Panelists Identify Drivers of Rising Health Costs

April 04, 2016 05:18 pm Michael Laff Washington, D.C. –

As primary care physicians and the wider medical community work to expand access to care while reducing health care costs, they must navigate rising insurance costs and aggressive consolidation among large health systems. A panel of health care analysts addressed this tension during a recent forum hosted by the National Coalition on Health Care (NCHC).

Scott Weltz, a health care specialist with Milliman, a consultant company, discussed health care costs during an event hosted by the National Coalition on Health Care.

Several factors contribute to the trend of consolidation, notably pressure to decrease payment rates and a preference among large employers for national insurers, factors that weigh heavily on small practices and small insurers. Paul Ginsburg, Ph.D., a professor of health policy at University of Southern California, predicted that the situation will continue even with strong antitrust enforcement.

"It is driven by greed and fear," Ginsburg said. "I don't know if the greed has increased, but the fear has."

This consolidation and the dominance of large health systems influence the career choice of many physicians fresh out of residency.

"Younger physicians want to work for a larger organization," Ginsburg said. "They don't want to hang their shingle out and start a small practice."

At the same time, insurers need a larger volume of practices to create performance databases and implement alternative payment models with incentives.

Story Highlights
  • A panel of analysts discussed health care costs during a recent forum hosted by the National Coalition on Health Care.
  • Panelists addressed several factors, including consolidation and rising insurance deductibles.
  • Bolstering the primary care workforce would be a major step toward reducing overall costs.

"I still think we should pursue payment reform aggressively," Ginsburg said. "We should deal with consolidation as it happens by enforcing antitrust laws."

Health care costs also are rising because insurance plans offer few incentives for patients to think about cost. Price transparency is often suggested as a solution. Several price comparison tools exist, but Ginsburg characterized price transparency as a future aspiration to come after patients learn to navigate the market.

"There are excellent price tools, but almost nobody uses them," Ginsburg said.

Scott Weltz, a health care specialist with Milliman, a consultant company, presented data on how insurance costs have risen steadily during the past year. The main driver is the cost of prescription drugs, which rose 10 percent during 2015.

Deductibles also have been rising. According to the Commonwealth Fund, the number of beneficiaries who have a deductible between $1,000 and $3,000 increased from 7 percent in 2003 to 27 percent in 2014.

Now, a family of four can expect to pay about $10,000 in medical costs -- 19 percent of its annual income. Those who have coverage through their employers pay about 16 percent of their income toward medical costs.

One solution might come from employers letting their staff choose from a greater range of plans, although Weltz said that is unlikely to happen. As a result of these limited choices and increasing deductibles, individuals are shouldering a greater share of health care costs, a trend that has been difficult to reverse.

"To continue to squeeze the patient and ask the patient to be the hammer in the marketplace is the reason we don't have health care as a universal right," said Damon Silvers, policy director for the AFL-CIO.

A report from the NCHC said bolstering the primary care workforce would be a major step toward reducing overall costs.

"America's medical workforce must shift from an increasingly specialty-centric one to one that supports more primary care," the report states. "To that end, an existing imbalance in fee-for-service payments levels that disadvantage primary care providers must be corrected, and more medical school graduates need to undertake residencies in primary care specialties."

Related AAFP News Coverage
AAFP Warns Legislators About Bill to Speed Review of Mergers
(3/29/2016)


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