The Problem | The Causes | The Solutions | Premiums | Related Issues
“Health plans are playing a vital role in reducing the cost of care and improving value…”
- Karen Ignagni, President & CEO, America's Health Insurance Plans
Health Plan Innovations in Delivery System Reforms,
American Journal of Managed Care
than one-sixth of the U.S. economy is
devoted to health care spending and that percentage continues to rise every
year. Regrettably, our system is not delivering value commensurate with the
estimated $2.7 trillion spent annually on health care. Experts agree that an estimated 20 to 30 percent of that spending
– up to $800 billion a
year – goes to care that is wasteful, redundant, or inefficient.
health care costs punish our nation on multiple fronts. For families and
seniors, the soaring cost of medical care means less money in their pockets and
forces hard choices about balancing food, rent, and needed care. For small
businesses and Fortune 500 employers alike, they make it more expensive to add
new employees, more difficult to maintain retiree coverage, and harder to
compete in the global economy. For federal, state, and local governments,
rising health care costs lead to higher Medicare and Medicaid costs, and
reduced funding on other priorities such as infrastructure, education and
public safety. The net results of rising
health care costs are far-reaching and ominous: higher costs for health
insurance, the fraying of the nation’s
an erosion in our global
competitiveness, and long-term fiscal insolvency.
health reform law makes important strides in expanding coverage, much more is needed
to rein in the rising cost of health care.
many causes of higher health care costs and spending. These causes include higher
prices for medical services, paying
for volume over value, defensive
medicine, use of new technologies and treatments without considering
effectiveness, and a lack
of transparency of information on prices and quality. There is also evidence that provider
consolidation is having a significant upward pressure on health care
costs. The causes of higher health care
costs and spending are not simply or easy to solve, but they must be addressed
or the impact will be severe.
the rate of growth in health care costs requires a collaborative, inclusive,
and bipartisan approach. While there is no simple formula for lowering the
growth in health care costs, stakeholders
have long recognized that there are many areas where common ground can be found.
plans are playing an important role in lowering health care costs. Health plans are partnering with providers to
create innovative, high value payment systems to reward value and quality over
volume. Health plans are also empowering
patients with new coverage options that focus on high-performing providers and
key tools like care coordination and case management for individuals with chronic
conditions. These types of approaches
are helping to move the nation away from the broken and unsustainable
fee-for-service system toward a health care system better suited for the 21st
Board of Directors has released a statement addressing the soaring cost of
health care, outlining three key strategies for reducing health care costs:
Barriers to Transparency:
"Action must be taken to eliminate barriers that prevent stakeholders from
understanding how markets are (or are not) working. Increased transparency—with
a concurrent focus on quality—will lead to greater awareness of the specific
market dynamic and give consumers and purchasers a better line of sight into
the drivers behind the growth of health care costs in their community as well
as an understanding of the impact of dynamics such as provider
"Today, a range of legal, regulatory, or operational barriers often
prevent plan innovations from being realized in local communities. To address
these barriers, cost containment strategies must modernize these 'rules of the
road' to ensure that innovative plan designs—aimed at decreasing costs while
ensuring safe, high quality care—can thrive." This
includes re-evaluating scope of practice requirements, accelerating use of
Health IT, promoting preventive care and wellness programs, promoting laws or
regulations that support innovative delivery structures, and eliminating
excessive network requirements that prevent plans from forming lower cost, high
Bold, Structural Reforms: "Strategies
to address soaring health care costs need to include fundamental, structural
changes in the health care system. Further, action needs to be grounded where
health care is delivered today—at the state and local levels." A
state-federal shared savings, or "gain-sharing," initiative could be
implemented that would allow states to keep a portion of any health care cost
savings they generate. "This would direct hundreds of billions in needed
incentives to cash-strapped states, while at the same time bending the total
cost curve and having a productive impact on the economy as a whole, as well as
family, corporate, and government budgets."
Health Care Costs and Premiums
Rising health care costs are making health care coverage
more expensive for individuals, families and employers. Government data
show that the growth
in premiums has tracked directly with the growth in underlying medical costs.
Thus, as health care costs increase, so do premiums.
The health care reform law also includes a number of changes
that will impact the benefits people receive and the premiums they pay.
Covering pre-existing conditions, requiring a broader benefit package, and
covering uninsured Americans who have gone without medical care will benefit
millions of people while increasing the cost of health care coverage. The
new health insurance tax and other fees will also increase premiums.
Other provisions of the law will make health care coverage more affordable,
including premium and cost-sharing subsidies and the transitional reinsurance
program, which provides funds to help offset the impact of high-cost
The impact on specific individuals will vary significantly
depending on their age, gender, location, health status, income level, and what
coverage they have today. Young, healthy males could see substantial
increases due to the combination of these reforms while older, less healthy
individuals could see rate reductions.
To learn more about all of these factors, click here.
Follow the links below to learn more about rising costs, their impact on health insurance premiums, and what can be done to reduce the rate of growth in health care:
A new statement from America’s Health Insurance Plans’ (AHIP) Board of Directors recommends a series of strategies to bring down costs and make health care coverage more affordable.
The AHIP Board of Directors released a statement recommending a series of strategies to bring down costs and make health care coverage more affordable.
A new report from Milliman, Inc. helps explain how the Affordable Care Act’s (ACA) coverage expansion, new benefits, and market reforms will impact individual market health insurance premiums in 2014. The report highlights how some provisions will increase premiums while others will make health care coverage more affordable for consumers. The focus of this report is to highlight the broad range of changes happening in the marketplace and the wide variation in impact that is likely to occur.
For taking the guessing game out of the health care cost debate,America's Health Insurance Plans' (AHIP) U.S. Health Care Spending 101 iPad app was recognized by the American Association of Political Consultants (AAPC) with two Pollie Awards, the industry's highest honors for political advertising and communications.
In an effort to improve both the affordability and quality of health care in America, key health care stakeholders from the insurance, hospital, physician, business, and consumer sectors—America’s Health Insurance Plans (AHIP), Ascension Health, Families USA, the National Coalition on Health Care, and the Pacific Business Group on Health—worked together to reach consensus about what is needed to control costs and improve quality.
A new study published in the March issue of the American Journal of Managed Care (AJMC) provides new data on trends in hospital prices across the country.
Unadjusted inpatient hospital prices per admission grew by 8.2% per year from 2008 to 2010 for the commercially insured population (under age 65 years) in the MarketScan data set. We estimate that approximately 1.3 to 1.9 percentage points of the growth in prices can be attributed to increased intensity per admission. Thus, we estimate that intensity-adjusted price increases ranged from 6.2% to 6.8% annually in the 2008-2010 period. Price levels and trends varied considerably across admission types, states, and localities.
A new report from America’s Health Insurance Plans (AHIP) highlighting data collected by Dyckman & Associates shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are 10 times – and in some cases, nearly 100 times – Medicare reimbursement for the same service in the same geographic area.
To make health care coverage more affordable, the nation must address the soaring cost of medical care that continues to rise at an unsustainable rate. Research shows that higher health care spending is a result of higher health care prices.
AHIP has released a new iPad app, U.S. Health Care Spending 101, that provides policymakers and stakeholders with comprehensive health care spending data in an easy-to-use digital format
AHIP’s new iPad app, U.S. Health Care Spending 101, is an interactive guide for examining the history, components, and sources of spending for the largest sector of the American economy.
This infographic outlines the five most expensive treatments and the five fastest growing treatments by unit price in 2011.
AHIP released a statement from its CEO and President Karen Ignagni on the release of the National Health Expenditure data.
In this report—an update to AHIP’s 2005 Innovations in Medicaid Managed Care book—we provide details about 17 health plan initiatives dedicated to improving the health and well-being of Medicaid beneficiaries.