Here is a fun fact (very tongue in cheek): U.S. hospital prices are 60% higher than in Europe, which begs the question, why? Why are hospital prices so much higher in the U.S.? And what impact does this have on patient costs?
The answer to the first part of this question, why hospital prices are so much higher in the U.S. boils down to two factors: Government Policy and Lifestyle Changes.
So we have defined two of the factors driving the increase in overall healthcare costs. We will now address the second part of this equation: What is the impact on patient costs?
As healthcare costs have skyrocketed so has the patient’s burden of these costs. From 2002 to 2016, patient responsible healthcare expenditures have increased from 10% to over 30%.
Employer-sponsored private health insurance plays a very big role in making up the large increase in patient financial responsibility. Although employers are responsible for providing healthcare for their workforce in most cases, the employers are not responsible for paying 100% of the total cost. Employers often pass along these cost increases to their employees or at the very least, a portion of it.
Making matters worse, healthcare costs are increasing at a rate far greater than the increase in annual wages. In 2018, premiums paid by employees on average increased over 4% over the previous year, while the average wage increase rose by only 3.4%.
As healthcare costs continue to rise at an unaffordable rate, many are finding it difficult to bear their burden of these costs. Our system is seeing an escalation in collection and bankruptcy activity because patients cannot afford their responsibility. These bad debt accounts are causing health systems to continue to increase their costs to deliver care.
As it stands today, the U.S. finds itself in an endless circle of rising costs with really no end in sight. We should not expect to see the patient responsibility in this equation to decrease either.
In part 3 of our series, we will provide you tips on best patient collection practices and define what steps you can take to help alleviate the patient financial burden.