Hospitals, Insurance Administration Biggest Causes of Health Insurance Increases


We’ve all heard a lot about how sky-high drug prices are contributing to rising health insurance costs, but it turns out the biggest contributors are hospitals and health insurance administration expenses.

That was the surprising finding from Harold Miller, president and chief executive officer of the Center for Healthcare Quality and Payment Reform, a Pittsburgh-based policy center. Miller spoke at a conference I covered on reining in health-care costs, which have risen faster than general inflation for many years. The conference was sponsored by the Network for Regional Healthcare Improvement.

Private health insurance spending increased $240 billion between 2009 and 2015, and hospitals accounted for 50 percent of that, Miller said. Health insurance administration and profits accounted for 12 percent of the increase, and health insurance administrative expenses equaled drug spending, he said.

Miller advocated avoiding spending that doesn’t benefit patients. He cited unnecessary surgeries, including Caesarean section and elective early deliveries, and giving patients unnecessary drugs for cancer treatments. Medical providers should be paid to better coordinate care, rather than just treat people when they get sick, he said.

The point about unnecessary spending in the U.S. health-care system was brought home at another conference on the subject sponsored by the free-market oriented American Enterprise Institute.

Major savings are possible if changes are made in maternity care, seeing that patients with chronic diseases take their medications, and the way we care for dementia patients, a group from the Stanford Clinical Excellence Research Center said.

One example, according to Vicky Woo, an obstetrician who works for Kaiser Permanente medical group in Oakland, Calif., is to move most births, those for low-risk, healthy women, to midwife outpatient birth centers connected to hospitals. The U.S. spends about $800 million for maternity care annually, about 60 percent of which is for hospital care, she said.

That type of system is used by the United Kingdom’s National Health Service, and that change alone could reduce U.S. health-care spending by a half a percentage point, Arnold Milstein, director of the Stanford research center, said.

Read my full story here.

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