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The United States substantially outspends peer countries on health care, but health costs continue to soar. In 2016, the U.S. spent $9,892 annually per person – more than any other wealthy nation and more than twice the average of the 35 nations in the Organization of Economic Co-operation and Development (OECD). The U.S. allocates 17.2 percent of its gross domestic product (GDP) to health spending – again, more than any other country and nearly twice the average of OECD countries. The rising cost of health care has outpaced U.S. GDP growth significantly for decades. Health care represented 5.2 percent of GDP in 1963 and 8.4 percent in 1979, less than half today’s rate.
Americans don’t necessarily get better health care for all this spending. On many measures of health care quality and access, including life expectancy, birth trauma, doctors per capita, and cancer mortality, the U.S. ranks below many other wealthy countries.
Why is Health Care So Expensive?
Basic health care goods and services cost more in the U.S. than any other developed country. Uniformly, Americans pay more for prescription drugs, diagnostic procedures and surgeries. A commonly prescribed drug called Humira used to treat inflammation for diagnoses like Crohn’s or rheumatoid arthritis costs $2,669 dollars for a 28-day supply in the U.S., compared to $822 in Switzerland. An MRI in the U.S. is more than twice the cost of one in Switzerland, at $1,119 compared to $503. An uncomplicated childbirth delivery in the U.S. averages $10,808, more than five 5 times the $1,950 cost in Spain. Profits for big drug corporations, excessive hospital executive compensation, and an emphasis on expensive specialty care over primary care focused on wellness contribute to driving up costs.
Health Care in Washington
Patients bear the brunt of excess spending. Rapidly rising costs are affecting people’s basic health care choices and blocking access to care. A report published in 2018 by the Washington Health Benefit Exchange (WHBE) concluded the primary factors influencing people’s choice of insurance plans are premium cost, out-of-pocket expenses and deductibles. Nearly 60,000 customers insured by the WHBE have annual deductibles above $9,000 – essentially only catastrophic coverage – in order to keep premiums affordable.
When individuals and families cannot afford a visit to the doctor for a diagnosis or to purchase medication to treat an illness because of deductibles and co-pays, unmet medical needs follow. Rather than seek care when needed, patients are skipping health services or dropping health insurance altogether. Without ready access to preventative care, people end up sicker and at high risk of medical debt. They end up with more emergency room visits at a higher cost burden for the whole system and ultimately the state.
Cascade Care – the Right Path Forward
Cascade Care will establish a standard, state-sponsored plan on the Exchange that caps out-of-pocket expenses for patients and caps reimbursement rates for providers. Montana implemented a similar public plan in 2016, capping hospital and reimbursement rates to drive down costs. Prior to offering the public option, the state spent over $200 million in health care. By the following year, the plan saved a total of $17 million. After two years of instituting cost containment measures, the state is touting the program as a success with an annual cost saving of $15.6 million without having to reduce patient benefits or quality of care.
Health care reform is urgent. By implementing Cascade Care, we utilize existing infrastructure to leverage federal subsidies and cap costs to ensure all residents have access to quality medical care without the worry of an excessive price tag.
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