Why are health care costs rising?
Some of the other factors that contribute to the cost of health care are:
- Prescription drugs
- Patient demand for services
- Government mandates and regulations
- Treating the uninsured, underinsured
- Economic pressures on doctors, hospitals
- Lifestyle choices
In recent years, we have seen growth in the cost of individual health care services, along with a tremendous increase in the number of services Americans demand. When you multiply the higher cost of each service by a greater demand for more services, you have an equation for overall higher costs.
The premiums health insurance companies charge are based on the amount of claims they’ve paid in the past and what they expect future claims to cost. When insurers pay out more in claims than they receive in premiums and when future services are predicted to cost more, premiums go up. This is what has been happening in Kansas for several years.
Often times, health care consumers don’t have a clear understanding of just how much the services cost. For many years, we insulated our members from the true cost of these services by making payments directly to doctors and hospitals. Did you know, for example, that in Kansas it costs more than $12,000 to have an appendix removed? Or nearly $89,000 for heart bypass surgery?
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Other factors are beyond anyone’s control. For example, no one can control the fact that our population is getting older. In Kansas, the median age of our population increased from 33.5 in 1992 to 35.4 in 2002. One in three Kansans are age 45 or older, including the large generation of Baby Boomers. As people reach middle age they tend to require more medical care. A formula developed by the Center for Studying Health Care Change suggests that a 64-year-old person requires nearly $4,500 more a year in health care services than an 18-year-old.