How To Address The Rising Cost Of Higher Education – By Atul Grover, MD, PhD, Executive Director, AAMC Institute for Research and Operations; Kendal Orgera, MPH, MPP, Chief Research Analyst, AAMC Research and Action Institute; and Laura Pincus, MHA, Manager, Strategy and Planning, AAMC Institute for Research and Action
Health care costs in the United States are higher than in other wealthy countries. all over the world By 2020, US health care costs will increase by 9.7%, to $4.1 trillion, or about $12,530 per person.
How To Address The Rising Cost Of Higher Education
Meanwhile, the United States lags behind other high-income countries in access to care. care and some health care outcomes.
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As a result, policymakers and health care systems are faced with an increasing need for low-cost care for more people. And, of course, everyone wants to know why their health care costs are so high.
The answer, in part, depends on who is asking this question: Why is US health care so expensive? Public policy often emphasizes and determines the total cost of the health care system or spending as a percentage of the gross domestic product (GDP), while most patients (people) are more concerned about their own out-of-pocket costs and whether Have access to affordable, meaningful insurance. Providers feel public pressure to contain costs while trying to provide the highest quality care to patients.
This brief is the first in a series of papers that aim to identify some of the key questions policymakers should be asking about health care spending: What costs are too high? And can they be controlled through policy while improving access to care and the health of the population?
Total spending on U.S. health care has been rising steadily for decades, at the same rate as costs and spending in other parts of the U.S. economy. In 2020, health care spending was $1.5 trillion more than in 2010 and $2.8 trillion more than in 2000. While total spending on clinical care has increased over the past two decades, health care spending as a percentage of GDP has remained stable and has accounted for approx. 20% of GDP in recent years (the largest single increase was in 2020 during the COVID-19 pandemic).
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Health care spending in 2020 (especially public spending) increased over the previous year due to increased federal support for critical services related to COVID-19 and expanded access to care during the pandemic. However, no single sector’s health care costs – doctors, hospitals, equipment, or other sectors – have increased disproportionately enough to be the sole cause of high costs.
One of the health care areas with the highest level of spending in the United States is hospital care, which accounts for approximately 30% of national health care spending.
For the last 60 years (and remained close to 31% for the last 20 years) (Figure 1). Although hospital spending is the focus of many cost control policies and public attention, the increase is consistent with the increase in other health care, such as physicians and other professional services. Aggregate spending for a small portion of non-hospital care has more than doubled in the past few decades and accounted for an increasing proportion of total spending. For example, home health care as a percentage of total spending between 1980 and 2020, from 0.9% to 3.0%, and drug spending almost doubled as a percentage of health care spending between 1980 and 2006, from 4.8% to 10.5%, and. currently accounts for 8.4% of health care spending.
Figure 1. National Health Care Expenditures (in billions of dollars), 2000-2020. Note: Investments include spending on research and development of pharmaceutical companies and other manufacturers and providers of medical equipment and structures. Other personal health care includes other professional and dental services, home health care, medical equipment and products, nursing care facilities and continuing care retirement communities, and other health, residential, and personal care.
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Source: AAMC analysis of the Centers for Medicare & Medicaid Services. National Health Expenditure Data. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHeal…. Published on 1 December 2021. Accessed on 24 February 2022.
The largest areas of spending that may provide the greatest potential for savings – such as inpatient care and care by physicians – are unlikely to be reduced by reducing the number of insured patients or visits per person, due to the increasing US population, aging and. Desire to cover more, not less, individuals with adequate health insurance.
In the past decade, policymakers and insurers’ interventions aimed at changing the mix of services by keeping patients out of high-cost settings (such as hospitals) have never succeeded in reducing costs, although they have other benefits for patients.
Thinking about total health care spending as an equation, one might define it as the number of services delivered per person multiplied by the number of people served, multiplied again by the average cost of each service:
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Health care spending = (number of services delivered per person) × (number of people to be served) × (average cost of each service)
Can health care costs be reduced by making significant changes to the number or type of services delivered or by reducing the average cost per service?
Although recent data on overall health care utilization is limited, in 2011, the number of doctor consultations per capita in the United States was lower than in many comparable countries, but the number of diagnostic procedures (such as imaging) per capita remained higher. .
In addition, no identifiable group of individuals (by race/ethnicity, geographic location, etc.) appears to be the group of people who consume the specialty services significantly.
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The exception is that the sickest have more costs to care for, but even the most cost-conscious policymakers seem reluctant to abandon these patients.
In addition to the fact that the average number of health care services per person in the United States is below the international standard in 2020, the 7 percent of people in the United States who have health insurance is still lower than in other wealthy countries. . Although millions of people have gained insurance 8 through the Affordable Care Act and regulations enacted during the COVID-19 pandemic, 10% of the non-elderly population remains uninsured in 2020.
When policymakers focus on reducing health care spending, consider the equation above, and see that the United States has a lower percentage of the population of the insured and less services delivered to patients than other wealthy countries, their focus often shifts to the average cost of services. .
The 2017 International Health Care Price Comparison Report found that the average list price (charges) for medical procedures in the United States far exceeded list prices in other countries, such as the United Kingdom, New Zealand, Australia, Switzerland, and. South Africa.
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For example, the average US healthcare bill in 2017 for a hip replacement hospitalization was $32,500, compared to $20,900 in Australia and $12,200 in the United Kingdom. In comparing the list prices of other procedures, such as cesarean delivery, cesarean section, and knee replacement surgery, the price of the average US list and necessary services is thousands of dollars – if not tens of thousands of dollars – more.
However, the list price for these services in the United States is often higher than the actual payment to the provider by the public or private insurance companies.
Public payment programs (especially Medicare and Medicaid) tend to pay hospitals less than the cost of providing care12 (although many economists argue that these payments are slightly higher than actual costs, and providers argue that they are slightly lower than actual costs), while private payers have historically paid roughly twice the public payment.
(See another brief in this series, “Surprised! Why medical bills are still a problem for US health care,” for more information on the role of public and private payers in health care costs.) However, the average cost per service remains high. By international standards, though it’s not as high as the list price might suggest. The high average cost is due in part to the labor-intensive nature of health care, with labor consuming nearly 55% of the share of total costs in US hospitals in 2018.
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Reducing US health care spending by reducing labor costs can, in theory, be achieved by reducing wages or eliminating positions; However, both of those policies would be problematic, with potential unintended consequences, such as driving physicians out of the workforce at a time of increased demand.
Wage reductions, especially for physicians, require significant labor expansion that will take years to achieve (and even then, lower per capita wages for non-physicians may not reduce total health care labor-related spending).
Reducing or replacing clinical staff over time will require significant changes to policy (both public and private) and significant changes in the way health care is delivered – neither of which has happened quickly, even since the implementation of the Affordable Care Act.
Nearly one in five Americans have medical debt, 16 and affordability is still a problem for large numbers of the population, whether uninsured or insured, which suggests that policymakers should focus on patient costs. This may prove to have more impact on individuals than reducing overall health care costs.
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Most of the country