Healthcare Cost Inflation in my Lifetime
Today’s video addresses the vexing issue of the ever-increasing cost of medical services. The increase in the cost of medical services obviously increases the cost of coverage. There are many reasons healthcare costs increase over time beyond inflation as compared to other goods or services. New drugs, procedures and treatments are approved every year which can improve and extend our lives but come at a cost. Standards of care change too. I had my first two children without a single ultrasound. That doesn’t happen today. The Affordable Care Act, with its elimination of pre-existing conditions as a reason to exclude someone from coverage, improved access to coverage and care in the individual market but including less healthy people in the risk pool increased the cost of coverage.
In addition, the primary form of payment for services in the United States remains fee for service which can encourage overutilization and duplication of services on the provider side. And, of course, unlike many other services, the demand for healthcare is theoretically unlimited.
All these issues contribute to the field being, at times, maddeningly adversarial due to the inherent tension between the objectives of easy access to services and cost containment.
I thought that rather than have an entire piece discussing generalities, we would share the actual hospital bill (below) from my birth which I learned after my mother’s death that she had saved. You can see that I was born in 1953 which makes me no youngster. You can also see that my mother and I remained in the hospital for an entire week (clearly not the standard of care today) and that the total cost to my parents was $138.00 (note this also includes phone expense). The daily room and board rate for my mother was $17.00/day and for me, $2.00/day. I believe my parents were actually self-pay in that era. My father had just finished medical school and was moving to another state for further training. Anyway, if you put $138.00 in an inflation tool to see what $138.00 in 1953 is worth in 2022 dollars, you get, $1,400.00! I am sure we can all agree that no one (actually, mother and baby in this case) stays in the hospital for a week or has a baby in a hospital for anything close to, $1,400.00.
What is the point? Oh, I have several. In this high-cost U.S. healthcare environment, NO ONE can be self-pay except the very wealthy. When people tell me they are self-insured, I know they are risking financial ruin. No one should even have a gap in coverage if it can be avoided. The fact is that my parents even in their twenties and with a modest income, could pay out of pocket for my birth. That is not true today. And even if they had help from my grandparents, it was still possible to pay for the service out of pocket. Today, healthcare coverage is unaffordable for everyone except the wealthy unless it is subsidized by the government or by an employer. And, needless to say, both government and employers struggle to pay their share of healthcare costs.
What is our responsibility in all of this? It is what we’ve been preaching all along, to understand your coverage and how you might lose it and to plan ahead accordingly to avoid a gap in coverage. We also recommend, as other videos have emphasized, reviewing your explanation of benefits statements and medical bills so that you catch mistakes, overbilling and fraud.
We will have more to say on this daunting topic in future videos. In the meantime, please watch today’s video and spread the word to others.