Skyrocketing Health-Care Costs Could Double Premiums for Many Americans
Wednesday, January 28, 2009; 12:00 AM
WEDNESDAY, Jan. 28 (HealthDay News) -- Unless health-care reform becomes a reality, most Americans can expect to pay health insurance premiums that will double by 2016, a new report claims.
Left unchecked, the costs of employer-paid health insurance will jump from $11,381 to $24,291 in the next seven years, according to the report, which was released Wednesday by the Public Interest Research Group (PIRG).
And wasteful spending and inefficiencies are what is fueling the trend, the report contends.
"As costs rise, one out of three American's health-care dollars are going to waste and inefficiency," said report co-author Larry C. McNeely II, a U.S. PIRG Health Care Advocate.
Wasted dollars include inappropriate and unnecessary care, inflated drug prices and administrative bureaucracy, McNeely said. The total cost in waste in 2007 for insurance bureaucracies, drug companies, medical device manufacturers and providers was $730 billion, according to the Congressional Budget Office.
The models for efficient care are out there, McNeely noted. These include the Mayo Clinic and Utah's Intermountain Health System. Using a coordinated approach to care, these systems improved quality and reduce per-patient costs by 43 percent, he noted.
"If hospitals in America reached the benchmark set by the Intermountain Health System, we would be spending $299 billion less every year on hospital care and getting better outcomes," McNeely said.
Moreover, doctor's pay should be based on the quality of care they provide rather than the number of tests and procedures they order, McNeely noted.
In terms of administrative bureaucracy, the private insurance industries' "red tape" needs to be controlled, McNeely said. Insurers waste billions each year on paperwork that has nothing to do with patient care. One suggestion is to limit the amount of premium dollars that can be spent on administrative costs, he said.
In addition, drug prices need to come down, McNeely said. "You can sever the link between physicians' prescription practices and the incredible amount of marketing dollars that the pharmaceutical industry is pouring into influencing physicians' decisions," he said.
In 2005, pharmaceutical companies spent $11.5 billion in advertising their most expensive drugs, and total drug advertising dollars increased 250 percent from 1997 to 2007, according to the report.
Drug company marketing increases the total number of prescriptions written and increases prescriptions for newer, more expensive drugs over older, less expensive drugs that are just as good, the report said.