Standard & Poor's came out with a notable—if unsurprising—annual report last week showing that medical inflation rose 7.3% in the 12 months ending in August, a pace that is nearly seven times that of the 1.1% increase in the Consumer Price Index for the same period.
This is not surprising because the runaway growth of medical inflation is a trend that has gone on for decades or longer. U.S. Bureau of Labor Statistics data show that medical inflation grew by 48% in the last 10 years, while the CPI grew at 26%.
Think about the ramifications of this trend, which will significantly worsen the physical and financial health of tens of millions of Americans.
Imagine a chart with two lines drawn on it. The top line, holding horizontal with tiny annual increases, is the average income for Americans. The bottom line, rocketing upward like a surface-to-air missile on an intercept course, is the rising cost of healthcare. How long before those two lines collide? What happens when they do? If this trend continues—and there is nothing to suggest that it won't—is it conceivable at some point in the future that every dollar an American worker earns will be spent on healthcare?
I ask this because I don't see anything, anywhere that comes close to addressing this catastrophic rise in the cost of healthcare. The Obama Administration claims its healthcare reforms will save Americans' money. Perhaps, but we don't really know. Critics note the president's reforms are more concerned with expanding access than with containing costs. This may be true. Many of those same critics—from Congress and the private sector—have been obstructionists satisfied with the untenable status quo.
There are several versions of cost containment out there, but they all dump it back on the same source: the consumer. It doesn't matter if it's a hospital executive, a physician, a health insurance bean counter, or a CMS bureaucrat. When they talk about "cost containment," they're talking about shifting more costs onto consumers, who are nearing the breaking point.
Government contains costs by cutting Medicare/Medicaid. Providers will cover much of that lost revenue by shifting even more costs onto consumers. Health plans and employers raise premiums, co-pays, and deductibles to cover the rising cost of coverage and to discourage consumers from seeking medical care by making it unaffordable for people on a fixed wage.
Yes, of course, more and more hospitals are focusing on outpatient services, so that may have played a role in the decline. It could be argued, however, that a major reason for the decline of hospital in-patient admissions is less by design and more owing to the simple fact that people can't afford to be admitted.
And yes, of course, healthcare consumers aren't blameless here. Poor diets and sedentary lifestyles have done much to drive up the cost of care for chronic diseases like diabetes and hypertension. People have to take responsibility for their own health. Be careful, however, when throwing the blame at working- and middle-class Americans who toil for stagnant salaries while the cost of everything else goes up, who may not live in nice neighborhoods with lighted sidewalks, or who can't afford or don't have the time and energy for the gym when they're working two jobs or trying make a mortgage payment.
Even people with health insurance may forego care because they can't pay the high deductibles—a particularly heinous example of "cost containment"—that makes the idea of preventive medicine a cruel joke for those who can't afford $115 or more out-of-pocket for a proactive visit to their physician's office. Speaking of which, good luck finding a primary health provider who is taking new patients. If you find one, the wait may be as long as 18 months for a well patient exam.
Some time in the next few days or weeks, Americans lucky enough to have a job that provides health insurance will trudge into their company meeting rooms to learn how much more they will have to pay for a vital benefit that many already cannot afford. HR directors across the nation should drop the bad news at the same time so we can have a national day of mourning. It would allow our overworked, overstressed, underpaid workforce a shared moment of commiseration as their financial burden gets a little heavier, their paycheck gets a little lighter, and they adjust to the anxiety that comes with praying they don't get sick.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.