In 2006, health care spending in the United States finally topped $2 trillion. That year health care became 16% of gross domestic product. Several factors are now pushing these costs even further up, including the aging of the population, advancement of technology, the obesity epidemic and skewed incentives
within the system. That ever-rising price tag is a burden not just on government health care programs, such as Medicare; it has also put an increasing strain on companies that provide health insurance to their employees. Because the cost of health insurance keeps going up, these companies find themselves at a disadvantage compared with companies that operate from other countries where health care costs are not nearly as high.
The rising cost of health care, and subsequently of health insurance, is also pushing more and more individuals into the ranks of the uninsured. Many people who do not have employer-sponsored insurance plans cannot afford to buy individual insurance coverage, which is typically very expensive. As a result, more people are both going into debt over health care spending and receiving "free" care, which others end up paying for through either higher taxes or higher insurance premiums.
Health care spending is clearly rising at an unsustainable rate. The major questions facing politicians are: Should we promise universal coverage – health insurance for everyone – first? Should we work on lowering health care costs? Or can both be achieved at once?
One tactic that states are trying is redirecting money slated to cover "uncompensated" or "free" care and using it to get more people covered by insurance. Unfortunately the cost of covering more people is higher than anticipated and the cost savings are much smaller and longer in coming than anticipated.
Featured Podcast
Current State and Prospects for Consumer Directed Health Care Kim D. Slocum, President of KDS Consulting speaks with Malorye Allison, editor-in-chief of ReformPlans.com.
