What Drives up Health Care Costs?

There is no one driver and everyone contributes – this according to Kaiser Health News. KHN, in collaboration with the PBS NewsHour reports on a study from the Bipartisan Policy Center, a think tank in Washington, DC which identifies 7 factors associated with health care costs.

The US currently spends more on health care than any other country - $2.6 trillion or about 18% gross domestic product. In 2000 the percentage of GDP was below 15% and by 2020 it is projected to be about 20%.

Here are the 7 factors –

1. We pay our doctors, hospitals and other medical providers in ways that reward doing more, rather than being efficient.

2. We're growing older, sicker and fatter.

3. We want new drugs, technologies, services and procedures.

4. We get tax breaks on buying health insurance -- and the cost to patients of seeking care is often low.

5. We don't have enough information to make decisions on which medical care is best for us.

6. Our hospitals and other providers are increasingly gaining market share and are better able to demand higher prices.

7. We have supply and demand problems, and legal issues that complicate efforts to slow spending.

Find the article here. 

Find the BPC’s Health Care Cost Drivers Report here. 

The drivers are labeled a bit differently than the 7 drivers presented by the KHN/NPR report, but the drivers are the same and the report has more detail for each.

Find the more detailed BPC study “What Is Driving U.S. Health Care Spending? America’s Unsustainable Health Care Cost Growth” here.

“At a basic level, health spending is a product of the price of health care services and the utilization of those services. The underlying drivers of price and utilization, which in turn are the key drivers of overall health care spending growth in the U.S., are described in this paper.”