Healthcare Cost Management - Tales from across The Pond

 
Healthcare in America has, like every country, its own unique set of challenges. However, trends that emerge there often find a resonance in our own private healthcare sector. The debate about managing healthcare costs has some key themes of interest to us.

As US health insurers and HMO's (health maintenance organisations) ability to keep a lid on costs runs out of steam, healthcare costs are heading into a fourth consecutive year of double-digit increases.

Employers in the US are shifting a growing share of the cost burden onto employees and their dependants who use medical services the most. This trend takes the form of fast-rising co-payments and excesses, higher payroll deductions to cover spouses and children and new kinds of health plans that give employees a fixed sum to spend.

The latter approach has become known as 'Consumer Driven Healthcare'. Employees get an allowance to spend on medical expenses. If they exhaust it, they use their own money until they reach a limit, typically $3,000 to $5,000, when the plan starts paying.

On average, the annual out-of-pocket costs for employees of large companies have more than doubled since 1998, to $2,126 this year.

Employers there still pay most of their workers' health care bills, but their contribution has reduced over the last five years, to 70 percent of total health care costs from 75 percent

According to the US Census Bureau, the number of Americans without insurance has grown to 43.6 million, the highest since 1998. In the UK we can, of course, count ourselves fortunate that we have the safety net of universal coverage under the NHS, imperfect though this may be at times.

Some health care economists - and many insurance companies - argue that costs will never come under control until the users of medical services feel the financial sting. There is, like the UK private insurance system a 'disconnect' between the consumer of healthcare and the cost of that treatment. Generous coverage, they contend, long gave Americans and their doctors a perverse incentive to indulge in wasteful consumption of expensive drugs and diagnostic tests. In its more restrictive forms, managed care made patients jump through bureaucratic hoops to obtain treatment, but experts say it, too, did little to expose consumers to the true costs of health care.

A concern amongst economists in the US is that some employers could risk going out of business as they struggle to afford the costs of healthcare cover.