Why Health Care Cost Will Keep Rising Faster Than The Rate of Inflation

Health Care cost continue to increase because of the population of aging people. Patients are sicker than ever before. Hospital costs are on the rise. The good reputation for health care cost control suggests that the likelihood of long-term success of any particular idea are low. Is it feasible that we can  reduce health care cost by providing better care ? I heard this story on NPR a few weeks ago and it is fascinating to me because the rising cost of health care is a huge obstacle to my early retirement plan.

The increase of drug use and poor various living styles has increased medical costs. The rise in patients filing Mal-practice suites on doctors also increases medical costs. Some insurance providers are promoting programs for good health. In these programs people are awarded for healthy eating habits, exercise programs and making good choices in their lifestyle. Dr. Brenner and the team were able to lower the overall health care cost by taking better care of those most difficult cases. They followed up with patients to make sure they took their medication, attempted to get them to quit smoking, and encouraged them to rejoin their churches and communities.

They were basically coaching these patients to take better care of themselves. Their efforts were successful and many patients improved their long-term health and their overall costs were lowered as a result. The analysts posited that the effect of excess cost growth on economic outcomes depends upon the percentage of workers with employer-sponsored insurance (ESI). Health care cost growth would have a stronger effect in industries that have a larger percentage of workers with ESI: Increased health care costs can translate into higher labor costs, which might cause firms to hire fewer workers, produce less output, or raise prices.

This back-and-forth between the government and industry signals the impossibility of developing, enacting, and implementing effective measures to bend the health care cost curve. What ought to be clear, however, is that a strictly voluntary effort to slow the growth in costs is unlikely to be successful, and that health reform will need to include legislative provisions and enforcement mechanisms to ensure that spending targets are met. The extent that an increase in  health care costs affects output and employment in different industries depends  on how much total compensation rises due to health care cost inflation.

Industries where health care benefits really are a larger share of total employee  compensation are experiencing a larger increase in total compensation,  consequently leading to a larger reduction in employment and output. I believe our Nation's long-term fiscal problems, and the problems caused by the growth of per capita health care spending, are higher priorities to resolve than reducing the number of uninsured Americans now. I'd rather solve America's health care cost problems of the future than expand government now. This is my value choice. I expect and believe that others will disagree.