There are 4 main reasons for health care trend increases:

1. Medical inflation

2. Cost Shifting

3. Utilization

4. Deductible leveraging

ObamaCare did little to nothing to address 99% of reason healthcare increases by 8%-12% each year. Until we tackle the four main components of trend we will continue to see these large increases.

1. Medical Inflation: This is the pure price increase in the cost of goods and services provided by healthcare providers.

2. Cost Shifting: This occurs when medical and managed care plans such as meidcare and medicaid pay a fixed or discounted claim charge to healthcare providers. Basically the government is able to force the healthcare providers to charge a certain rate for services even if it means that the healthcare provider will lose money. The providers subsequently increase their charge to insurance companies to make up for the shortfall. Another reason for cost shifting is the increasing number of uninsured. Those without insurance go to the expensive Emergency Room because they know that they can not be turned away. The hospitals have to get their money somewhere so they shift the cost to those with insurance. They just can't take a loss, which is justified. Basically those with insurance end up subsidizing the uninsured, those on medicare and medicaid.

3. Utilization: Reflects the increase in utilization of health care services. Pressures of an aging and increasingly health-conscious society, the practice of preventative medicine, new technologies, new expensive synthetic drugs, etc. lead to increased utilization. We all want the newest and best health care, which is expensive.

4. Deductible leveraging: This happens if you have a single payor system or the current insurance system: This refers to an increase in plan costs due to the effect of fixed dollar deductibles and out-of-pocket limits applied against trended claim amounts. As medical cost increase, the employer's or governments plan will absorb a larger portion of the increase. The leveraging component as a function of the other trend factors, will increase or decline to reflect the trend levels of the other three components. Do the math, it is pretty simple: Assume you have a $1,000 deductible and a $1500 claim this year. You pay $1000 and the insurance company pays $500. If healthcare trend is 10%, next year that claim is $1,650. If you do not increase your deductible you pay $1000 and the insurance company pays $650. Therefore, the insurance carrier's liability just increased 30% ($650/$500 = 1.3) even though inflation/trend was only 10%. Deductible leveraging will always happen as long as you have a fixed deductible. Somebody has to pay for the leveraging component or the individual has to increase their deductible to lessen the impact of leveraging.

For insurance premium, 93-95% of the cost is claims, 4-5% is the cost of administration, and 1-2% is profit. Don't you think we should be focusing on the 93-95%? Us Democrats need to come out and go after the hospitals, doctors, drug manufactures, Durable Medical Equipment providers, and medical researchers and let them know that they make too much money and are bankrupting the rest of America with their greed! Insurance companies are a small issue that we should keep our eye on. We need to focus mostly on the 93-95% of cost if we want to help America. The government needs to set the salaries of all healthcare professionals! Our legislation will eventually get to this, but the American Medical Association is very powerful and is paying off both democrats and republicans.

Nailed it.

Well, until I read the very last paragraph. My bad for not finishing that. So, you want to live in a free society and allow your citizens to have the freedom to go out and become anything they believe they can be, but... you want to regulate what they can make if they take up a specific profession. Just not yours, right Pity? So you think a very talented Cardiovascular surgeon, who may perform 50% more successful heart surgeries because of his/her talent should be regulated as to what they can make a year? You think that the education and training it took to become that will cause other just as talented folks to try and achieve it if you say, oh by the way, we regulated what you can make a year, no matter how good or successful you are. Yeah, that should work. We'll have our medical schools full of folks that want to be told that no matter what you achieve, the least talented of you will make the same as the most talented?

Works for all other areas of this country. I wonder why Basketball players all demand more, a lot more, if they are successful. Baseball? Football, Engineers, lawyers, actors...on and on. But, let's regulate probably some of the most important. Because, they don't deserve what they earned. Nah Pity, you way lost me there bud.

I'm with you there. The rich can afford to move around the normal standards that most of us have to get. The owner of a company that my husband works for had partnered up with someone to get a private plane...the reason? So his family doesn't have to endure security checks. Lord.

I was being sarcastic about the government setting the salaries for healthcare professionals. I was just putting a paragraph in there the way that Democrats think. The ignorant Democrats that want a single payer system fail to understand that the healthcare professionals in these countries that have a single payer system are all government workers and get paid 1/3 of what healthcare professionals get paid in the United States. If you have a single payer system you are then saying that you think doctors and all healthcare professionals should be government employees. People fail to understand this major difference. They want a single payer system, but then they want doctors and other healthcare professionals to continue being able to set their own salaries and huge increases in cost each year.

My bad Pity, I should have grasped the sarcasm after the intelligent posting above it. That is what I get for reading it out of context like I did to begin with.

I always believe *everyone* should be treated fairly, and I believe *every* patient, irregardless of who they are, should be given the *very best* medical care, treatment and attention available! However, I've heard that a lot of hospitals are not turning a profit or are close to bankruptcy! *How* will that help them to give the rest of us good care? At least if they "offer" "First Class" rooming, (such as "First Class" seating - as opposed to "Coach" offered by airlines, or a "Deluxe Suite" at a hotel - as opposed to a "Standard Room", wouldn't that offering help raise their bottom line so that these hospitals will be *able* to offer the rest of us *better "medical" care*? - With more money for extra nurses, better wages for nurses aides, whom we "want" to care about us, etc.? I would rather save my money to go to Disney later (*if* I receive good enough care to *survive* my hospital visit) than to shell out $ for an upscale room or upscale amenities at a hospital, so long as I knew that *everyone* in that hospital, including myself, were getting the *very best* medical care - bought maybe in part by the hundreds of thousands of $$$ the wealthy just paid the hospital for their butler services and a room w/a spa-tub! We should *all* get the same quality of *medical care*! As long as we do, what's wrong with the hospitals having *another* way to bring in income without relying on further bankrupting Medicare & Medicaid! - And without driving up our insurance costs & premiums!

Perhaps the very wealthy who choose to stay in a room like that should not be using Medicare?

Just a thought.

I've never stayed in a room like that but I have had a major surgery at UCLA and the floor I was on the rooms were extremely nice but not on that level. I'm young - 23, but I do have good health insurance - Tricare and at the time also had Blue Cross Blue Shield. The food was great, nurses were awesome, I never had to share a room. Its all about what you and/or your health insurance can pay for. If I uber rich, I would do the same as those folks.

This article reminded me of an episode of a show I watched. The level of care was based on your position you held in society. Patients on level red were not getting necessary treatment just because the jobs those people did were labeled not as useful. But patients on level blue were getting all the treatment necessary and more just because of their job positions they held labeled them more important. It makes me wonder if a Star Trek Voyager episode was a glimpse into our future healthcare.

Only 10% of health care costs goes to the doctors.

Doctors spend AT LEAST eleven years after high school eating ramen noodles, living in cracker box apartments and racking up debt unless they are born to rich parents.

A few things that consume a huge amount of health care resources:

1) Doctors are forced to practice defensive medicine for constant fear of being sued. That means spending an inordinate amount of time documenting every detail and ordering expensive low yield tests to cover their backs.

2) Americans are obese and self indulgent. Much of what doctors treat is preventable illness.

3) Somatoform disorders, like hypochondrias, results in lots of needless visits to doctors. And these patients all need to be thoroughly worked up for every complaint (see #1).

4) Drug companies: they develop a compound, conduct their own clinical research, and conclude that patients must have it. Doctors are obliged to provide these treatments based on the most current literature regardless of cost and despite the fact that the benefit may be marginal at best (see #1).

5) End of life care: death is seen as failure. So patients with incurable cancers, end stage alzheimers, in a persistent vegetative state, and many other conditions consume tremendous medical resources for futile care to delay the inevitable, even if it's only a few days or weeks.

That is just a few.

Pity,

You state that 4-5% of the insurance premiums go to administration.

In your analysis you have ignored the administrative costs the insurance industry forces on providers. In our specialty practice 2 secretaries are devoted to the insurance industry concentrating on per-approval's for diagnostic imaging. That of course doesn't include the nurses and doctors times spent on appeals and the so called "peer to peer" calls.

Procedure approval is done by a different group attached to the service. Of course there are completely different departments in the hospital that work on pre-approval.

All of this costs a lot of money just to take care of the insurance companies before you are allowed to take care of the patient.

Don't expect the "Affordable Care Act" to improve this as provider administrative costs were ignored in the legislation. Based on MA experience, as reported in the NEJM, it will most likely get worse.

Here in MA it is very difficult to get an appointment with a provider. One would expect if the laws of supply and demand work the number of providers would increase. That didn't happen. What did increase significantly were the number of administrative (insurance company care) personnel.

Scott-718781, perhaps you're thinking of "Brave New World," where, while it's good to be Gamma, it's better to be Beta. (And right now, I'm feeling a bit Delta, but fortunately, not Epsilon.)

ElkMeadow - Nope, it's an episode of "Star Trek: Voyager" entitled "Critical Care." Very good episode - worth watching for the storyline.

Ahh, contempt and prejudice! It's what our country thrives on! Please, tell us all about the upper-middle-class, collegiate scholars who live in the suburbs and are found to be serial killers and child sex offenders, not to mention white-collar drug addicts of all the highest quality heroin and crack cocaine. Your fear stems from preconceived ideas, prejudices as it were, of what "type" of people must have less than you. Even worse is what you obviously feel is deserved by those who do not have the money you do. Your fear is typical of the isolated well-to-do. It is frightening to learn that, in all that really counts when you're ill, you're no different than any other human.

Although we should NEVER call anyone "trashy", as the poster above has done, that poster did make a very important point in that patients with a criminal history should not be sharing a room with just any unsuspecting room-partner! Background checks for patients, as well as their visitors, would not be a bad idea. However, I could see that getting Orwellian, with government-run hospitals refusing to allow in those who disagree with them. (For example, those whom our federal government currently calls, right-wing "extremists".) Why, btw, are we repeating nazi Germany's mistakes of prejudice, exclusion, loss of important, basic freedoms, etc. (for those who disagree with the federal government's social or political views?) When has that model ever brought about peace?

It isn't so much that the 1% have special accommodations, it's that there are only two classes - 1% and everyone else. I'm not 1%, but decent middle class in an urban area, and it's frightening to be thrown in with the trashy poor, multi-generational welfare, addicts, etc.

very common for prejudicial racist bigots to couch their racism and bigotry is such nice,"proper and decent" psuedo sophistication. It is not PC to actually say we are racist pigs.

2 tier medicine is becoming the standard under MA's insurance centered RomneyCare going beyond special rooms and floors.

The insurance industry has created plans that do not allow patients access to certain hospitals that they deem to expensive. These banned hospitals are usually the ones that are most highly rated and are the ones that all of the political VIPs go to. The serfs are restricted to the low cost facilities.

U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion. Big pharma has profit margins that are about 16% even after spending 24.4% on advertising! Take away their advertising expense and their profit margins would be the highest industry in the US! We are wasting money on advertising and subsidizing the world's pharmaceutical costs All we need to do is have the government and insurance carriers negotiate one much lower price of service with these healthcare providers as this would save hundreds of billions

Where are you pulling these statistics from? What year? What study?

One of the main reasons that the cost of health insurance keeps increasing at higher than inflation rates is due to the fact that insurance carriers have to subsidize government run Medicare and Medicaid that have cut throat rates that are forced on hospitals. Hospitals would go out of business if they did not have all of us with insurance subsidizing the money that they are losing on patients with Medicare and Medicaid. America, please take a little while to step back and think. Think about what you read and hear!

We need a program that will make it unlawful to turn someone down because of a pre existing condition.

Then we would not have "private" insurance carriers. Insurance is nothing more than risk management ~ be it on property or one's health. When the government imposes mandates that pre-existing conditions must be covered but no consideration of the increased risk is permitted, we have very simply a government run, government controlled healthcare system. The next step will be mandates on how benefits are structured, what percentage of costs must be paid, and who approves the charges. We have more than enough corporate / government mixing already, thank you. This concept was once denounced by our country ~ ~ when it was called Fascism. Its still called that today and it doesn't become more attrractive simply because we are engaging in it more and more readily.

A government plan will only lead to absolutely no competition because the government will receive the best discounts and run everybody else out of business. Then they will eventually control every hospital, research facility, and drug company. Yippee pretty soon we will all be working for the Government!

There is currently massive competition with BCBS, CIGNA, UHC, AETNA, Kaiser, and hundreds of smaller Third Party Administrator's (TPA's) that are fighting every day for your business. If an insurance company prices a case a little too high there is always a carrier that is there ready to buy the insurance. We have

brokerage firms that are fighting for their clients and keeping the insurance companies honest and not letting their clients pay too much for their insurance dollars! It is competition at its best. If insurance companies are truly making so much profit than why is not every person investing in them to make money? It is because it is not reality. It is not happening. Read a couple financial statements and come back with some intelligent remarks! It is the doctors, Rx, companies, hospitals, healthcare facilities, etc. that are driving up the cost of insurance!

Rates go up each year due to hospitals, drug companies, doctors, etc charging more than the previous year. Rates do not just go up because they can! Rates go up to cover the increased costs that healthcare providers are charging! We need to go after doctors, research companies, drug companies, and all other healthcare providers and say enough is enough you can not charge so much because it is causing us to all go broke.

Look at the 10 highest paid CEOs for 2010 and 2011, you will find many of them CEOs of Insurance companies and Pharmaceutical companies and other healthcare related companies. That is why healthcare costs so much. here are just a few.

Ron Williams, Aetna $57.8 million

Tom Ryan , CVS $68.1 million

Joel Gemunder, Omnicare $98.3 million

John Hammergren, Mckesson, $145.3 million

Stephen Helmsley, UnitedHealth, $101.96 million

George Paz, Express Scripts, $51.52 million

David Pyott, Allergan, $33.76 million

No one person is worth this much money in one year. When they make more money in a half hour than anyone person in their workforce makes in a year there is something wrong.

6

Pity the Fool: I agree with a lot of your comments. Although, providers are paid at the contracted rate which is usually a lot less than the actual U and C (usual and customary ) rate. Medicare providers are paid at the allowable rate as well, which is also a discounted rate. Many physician providers are opting not to accept Medicare anymore as a result of plummeting reimbursements. You also mentioned Durable Medical Equipment providers: reimbursements rates for oxygen for example have continued to decline over the past several years; just for an example. In conclusion, I don't entirely agree with your statement about providers driving costs up.

Passion Eagle:

This has been going on for Centuries.

Did you think they are going to put the Astors, Rockefellers, Kennedy's etc.; the wealthy people in a shared bedroom of 4 in a hospital room? Or a State run Nursing Home?

So the wealthy get more privileges. If anyone wants them, one has to work hard, and move up the ladder with connections, networking. There are advantages to being RICH---Power, Freedom, Influence, Travel, and lower class envy---just ask Bill Gates, or Warren Buffet. Look at the deceased life of Steve Jobs?

Most people today do not want to work hard, not because of Unemployment, but the laziness of no motivation and creativity. It's Capitalism all the way---

There is always a new way to improve an old invention---like the Light Bulb, etc. or Solar Energy---

Energy---now there is an opening for someone to get very wealthy on inventions.

Exactly Lydia, (applause!!!!)

Where do you think rich christian leaders go?? Talk about gullible!

Exactly...ask Steve Jobs if he would have traded for a crappy room and longer life.

They said later in the article that her "wealthy boss" picked up the tab. So it kinda *did* "just happen to her."

On another note, nice to see some wealthy bosses still care about their employees.

I wonder what she was having done? Cosmetic surgery perhaps? There are many flavors of sugar daddy. It's hard to believe a boss would pay for an ingrown toenail removal, but if it was something they would benefit from... I'm sorry, I'm cynical.

Well said

Well! what can you accomplish when your own party members are "conservative-Blue-Collar"? They went out and reject to pass the healthcare bill. It had to be twicked they said, eh! Someone has to pay for what is not paid for, get out of these stupid wars. And America, you'll takecare of your people and your borders while at home. If someone threatens, you fly over and lay it down on them and swing back home. what a waste of money in Afghanistan, Pakistan, and Iraq. A complete waste for over 10years, where are the American people? Keep complaining about what you didn't get,

Nance: your comments reflect that you too prefer to claim you are only a victim in this merciless world. You victim you...always someone else's fault.

It's MSNBC ED. It is like the Carl's Jr Turkey Burger commercial says, That's just the way it is. I wonder if they'll ever turn around and scream at Jeff Zucker, MSNBC's CEO, for that $10-15 million a year he makes..lol.

It is a class war,everyday and the rich are winning.

It appears you are the minority in this group. When will you realize you are the minority, period?

I see, and this country has become so much better with the majority of folks like you Lydia? If you opened your eyes you may see why this country is going to crap. And it isn't because of the folks that for decades went out and earned what they wanted. Achieved what they earned. It's folks like you that want what someone else has because it's "not fair" that they do. I'll stick with the minority any day, take what I have earned in my life and tell all folks like you to go find another sucker to pay your way. I earned mine. Go earn your own. Period.

Well said, Jon.

Jon, you are plain ingornant! Most people would love to pay their way! There was a time that a blue collar job would provide for a family and thier basic needs. Now, that same job will earn you food stamps. Not everyone can become rich, but everyone should be afforded the dignity of decent medical care. When we have people dying in the ER, there is no room for greed! I work for mine, but I'm just one health issue away from total dispare, and unless you are utlra rich, so are you.

We all the right to make as much money as we want. Why the whinning?

I'm no where near ultra rich Tiredamerican, but I have worked in healthcare 30 plus years and I know for a fact no one is turned away because of not being able to pay. In fact we treat more folks that cannot pay than those that can. Hospitals in this country are shutting down, and ER's are full because of it. But all you want to blame are the folks busting their ass to provide you that service. I haven't had a cost of living increase in 6 years. On top of that they took 10% from our pay because we are in bankruptcy. Subtract that from my pay and I am making less than what I was paid 10 years ago. Yet I still come to work, still make sure the patients in my hospital are provided the best care I can give. So you can take your "ignorant" rant and shove it where the sun doesn't shine Tired because I pay the same healthcare costs as you do, I live under the same issues as you do, I have children to put through college, mortgages to pay, food to buy.. But I don't run around blaming it on anyone else in this country except those that want something for nothing, or to give it to someone that never earned it.

Yes he does come across as an ignorant, pompous ass doesn't he. But then again there seems to be quite a bit of that nowadays. Everytime there is a discussion that is associated with money or social status its always the same. Those who were fortunate to get ahead in life tend to brag and lord it over the less fortunate while the other half bitch and hate the rich or people who have gotten ahead. Does it ever stop?? Now how many replies does that merit??. Lets find out... Here goes..

I suppose fortunate in your vocabulary is the same as busted your ass in mine James. We just have a difference in the english language interpretation.

Call it what you wish.

I just did.

Jon, I was poor 14 years ago when I came to US. I am now in the top 3%. What a great country! I would say If I can do it, anybody can! but I guess this is not true anymore. Some people put more energy into getting free stuff than into getting ahead in life.

Well said, Jon.

If people have the money to afford luxury suites in hospitals, then so be it. That's life. GET OVER IT.

Their spending is providing jobs to others including the butler, the chef, the furniture maker, etc. Everyone wants to complain that people can afford these things, but no one wants to stop and think about what would happen if the rich stopped spending. The truth is, without spending like this, our country would be in even worse shape than it is today.

@PH-3046605:

As you yourself said:

"...there really is no difference between a rich person who capitalizes on a loophole in the system, and a third-generation welfare recipient who owns the latest plasma tv and has multiple children for the sake of getting more aid. They are both wrong, and they are both destroying this country."

As long as it really is "their money":

neither subsidized with tax benefits -- like exclusions and deductions,

nor paid for with corporate funds that the shareholders have not approved.

Watch out krahl4, Lydia Adams, may scold you and let you know you are so in the minority.

They complain about the 1% of which a majority made themselves what they are, and don't say boo about the 50% that sit on their ass and want the same thing. But somehow they want to tell you how wrong you are for bringing that up. Have to appreciate their powers of deduction.

Well said krahl.

And Tom - the majority of upper middle class and 1%-ers operate well within the confines of the law. If you have a problem with exclusions and deductions than take it up with the government.

And, as Jon said, there really is no difference between a rich person who capitalizes on a loophole in the system, and a third-generation welfare recipient who owns the latest plasma tv and has multiple children for the sake of getting more aid. They are both wrong, and they are both destroying this country.

Thank you. most of them don't get it anyway P.H your wasting your time with those guys or gals.... Wahhh I earned it wahhh I deserve it, Wah ?I'm poor Wah i'm rich and I'm gonna crap on people and lord it over who I can, Wah i'm poor and I want someone to give me something. Wah I can't do This. I have that etc, etc, etc. Be happy That you crawled out of bed by yourself and drew breath today and be glad to be alive.. If you woke up like I do everyday then maybe you would see things differently. I'm not going to even waste my time explaining why I wake up differently because you would only find a reason to dissect that. So wonder all you want, and believe this if you did wake into this world with out assistance then you are more fortunate then you will ever believe, trust me on that. So be happy with what you have and enjoy your lives. Stop bitching, start living.....

Without a doubt,some of the best health care,information and advice I've ever received as a common patient has been from Mary and her peers.Bless your endavours to provide more than the bean counters can fathom about nurses of this consequence;I admire you,..this from a common teacher in a common little community in common little middle-America.Good care,as if we are a valued citizen

Because they are profitable items. Many procedures and actual healthcare services are performed at a loss in hospitals because of how reimbursements work for inpatients. Because the "VIP" patients are paying cash for these services, there's no haggling with insurance or gov't, mountains of paperwork, or inadequate reimbursements--they actually make money off of them.

It's like first class on an airplane. People pay 2000 to get nicer seats, a nicer meal, and a couple cocktails. The added cost to provide the amenities is nowhere near what they can charge for it, so the profits benefit regular people by reducing prices (in the airplane example) or allowing for better services, staffing, etc. in the hospital.

The only problem is hotwheels, money can buy anything, in any country. You think North Korea is different? Russia? European countries? In China the police/government officials drive $80,000 BMW's as work cars. Now take our country. You think a congressman will sit in a ward at a hospital? Where is your outrage at that? Why just at the folks who have money? I have worked in medical field for 30 plus years. I have seen thousands and thousands of folks treated that could not afford it. Do they have suites? No. But they get treated. Like someone said above, a suite will not save your life for one day more. Comfort is not a savior.

Hotwheels - When you go out of town, do you pay for a hotel or stay in lockup across town on the taxpayer's dime? The toenail patient pays for their ammenities out of pocket. The medicaid patient gets treatment on the taxpayer's dime.

You don't want to pay for medical care for someone who can't afford it, but you're pissed at someone who can pay for comfort and medical care not to pay for yours. So hypocritical and selfish.

Anyone know that if a hospital bill is paid in cash and not through insurance, the bill is reduced? A person waiting in the ER or stuck in a multiple bed room just may be paying the same or more for that privilege than one paying cash for a private room. I must think, though the butler must be an additional charge. Just sayin...

Thank you Pity!!! I wish that more people would take these words to heart.

I agree. Huguette Clark's long-term stay at her hospital probably paid for quite a bit of the hospital's budget. To stay in a nicely appointed hospital as opposed to a nicely appointed assisted care facility, if it's privacy she wanted, I'd say go with the hospital. It's like they just rented a few rooms to her at a high mark-up. The hospital staff, for the most part, was probably unaware she was there and they wouldn't be trying to drag her out for recreational activities, like trips to New Jersey.

(It's very early as I type this: Grammar Police, please forgive me.)

Oh yes. MSN deliberately posted this just to piss you off.

Guess what D777, Patrick Swazey had millions of dollars and all the treatment options of care in the world. So did Steve Jobs obviously. They both died too. So, I don't think a room with fancy linen will mean much to anyone in their, or your husbands situation. I am sorry for your loss. It is a terrible disease.

All hospitals are funded in some way, either by grants due to the academic research, Medicare and Cal payments, VA hospitals, county hospitals, etc.

You ever wonder where a majority of the non-profit hospitals get their funding?

Read the story about the mentally disabled little girl in Philadelphia that were denied a transplant because there was questions about her "quality of life". The parents were told it wasn't the hospitals policy to deny a transplant based on mental conditions but the decision was based on money. WHAT???? This is what a national or government health-care will become. Bureaucrats will be making my health care decisions based on things other than medical basis and my wishes over anything else. How can anyone foresee my happiness or quality of life based on how money (insurance money) is spent?

I guess it is on the same backseat level as people sitting in Occupy tents complaining about what they don't have instead of getting off their ass and going and working for it. Maybe if they had busted their ass to get into Medical school instead of sat on it they could go treat everyone for free instead of us having these greedy doctors today. I'm sure you would, right Morlack.