Op-ed: Health care costs are increasing, but there’s a way out

Healthcare costs are increasingly burdening Washington families. Several new studies from the Commonwealth Fund, Health Care Cost Transparency Board (Cost Board), and the Washington Health Alliance (WHA) reveal some distressing findings.

The national cost for employer-sponsored coverage for a family is almost $24,000 per year. This is an alarming increase of 7 percent year over year. This outpaces the rate of wage increases for employees and consumes more from families’ budgets each year.

In addition to premiums, individuals and families likely pay for additional out-of-pocket costs for most health care services. An average family pays 20-30 percent of the costs for in-network services. People with a high-deductible health plan will pay 100 percent of out-of-network services, such as preventive or maternity care.

According to the Commonwealth Fund, 51 percent of working-age adults find it difficult to afford health care. For lower-wage workers, more than 10 percent of their income goes toward healthcare costs.

So, why are costs so high?

There are multiple factors—including an aging and larger population—although rising prices for products and services remains most significant. Excessive, wasteful medical procedures are another factor. WHA reported on services the U.S. Council of Medical Specialty Societies deem wasteful.

WHA found that for 48 different services, they are prescribed 38 percent more often than necessary, resulting in significant and excessive waste. People living in more advantaged neighborhoods are more likely to receive unnecessary screenings, such as vitamin D testing. People living in underserved neighborhoods are five times more likely to receive narcotics for back pain. The overuse and misuse of these 48 services alone was $126.5 million over three years.

The Cost Board’s recent report also revealed a significant increase in statewide total health expenditures. In 2018, it increased 7.2 percent, followed by a 5.8 percent increase in 2019. Statewide total health expenditures exceeded a shocking $48 billion in 2019. This translates to $7,152 per person in the state.

To help curb rising health care costs and its impact, the Cost Board set an overall health care cost growth benchmark rate of 3.2 percent. This benchmark is a specific rate—designed to go down slowly—that insurance carriers and health care providers should try to stay under to contain cost growth over time.

What can public and private organizations, employers, health plans, and providers do to slow down the increasing cost of health care?

• Invest in primary care, which may lower costs as much as 30 percent by addressing prevention and managing chronic conditions.
• Lower the cost of medications for consumers by distributing and buying medications in a transparent way. Cost plus 15 percent is one example of fair pharmacy pricing that is clear and transparent.
• Address fair pricing for hospital services, especially where the prices paid far exceed the cost of delivering care. For example, nonprofit-status hospitals should be held accountable for providing charity care and community investments to maintain their nonprofit status. In Washington, 21 hospitals were evaluated and have unspent funds for charity care totaling $275 million, according to the Lown Institute.
• Eliminate wasteful and unnecessary services like cardiac stents for stable heart disease. In Washington, cardiac stent overuse ranged from 9.7 to 46.2 percent in 21 hospitals studied. Nationally, 22 percent of cardiac stents met the criteria of overuse. That’s about 1 million stents. The average price of a cardiac stent is $28,000 for a commercially insured person.

We must work together to reduce administrative complexity and avoid the misuse, overuse, and underuse of care. By doing this, we can achieve better quality, better access to, and more affordable care for people in Washington.

Sue Birch is the director at the Washington State Health Care Authority and Drew Oliveira is the executive director at the Washington Health Alliance.