Why the State of Costs

The State of Health Care Costs in North Carolina

Medical costs are rising rapidly with little promise of relief.80 From 2010 to 2015, insurance deductibles rose six times faster than salaries.81 And more than a quarter of American households report that they were either unable to pay or had serious difficulty paying medical bills in the past year.82 Yet most people don’t know why costs are rising. All they know is that they are paying higher and higher insurance rates.

The reasons for escalating health insurance rates are complex. Key drivers include rising costs for prescription drugs, hospitals and doctors, regulations, and our own unhealthy habits.

While the future of health care reform is uncertain, any reform will certainly need to address rising costs to be successful for North Carolinians.

Prescription Drug Costs

Prescription drugs, whether decades old or brand new, are becoming increasingly unaffordable. Drugmakers often increase prices for existing medications year after year so they can maximize profits before the drugs’ patents expire.83 Another reason for spiraling prices: specialty drugs that treat complex conditions like diabetes, arthritis and many others. Patients urgently need these drugs, but the prices are staggering. One example: a cancer drug that sells for more than $108,000 — 54 times what it costs to produce.84

Hospital costs

Along with soaring drug costs, rising hospital costs are a leading cause of high health insurance rates.85 In fact, out-of-pocket hospital costs jumped 37 percent from 2009 to 2013.86

On average, Americans with private insurance paid $1,013 out of pocket for a hospital stay in 2013 — more than the average North Carolinian’s monthly rent.87, 88

Lack of Cost Transparency

For most other industries, price transparency is the norm. But the medical industry plays by a different set of rules. Many people are in the dark about their actual costs until their bills arrive. Since cost information isn’t always readily available, there’s nothing to determine whether hospitals or doctors are offering competitive prices.

This lack of transparency helps explain why patients in some North Carolina areas pay some of the country’s highest rates for common tests like MRIs and CT scans.89

Regulations

Since its inception, health care reform has focused on increasing access to health insurance. But one thing that’s always been missing from the health care reform debate is how to stop runaway health care costs. Any discussion about the future of health care reform must address increasing costs for prescription drugs, medical devices and hospital care, or it will fail North Carolinians and the country as a whole.95 After all, Americans pay far more for health care than any other country in the world.96

On top of the federal health insurance regulations that are part of the Affordable Care Act, North Carolina has added 57 more state regulations, or “mandates.”97 They increase insurance costs by requiring insurance plans to cover certain conditions, procedures and tests that all BCBSNC customers may not necessarily want or need.

Unhealthy Habits

For North Carolinians, unhealthy lifestyles along with factors like poverty and unemployment lead to high rates of chronic disease, increased health care costs and a lower quality of life.90, 91

How much do bad habits cost us? North Carolina spends $3.81 billion every year on medical costs associated with smoking.92 And problems caused by poor nutrition cost our state $12 billion — more than we spend on pensions, public welfare and police and fire protection combined.93, 94

Working on Our Customers’ Behalf

Since its inception, health care reform has focused on increasing access to health insurance. But one thing that’s always been missing from the health care reform debate is how to stop runaway health care costs. Any discussion about the future of health care reform must address increasing costs for prescription drugs, medical devices and hospital care, or it will fail North Carolinians and the country as a whole. After all, Americans pay far more for health care than any other country in the world.

On top of the federal health insurance regulations that are part of the Affordable Care Act, North Carolina has added 57 more state regulations, or “mandates.” They increase insurance costs by requiring insurance plans to cover certain conditions, procedures and tests that all BCBSNC customers may not necessarily want or need.

Cited Sources

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