In recent years, the topic of health insurance has garnered significant attention due to its notable increase in coverage costs. The rising premiums and deductibles, coupled with the growing complexity of the healthcare system, have left individuals and families grappling with the challenges of accessing affordable and comprehensive coverage. This surge in health insurance expenses has sparked debates on the sustainability of the current system and the need for innovative solutions to ensure accessible and affordable healthcare for all.
As we delve into the complexities of this issue, it becomes increasingly important to explore the underlying factors contributing to the increase in health insurance and the potential implications for individuals, employers, and the healthcare industry as a whole. To reduce the rate of growth in healthcare costs, it is crucial for industry leaders to come up with innovative solutions that addresses the total cost of care, not just an individual’s cost per person.
The cost of healthcare in the United States is among the highest in the world. In 2021, healthcare spending in the U.S. reached $4.3 trillion, averaging around $12,900 per person. Comparatively, other wealthy countries spend about half that amount per person. The rise in healthcare costs predates the COVID pandemic, although the pandemic exacerbated this trend. Over the past few decades, healthcare costs have increased from 5 percent of GDP in 1960 to 18 percent in 2021. Price and utilization play significant roles in healthcare spending, with factors like an aging population and healthcare prices contributing notably.
The proportion of individuals aged 65 and above in the United States has risen in recent years. People age 65 and over rose from 13 percent of the population in 2010 to 16 percent in 2021, with projections indicating a continued increase to 20 percent of the population by 2030. Because older adults tend to allocate more funds to healthcare compared to other age groups, the growth in their population is expected to result in higher overall healthcare expenses over time.
Finally, in addition to the changing demographics in the U.S. population, several continuing trends contribute to escalating healthcare costs:
- Improved Medical Technology—advanced procedures and improved medicines add to the long-term costs of healthcare.
- Inefficiencies in Insurance and Provider Payment Systems–the complex intricacies of the U.S. healthcare system lead to administrative inefficiencies resulting in higher costs and wasteful spending.
- Hospital Consolidation—industry downsizing can lead to diminished competition or even regional monopolies, thereby, enabling care providers to raise prices for hospital stays or procedures.
While the above list provides some insights into rising healthcare costs, more research needs to be done to confirm the reasons that these costs grow so quickly.
About Ameer Hasan
Ameer Hasan is a Sales Intern at Rue Insurance. He is a student-athlete at Skidmore College majoring in Management & Business with a minor in Economics. He is gaining valuable information in the insurance sector and expanding his knowledge of the industry during his sales internship at Rue Insurance.
About Melissa Cooke
Melissa Cooke joined Rue in 2022 as the Director of Sales, bringing over 20 years of management and sales experience. As Director of Sales, Melissa is responsible for the strategic direction, vision, growth and performance of the sales team. As the leader of the sales team, Melissa helps the department define and navigate the sales cycle. Melissa is also responsible for the training and developing our sales internship program at Rue Insurance.
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