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Doctors, hospitals and other health care providers are raising prices due to inflated costs and higher salaries, but that’s only part of the story. New research shows that government efforts to save money on taxpayer-funded programs like Medicare and Medicaid are also pushing up prices for private insurance.
Whether you buy insurance through the Affordable Care Act, your employer or some other means, premiums will likely jump significantly next year. Early indications from Washington and Maryland, the first states where insurers have filed to raise 2024 rates, show premiums rising between 9.1 percent and 5.7 percent, respectively.
The uniquely for-profit health care system in the United States encourages everyone in the supply chain to charge the maximum price the market will bear. Higher prices mean higher premiums.
Insurance companies negotiate rates with health care providers every few years. The talks revolve around providers, who rely on payments from insured patients, trying to get more money from insurers who must have enough providers to meet their clients’ needs.
Primary care physicians have the least negotiating power and get paid the least, so they only have 15 minutes for you. A large, popular hospital chain can demand better rates lest the local newspaper publishes a story about how people with a particular insurance brand will lose access to the best hospital.
The biggest price driver is inflation, according to the American Academy of Actuaries. High inflation has hit the health care industry the same, if not worse, as other industries. The COVID-19 pandemic and how we behaved during it have made it tougher to keep people in the business.
Forty percent of nurses and 20 percent of doctors said they are considering leaving the field, a Mayo Clinic study found. More than 60 percent of doctors said they felt burned out, another survey revealed.
Texas is short more than 30,000 nurses, and the number is expected to climb, according to the Texas Nursing Association. Texas has 204.6 patient care physicians per 100,000 people, well below the national average of 247.5, the Texas Medical Association reports.
Higher salaries and better working conditions are the best ways to stop the exodus; insurance companies will pass those costs along. Higher rents, more expensive supplies and higher utility bills also lead to higher premiums.
Some of the higher prices will come from efforts to save taxpayer money.
The share of U.S. citizens over 65 is rising, from 13 percent in 2010 to 16 percent in 2020 to a projected 20 percent in 2030. More older patients mean more billing to Medicare, the government health care program for the elderly.
President Joe Biden and Congress are trying to control Medicare spending, and have cut payments to some doctors and limited an increase in hospital payments. State lawmakers have placed caps on fees through Medicaid, the health program for poorer individuals.
Low reimbursements from public health insurance will force doctors and hospitals to pad the bills sent to private insurance patients. Medicare and Medicaid payments are so low that many medical practices limit the number of patients they will accept from those programs.
A fierce battle is raging over whether Medicare can negotiate drug prices the same as private insurers. Drug makers have filed several lawsuits to force the government to pay full price, but if they lose, expect drug prices to rise for everyone else.
Lastly, Biden also ended the COVID-19 emergency, meaning insurers must pay for COVID treatments and vaccines. While the pandemic has largely passed, the virus stills run up additional bills that insurers must cover, the American Academy of Actuaries determined.
Sadly, none of this additional spending is likely to improve our health. The U.S. spent a record $4.3 trillion on the medical industry in 2021, or about $12,900 per person. Meanwhile, the average American suffers from more illness and dies at an earlier age than people in other wealthy countries.
“The U.S. has the lowest life expectancy at birth, the highest death rates for avoidable or treatable conditions, the highest maternal and infant mortality, and among the highest suicide rates,” researchers at the Commonwealth Fund calculated.
Chris Tomlinson, named 2021 columnist of the year by the Texas Managing Editors, writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at HoustonChronicle.com/TomlinsonNewsletter or Expressnews.com/TomlinsonNewsletter.
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