Sunday, November 17, 2002

Many causes for rising health costs

By Tim Bonfield
The Cincinnati Enquirer

If the problem were simple, it would be solved already.

But as much as the CEO wants to blame the regulator, or the doctor wants to blame the trial lawyer, or the insurer wants to blame the patient, there is no single reason why health care costs are soaring. Among the many factors:

Rising drug costs: This is a combination of rising use of medications among many age groups; rising prices for many drugs, especially those commonly used by seniors; and the continuing influx of new, expensive drugs.

Exploding technology: Entire new classes of medications. Genetic testing. More powerful scanners. Quicker, more accurate lab tests. Minimally invasive surgical techniques. Drug-coated stents. Artificial hearts. Better artificial joints. Improved pacemakers. Insulin pumps. On and on. New medical technology helps people live longer with life-threatening diseases. But it all costs money.

The graying of America: For individuals, medical costs typically start rising around age 45, when people start taking screening tests for cancer and start developing heart disease and other chronic illnesses. The first people born in the baby boom - 1946-1964 - are 56 now. Those born in the peak years of the baby boom - 1957-1961 - hit age 45 starting this year and continuing through 2006.

Unhealthful living: The numbers are falling, but the Tristate still has above-average smoking rates that lead to many forms of illness. Meanwhile, obesity is catching up to tobacco as a leading trigger of preventable illness. Even some teenagers need stomach stapling.

Provider clout: Hospitals that spent years reorganizing into networks and doctors who joined larger groups have gained some negotiating leverage with commercial health insurers. In many cases, hospitals and doctors have begun reversing the losses experienced several years ago when they accepted low-paying contracts. In Cincinnati, doctors are suing insurers over allegations that insurers conspired to keep payment rates unusually low.

Government regulations: From requiring coverage for 48-hour maternity stays to new medical records privacy standards, some say state and federal mandates drive up costs regardless of the popularity of the rules.

Medical malpractice litigation: Some blame soaring malpractice insurance fees, high jury awards in some cases, and the sheer number of lawsuits filed with driving up the overhead costs of medical care and for causing "defensive medicine," in which services are performed to avoid lawsuits even though experts feel the tests or treatments aren't necessary.

Labor shortages: Be they nurses, health aides, occupational therapists or technologists to run high-tech diagnostic gear, personnel in short supply are getting rising wages and recruiting bonuses even in a weak economy.

Profit-taking among insurers: Cincinnati's biggest insurers have posted big profit gains this year. Some groups criticize the high compensation awarded to top health insurance executives.

Lifestyle medicine: The definition of medical necessity often varies between people seeking treatment and the employers and insurers paying the bills. Should insurers cover Viagra? How much is too much to spend on infertility treatment? Or weight control? Or skin problems?

Unfettered expectations: Rich or poor, covered or not, Americans expect near-immediate access to the best doctors, the newest drugs and testing techniques - all in newly-built, nearby medical facilities. Many industry insiders say expectations would shift and rising costs would slow if more people had to pay larger shares of their actual medical bill.

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