP by 2031.
However, given the challenges of ongoing inflation and rapidly increasing national debt, it is more likely that health care’s share of GDP will remain at around 17%.
This result may not be due to medical advances or innovative technology, but rather the result of drastic stinginess.
For example, consider Medicare payments reduced This year, the copayment rate for doctors will be 2%, and a further reduction of 3.3% is proposed in 2024. Additionally, starting next year, states will begin excluding individuals from Medicaid who became eligible during the coronavirus crisis. Insurers are also increasingly leveraging AI to automate payment denials.
In today’s competitive job market, business leaders are concerned about cuts to employee health benefits. But as the economy changes, employees should expect to pay more for their medical expenses.
The truth is that our health care system is grossly inefficient and financially unsustainable. Unless someone or something disrupts that system and replaces it with a more effective alternative, we will see even more stinginess in health care spending as our nation struggles to contain health care costs.
And that would be dangerous to America’s health.
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