Healthcare Expenditure Driven by Rising Healthcare Utilization and Severity

Consumers in the United States are increasingly concerned about the expense of healthcare. 

According to the Centers for Medicare and Medicaid Services’ 2017 report, per-capita healthcare spending in the United States increased by 5.8% in 2016, to $10,348. 

Rather than increased consumption by individuals or families, spending growth was mostly driven by a rise in the intensity of services used and higher prices paid to hospitals and other providers. 

The number of individuals with health insurance has increased, which has led to a rise in healthcare use. 

According to the analysis, the number of uninsured non-elderly Americans has decreased dramatically over the last decade, from 48 million in 2010 to 30 million in 2020. 

When people are insured, they are more inclined to seek medical help, resulting in higher use.

Healthcare spending in the U.S. is higher than in other countries

Individuals may demand more healthcare services as they become older, which adds to excessive healthcare use in the United States. 

More than half of individuals have at least one chronic ailment, and a quarter of them have two or more. 

In the previous 20 years, the number of people aged 65 and over has climbed by 60% in the United States.

Hospitals must reinvest in additional resources and equipment to address patient demands as the number of individuals with healthcare issues rises, which can be costly. 

Despite this demand, from 2010 until the onset of the pandemic in 2020, hospital charges only grew by an average of 2% each year. 

Premiums for health insurance, on the other hand, have increased by 4.4 percent on average over the previous decade.

Excessive healthcare spending on avoidable diseases COVID-19 hospitalizations has far-reaching ramifications for the whole business.

“The financial cost of care unvaccinated persons for COVID-19 is borne not only by patients, but also by society as a whole, including taxpayer-funded public programs and private insurance premiums paid by workers, businesses, and individual customers,” according to the KFF researchers.

“Only a small portion of the expense of a COVID-19 hospitalization is borne directly by the patient,” they said. 

Insurers, including publicly funded Medicaid and Medicare, cover the majority of the costs of hospitalization.

In recent research, CNN experts noted that getting individuals vaccinated is less expensive than a COVID-19 hospitalization. 

In comparison to fully vaccinated individuals, a Medicare beneficiary hospitalized with COVID-19 costs the government nearly 150 times more. 

The study took into account the fact that Medicare reimburses clinicians up to $150 for completely vaccinating Medicare beneficiaries with a two-dose COVID-19 vaccine, whereas the average cost of hospitalization for a Medicare member was around $20,000—the same figure utilized by the KFF study.

It’s driven by increased healthcare utilization and intensity

“The nation’s rising and aging population is part of the reason we spend more on health care each year,” said main author Dr. Joseph Dieleman of the University of Washington’s Institute for Health Metrics and Evaluation. “However, health-related factors such as higher price, intensity, and use are driving the majority of the spending rise.”

In the United States, five factors contribute to rising healthcare costs:

1. More people;
2. An aging population;
3. Changes in disease prevalence or incidence;
4. Increases in the frequency with which people use health-care services;
5. Increases in the price and intensity with which services are provided.

The influence of these various variables on total increases in healthcare spending as well as increases induced by individual health problems and types of care is measured in this study.

“Although there was a societal cost to produce and distribute vaccines, vaccines save the [US] healthcare system time and expense by reducing costly hospitalizations,” the KFF researchers concluded.

According to a study, the first spike of COVID-19 last year did not boost total healthcare expenditure in the United States, despite the fact that spending rates remained high.

The small fall in spending was due to a significant drop in use, particularly among elective treatments.

Per an August survey, healthcare utilization is still low compared to pre-pandemic levels.

Furthermore, due to the Delta variation, many hospitals and health systems are once again at capacity.

Conclusion

Only 5% of the population is treated with half of the money spent on health care.

According to a recent study (David Squires: Explaining High Health Care Spending in the United States, May 2012), health care spending in the United States is higher than in other countries, owing to higher prices and possibly more easily obtainable technology; and greater obesity, rather than higher income, an older population, or a greater supply of hospital and doctor utilization.

Hospitals and other stakeholders were concerned at the onset of the COVID-19 pandemic about how the virus would affect already high healthcare costs.

Now, over two years later, they’re worried about the impact an unvaccinated population would have on an industry already suffering from clinical and financial difficulties.