What is Medical Inflation and How is It Affecting Healthcare Costs?
Over the last 20 years, healthcare costs have surged beyond control, hindering the ability of many people to get quality, affordable health care. Individual health insurance premiums alone are expected to rise by 6% by 2023.
Overall healthcare costs are still expected to rise even more, and medical inflation carries a huge chunk of the blame. But how? Find out below about the mystery of medical inflation and its effect on healthcare costs.
What is Medical Inflation?
When the price of a healthcare service (per person) rises over time, this is known as medical inflation. It may also be used to describe a surge in service usage. This often takes into account both the higher price of more expensive procedures and treatments as well as the increasing accessibility and use of these services.
The first step will be for providers to request higher reimbursement rates, and the second step will be for payers to pass on greater costs to employers and consumers, who have already experienced cost increases of more than 6% annually from 1999 to 2021.
Treatment is Getting More Expensive
The latest trends and innovations, such as new treatments, new drugs, or new technology, are great, and practical and increase the effectiveness of providing healthcare. As a result of these innovations, individuals have a better chance of surviving and managing serious illnesses, such as cancer and heart disease. However, all of these come at a cost to patients and healthcare providers.
Doctors and healthcare facilities must pay high prices to acquire these latest developments and equipment. Unfortunately, this means they have to increase the cost of treatment to offset the cost of these expensive—though reliable—innovations for the medical industry.
Factors Driving Medical Inflation
Several factors drive and push medical inflation towards affecting the costs of healthcare. Two common factors are:
1). Change in Cost per Person
This points to the change in the cost of a specific ongoing medical procedure or treatment. The change occurs primarily due to the change in the following sectors:
- Hospital personnel costs (salaries, benefits, consultants)
- Hospital consumables cost (masks, gowns, bandages)
- Other expenses such as rent, technology, utilities, or property expenses.
2). Change in Utilization of Services
The shift in how many services are used per individual reflects the shift in how many medical services are used overall. Sometimes, though, this usage varies. For instance, it might shift toward cutting-edge, pricy medications and therapies.
Reasons that can cause this change include:
- Changes in healthcare availability and access (demand and supply) can be considered one of the primary causes of rising medical inflation.
- Consumer behavior is also a motivating factor for change in the usage of services per person. It refers to a perspective shift among people, such as increased health awareness among consumers or increased healthcare benefits.
- Medical advancements can increase the ultimate cost—as discussed above. Furthermore, new-age diagnostic technology that effortlessly detects conditions/illnesses with increased perfection and precision can cause medical inflation.
Other factors driving medical inflation include:
- Reduced number of qualified technicians
- Increased health insurance premiums
- Increased chronic diseases
- Growing and aging population
What Might Raging Inflation Cost?
An estimate by HealthView Services found that a healthy 55-year-old couple might spend an additional $267,000 on medical expenses upon retiring at 65 if healthcare costs increase by 2% above consumer inflation for a few years. Over the course of their lifetime, this couple's medical bills will probably total more than $1 million. They can anticipate receiving benefits from Social Security in an amount that is practically identical to this.
Healthcare doesn't have to be expensive. However, if your current healthcare costs are overwhelming, you can take advantage of the options available to pay for medical expenses.
Instead of using less effective treatment options such as conducting at-home medical tests to save money, you can use an alternative, such as Liberty HealthShare, to address your high medical costs. With such options, you can access the best professional treatment without compromise. We provide tools to help our members find reasonably priced, high-quality medical care. Reach out to Liberty HealthShare for affordable and efficient ways to pay for your healthcare costs.