According to a May 2009 WellPoint Institute of Healthcare Knowledge report, advances in medical technology may be the primary driver of increased costs, not insurer profits.
"What's Really Driving the Increase in HealthcarePremiums?" compiles research from sources such as PricewaterhouseCoopers, the Robert Wood Johnson Foundation, the Kaiser Family Foundation, the Bureau of Labor Statistics and the Congressional Budget Office.
"As the healthcare reform debate heats up, the results of this report provide important insights into the drivers of healthcare costs in this country," said Sam Nussbaum, MD, executive vice president and chief medical officer of WellPoint. "The bottom line is that those items typically blamed for rising healthcare costs – insurer profits, the aging of America and the high cost of medical malpractice – in fact have little impact on healthcare premiums."
According to the report, the "key drivers" of spiraling U.S. healthcare costs are:
- advances in medical technology and subsequent increases in use;
- price inflation for medical services that exceeds inflation in other sectors of the economy;
- cost-shifting from people who are uninsured and those receiving Medicare and Medicaid to the private sector;
- the high cost of regulatory compliance; and
- patient lifestyles, such as physical inactivity and increases in obesity.
The report also shows health insurers' profitability at somewhere between 25 percent and 40 percent, PricewaterhouseCoopers confirms that only three cents of every healthcare premium dollar is spent on health insurer profit. This is less than the 2008 profit of 4.9 percent reported to Reuters by auto and truck manufacturers, the 4.8 percent reported by healthcare facilities or the 4.7 percent reported by utility companies.
"We are all working toward the common goal of meaningful and responsible healthcare reform," Nussbaum said. "For this to occur and be sustainable, we should focus on the main drivers of healthcare costs. Independent of funding, we need to institute reforms that improve healthcare quality and outcomes, increase preventive care and reduce those common illnesses, including cardiac disease and diabetes and chronic lung disease, that result from smoking, lifestyle and obesity."
"We have learned over time that newer technologies do not always produce better health outcomes," Nussbaum continued. "We need to focus on outcomes and delivering better quality care and apply the breathtaking advances in technology and treatment when they produce better patient care. The wise application of these expensive new therapies will result in more affordable healthcare for all Americans."