The rise of healthcare premiums and the growing unaffordable state of insurance is the reality for many Americans. This trend in the United States is actually a global issue facing many countries, and even indicative of what is happening here in the UAE.
These are five important points we need to consider, according to Kenneth E. Thorpe, and Robert W. Woodruff’s economic analysis, released by The Partnership to Fight Chronic Disease (PFCD):
- Between 2016 and 2018, private insurance spending in the U.S. increased by $101 billion.
- Of that total, hospital spending grew by $43 billion.
- Insurance plans adapted with a $21.3 billion increase in administration costs and profits, and a $20.6 billion increase in spending on physician and clinical services.
- Those most affected by the rise in costs of healthcare premiums are the “six in ten U.S. adults having at least one chronic condition.” According to the Health Authority of Abu Dhabi Statistics Report, the Emirates face similar threats to the U.S. from diseases of the circularity system. These made the most significant contribution to Emirate mortality, accounting for at least 27% of deaths in 2010. Indeed, the International Diabetes Federation found that the UAE had the second-highest prevalence rate for diabetes in the world.
- Between 2016 and 2030, chronic disease is projected to cost the U.S. $42 trillion.
Are we just having an epidemic of overall bad health? Perhaps we haven’t been prioritizing how health care institutions address the management of services and spending to patients with long term chronic diseases. Reducing healthcare costs would inevitably require sustainably reducing hospital spending while improving patient care.
Seven Reasons Healthcare Premiums are Rising
A healthcare premium is the monthly fee one pays their insurance company for health coverage. This means, in the event you require medical attention, your insurance company can cover these costs for you unless you are the victim of:
- Hospital inefficiency and lack of transparency. Their power within the private market results in wide price variations, sometimes unfounded. Administrative costs are largely mismanaged and have consequences in excessive spending that are not required for quality care.
- Patients. Unnecessary visits to hospitals that can be managed and prevented with increased patient education of their own predicament. The PFCD gives a good example of what this can look like: “Spending $1 on medicines for adherent patients with congestive heart failure, high blood pressure, diabetes or high cholesterol can generate $3 to $10 in savings on emergency room visits and hospitalizations.”
- Growing populations. More people than ever before are subject to chronic disease. According to Jim Probasco, diabetes and heart diseases are responsible for 85% of health care costs in the U.S. Let’s not forget that people are living longer lives, and as a result, more seniors are ageing and require medical attention. This is a trend parallel to the UAE’s.
- Costs not directed towards chronic disease prevention and management, but rather towards hospital care after they have occurred.
- Healthcare plans attempting to contain health costs by increasing cost-sharing plans with patients. Those who routinely require access to treatment are encountering higher costs when equally sharing their medical costs with insurance companies.
- Government policy. U.S. government programs like Medicare, help people with health insurance costs. However, they have enabled market competition to foster an environment that is favorable towards higher prices.
- Rising costs of pharmaceutical drugs and services. For instance, a study published in March 2019 by the Journal of the American Medical Association, found that diabetes medication alone was responsible for $44.4 billion of the $64.4 billion increase in health care costs to treat that disease.
So… solutions anyone?
Reducing the cost of health care, given our current predicament, requires a joint effort by the institutions managing the health industry, and you, the victim of poor health and empty pockets. At Petra, we prioritize transparent discussions about the best plans available to you. This may mean:
- Reducing spending on Annual Limits, on policy benefits and increasing copays or deductible fees. We are always looking out for ways of achieving sustainable and cheaper healthcare plans in the long term through our partners and network.
- Adjusting the network of hospitals to combat the inefficient management of services. We advise on which healthcare institutions provide the best quality and most affordable services and work with insurance providers to address these issues.
- Including companywide education about medical insurance and ways of efficiently using it. We hope to spread awareness about the dangers of not having a comprehensible backup plan to our corporate clients and the market in general.
- Categorization inefficiencies arise when the c-suite to employees across the organziation are all one and the same in terms of types of benefits. Creating categories reduces premiums without hurting morale since it can be based on seniority at a company and can be considered a perk for reaching certain levels. Creating categories increases the efficiency of your coverage and trims unnecessary costs.
- Reducing some benefits and including others which are shown to add great value and reflect positively on employee satisfaction, such as group life or personal accident insurance.
- Strategically working on a holistic approach either in the short term (1 year) or a year on year approach while looking at medical policy effectiveness from a cost-benefit perspective would help bring more clarity to clients. This can also be done in the mid-to-long terms. Both approaches work, it just depends on how prepared the company is at that current moment.
Low quality of health and tremendous suffering from rising health care costs seem to have become a global trend. We will not see the light at the end of the tunnel until hospital spending is managed. Short and long term responses to the epidemic of chronic diseases are indispensable for a decrease in the demand for health services, as well as their subsequent costs.
You can do everything in your power to stay healthy, but anything could happen to your health. That’s why health insurance is a necessity so that you are covered when it does and the more people insured, means a bigger pool of resources for the entire community.
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