Why is health care so expensive?

Our health care system is fragmented and inefficient, resulting in duplication, waste, confusion and missed opportunities to impact and improve patients’ health—especially those with chronic conditions.  Consider the following sobering statistics:

  • Health-related costs are rising at twice the rate of overall inflation.1
  • More than 100 million U.S. adults are now living with diabetes or prediabetes, according to the Centers for Disease Control and Prevention (CDC). The latest CDC report finds that as of 2015, 30.3 million Americans – 9.4 percent of the U.S. population –have diabetes. Another 84.1 million have prediabetes, a condition that if not treated often leads to type 2 diabetes within five years.2 According to the CDC, in 2012, diabetes and its related complications accounted for $245 billion in total medical costs and lost work and wages.3
  • More than one-third (36.5%) of U.S. adults are obese. Obesity-related conditions include heart disease, stroke, type 2 diabetes and certain types of cancer, some of the leading causes of preventable death. The estimated annual medical cost of obesity in the U.S. was $147 billion in 2008.4

According to a recent Commonwealth Fund report, the U.S. health care system is the most expensive in the world, yet it consistently underperforms compared to other countries.  In its most recent report, the Commonwealth Fund states that among the 11 nations they studied—Australia, Canada, the United Kingdom, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United States—the U.S. ranked last in access, administrative efficiency, care delivery and outcomes.
Other Commonwealth Fund findings:

  • The U.S. spent $9,364 per person on health care in 2016, compared to $4,094 in the U.K., which ranked first on performance overall
  • Since 2004, the U.S. has ranked last in every one of six similar reports.
  • Although the U.S. has made significant progress, our health care system lags behind other countries, especially when it comes to access to care, primary care, affordability and equity.

Want to read more about why health care in the U.S. costs so much?

HEALTH INSURANCE TERMS


COINSURANCE

The percentage of the bill you pay after your deductible has been met.

COPAY

A fixed amount you pay when you get a covered health service.

Tiered benefit plan

A health care plan featuring multiple levels of benefits based on the network status of a particular provider. 

DEDUCTIBLE

The annual amount you pay for covered health services before your insurance begins to pay.

emergency care services

Any covered services received in a hospital emergency room setting.

SUBSTANCE ABUSE DISORDER SERVICES

Includes behavioral health treatment, counseling, and psychotherapy


in-network provider

A provider contracted by your insurance company to accept an agreed upon payment for covered services. 

OUT-OF-network provider

A term for providers that aren’t contracting with your insurance company. (Your out-of-pocket costs will tend to be more expensive if you go to an out-of-network provider.)

out-of-pocket

Your expenses for medical care that aren’t reimbursed by insurance, including deductibles, coinsurance and co-payments.

penalty

If you can afford health insurance, but choose not to buy it, you must have a health coverage exemption or pay a tax penalty on your federal income tax return.

premium

The amount you pay to your health insurance company each month. 


Preventive services

Health care services that focus on the prevention of disease and health maintenance.

rehab SERVICES

Services and devices to help you recover if you are injured or have surgery. This includes physical, occupational and speech therapy.

special enrollment period

The time after the Open Enrollment Period when you can still purchase health insurance only if you have a qualifying life event (losing other health coverage, having a baby, getting married, moving).

specialist

A physician who has a majority of his or her practice in fields other than internal or general medicine, obstetrics/gynecology, pediatrics or family practice.