|Who’s Driving Up Healthcare Costs?
Don’t blame the health insurers for higher and higher healthcare expenses, a new report says.
"What’s Really Driving the Increase in Health Care
Premiums?" was produced by the WellPoint Institute of Health Care
Knowledge and seeks to debunk the popular notion that insurer profits
are fueling ever-growing costs.
The report was developed based on research compiled from
such sources as PricewaterhouseCoopers, the Robert Wood Johnson
Foundation, the Kaiser Family Foundation, the Bureau of Labor
Statistics and the Congressional Budget Office, the WellPoint Institute
report points the finger at other "key drivers" of rising healthcare
costs and health insurance premiums. They include:
- Advances in medical technology and subsequent increases in utilization.
- Price inflation for medical services that exceeds inflation in other sectors of the economy.
- Cost-shifting from people who are uninsured and those receiving Medicare and Medicaid to the private sector.
- High cost of regulatory compliance.
- Patient lifestyles, such as physical inactivity and increases in obesity.
"As the healthcare reform debate heats up, the results
of this report provide important insights into the drivers of
healthcare costs in this country," said Dr. Sam Nussbaum, executive
vice president and chief medical officer of WellPoint. "The bottom line
is that those items typically blamed for rising healthcare costs
– insurer profits, the aging of America and the high cost of
medical malpractice – in fact have little impact on healthcare
Citing research from PricewaterhouseCoopers’
December 2008 report, "The Factors Fueling Rising Health Care Costs,"
the Wellpoint Institute report attempts to deflate the commonly held
belief that health insurers rack up profits of between 25 and 40
percent. The truth, according to PricewaterhouseCoopers, is that only
three cents of every healthcare premium dollar is attributable to
health insurer profit. That’s less than the 2008 profit of 4.9
percent reported to Reuters by auto andtruck manufacturers, the 4.8
percent reported by healthcare facilities, and the 4.7 percent reported
by utility companies.
"We are all working toward the common goal of meaningful
and responsible healthcare reform," Nussbaum said. "For this to occur
and be sustainable, we should focus on the main drivers of healthcare
costs. Independent of funding, we need to institute reforms that
improve healthcare quality and outcomes, increase preventive care and
reduce those common illnesses, including cardiac disease and diabetes
and chronic lung disease, that result from smoking, lifestyle and
According to the Wellpoint Institute’s report,
newer medical technologies tend to increase prices because they are
generally more expensive than the older ones they replace. While more
advanced and superior technologies can yield better results for some
patients, they can be used inappropriately in some situations where
existing technologies and diagnostic tests would be more effective and
For more information and a copy of the full report, visit WellPoint Institute of Health Care Knowledge at www.wellpoint.com/institute.