The Problem | The Causes | Premiums | The Solutions
To make health care coverage more affordable, the nation must address the soaring cost of medical care that continues to increase at an unsustainable rate. There needs to be a much greater focus on the main drivers of medical cost growth: soaring prices for medical services, new costly prescription drugs and medical technologies, unhealthy lifestyles, and an outdated fee-for-service system that pays for volume rather than value.
More than one-sixth of the U.S. economy is devoted to health care spending and that percentage continues to rise every year. Regrettably, our system is not delivering value commensurate with the estimated $2.7 trillion spent annually on health care. Experts agree that about 20 percent to 30 percent of that spending – up to $800 billion a year – goes to care that is wasteful, redundant, or inefficient.
Rising health care costs punish our nation on multiple fronts. For families and seniors, the soaring cost of medical care means less money in their pockets and forces hard choices about balancing food, rent, and needed care. For small businesses and Fortune 500 employers alike, they make it more expensive to add new employees, more difficult to maintain retiree coverage, and harder to compete in the global economy. For federal, state, and local governments, rising health care costs lead to higher Medicare and Medicaid costs, and funding cuts for other priorities, such as infrastructure, education and public safety.
The net results of rising health care costs are far-reaching and ominous: higher costs for health insurance, the fraying of the nation’s safety net, an erosion in our global competitiveness, and long-term fiscal insolvency.
While the health reform law makes important strides in expanding coverage, much more is needed to rein in the rising cost of health care.
many causes of higher health care costs and spending. These causes include higher prices for medical services, paying for volume over value, defensive medicine, use of new technologies and treatments without considering
effectiveness, and a lack of transparency of information on prices and quality. There is also evidence that provider consolidation is having a significant upward pressure on health care
costs. The causes of higher health care
costs and spending are not simply or easy to solve, but they must be addressed
or the impact will be severe.
Health Care Costs and Premiums
Growth in premiums has tracked directly with the growth in underlying medical costs. Thus, as health care costs increase, so do premiums.
Expanding coverage to new populations, new taxes and fees, broader benefit requirements, and the cost of health care services all factor into health insurance premiums. Moreover, these complex factors and provisions will affect individuals in different ways depending on their current coverage, location, age, and income level. Young, healthy males could see substantial increases due to the combination of these reforms while older, less healthy individuals could see rate reductions.
To learn more about the most influential factors that go into premiums, click here.
Reducing the rate of growth in health care costs requires a collaborative, inclusive, and bipartisan approach. While there is no simple formula for lowering the growth in health care costs, stakeholders have long recognized that there are many areas where common ground can be found.
Health plans are playing an important role in lowering health care costs. Health plans are partnering with providers to create innovative, high-value payment systems to reward value and quality over volume. Health plans are also empowering patients with new coverage options that focus on high-performing providers and key tools like care coordination and case management for individuals with chronic conditions.
Other strategies for reducing health care costs include promoting prevention and healthy living, improving patient safety, and promoting transparency on medical costs and quality, and reducing health disparities.
These types of approaches are helping to move the nation away from the broken and unsustainable fee-for-service system toward a health care system better suited for the 21st century.
Back to top
AHIP Specialty Drugs E-Pub: Summarization of the Specialty Drugs issue brief that explores recent trends in the specialty drug market, highlights some of the innovative strategies health plans are adopting to control costs, and recommends additional policy solutions to further promote high-value, high-quality care.
Provider networks have been a mainstay of private health insurance coverage for more than 35 years – providing consumers with access to a broad range of hospitals, physicians, and other health care providers along with financial incentives for members to obtain care within the plan’s provider network.  Virtually
This study demonstrates statistically significant positive correlations between health insurance premiums for coverage purchased on some Federally-facilitated and State-based Exchanges and the level of hospital consolidation.
A new report examining the impact of hospital concentration and premiums in California provides clear evidence that consumers living in regions with many hospital competitors have substantially lower premiums compared to those in regions with highly consolidated hospital markets. The analysis, commissioned by America's Health Insurance Plans (AHIP), offers a first look at the influence of hospital concentration on the cost of coverage in the new Exchange marketplace.
There are a number of private sector and public/private initiatives underway to address affordability by lowering or constraining the growth of the health care costs faced by consumers. These initiatives involve health plans and health care providers, and range from the incremental to the potentially transformational.
This document reviews current research outlining the key drivers of health care costs and advances a new policy framework for bending the cost curve and improving the quality of patient care.
This report describes trends in the medication therapy management (MTM) programs being conducted by America’s health insurance plans and provides details about 16 companies’ MTM initiatives for a variety of patient populations.
A new statement from America’s Health Insurance Plans’ (AHIP) Board of Directors recommends a series of strategies to bring down costs and make health care coverage more affordable.
The AHIP Board of Directors released a statement recommending a series of strategies to bring down costs and make health care coverage more affordable.
A new report from Milliman, Inc. helps explain how the Affordable Care Act’s (ACA) coverage expansion, new benefits, and market reforms will impact individual market health insurance premiums in 2014. The report highlights how some provisions will increase premiums while others will make health care coverage more affordable for consumers. The focus of this report is to highlight the broad range of changes happening in the marketplace and the wide variation in impact that is likely to occur.
For taking the guessing game out of the health care cost debate,America's Health Insurance Plans' (AHIP) U.S. Health Care Spending 101 iPad app was recognized by the American Association of Political Consultants (AAPC) with two Pollie Awards, the industry's highest honors for political advertising and communications.
In an effort to improve both the affordability and quality of health care in America, key health care stakeholders from the insurance, hospital, physician, business, and consumer sectors—America’s Health Insurance Plans (AHIP), Ascension Health, Families USA, the National Coalition on Health Care, and the Pacific Business Group on Health—worked together to reach consensus about what is needed to control costs and improve quality.
A new study published in the March issue of the American Journal of Managed Care (AJMC) provides new data on trends in hospital prices across the country.
Unadjusted inpatient hospital prices per admission grew by 8.2% per year from 2008 to 2010 for the commercially insured population (under age 65 years) in the MarketScan data set. We estimate that approximately 1.3 to 1.9 percentage points of the growth in prices can be attributed to increased intensity per admission. Thus, we estimate that intensity-adjusted price increases ranged from 6.2% to 6.8% annually in the 2008-2010 period. Price levels and trends varied considerably across admission types, states, and localities.
In this report—an update to AHIP’s 2005 Innovations in Medicaid Managed Care book—we provide details about 17 health plan initiatives dedicated to improving the health and well-being of Medicaid beneficiaries.
A new report from America’s Health Insurance Plans (AHIP) highlighting data collected by Dyckman & Associates shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are 10 times – and in some cases, nearly 100 times – Medicare reimbursement for the same service in the same geographic area.
To make health care coverage more affordable, the nation must address the soaring cost of medical care that continues to rise at an unsustainable rate. Research shows that higher health care spending is a result of higher health care prices.
AHIP has released a new iPad app, U.S. Health Care Spending 101, that provides policymakers and stakeholders with comprehensive health care spending data in an easy-to-use digital format
AHIP’s new iPad app, U.S. Health Care Spending 101, is an interactive guide for examining the history, components, and sources of spending for the largest sector of the American economy.
This infographic outlines the five most expensive treatments and the five fastest growing treatments by unit price in 2011.
AHIP released a statement from its CEO and President Karen Ignagni on the release of the National Health Expenditure data.