Can we lower healthcare costs and preserve jobs?
There is enough evidence now that the cost of healthcare in the US is driven by the fragmentation and the adverse demographics.
Drivers of Cost
1/ Medical Supply Costs
Medical supplies cost healthcare providers 30-40% of their revenue and the cost of supplies are substantially higher than other developed countries. For example:
– Pharmaceuticals in the US cost 3x more than Britain and and 4x more than Canada.
– Medical Devices cost 2 – 6x more than other first world countries.
2/ Collection Costs
Billing and collections for services provided to patients cost healthcare providers between 6-12% of their revenue due to the number and complexity of contracts with insurers.
3/ Administrative Costs
The fragmentation in the payer market results in the coverage and pricing variability in healthcare services that many American find confusing and alarming.
Demographic Trends
The increase in the cost of healthcare has returned to pre-recession levels of 4% which is largely driven by demographics:
1/ American’s population is aging slower than other developed countries but the 65-and-over population is projected to balloon from 48 million to 88 million by 2050.
2/ According to the CDC, the prevalence of obesity was 39.8% and affected about 93.3 million of US adults in 2015~2016. Obesity is now the #1 cause of cancer in women.
The flip side of is American jobs.
