A new reality is happening faster than any other health plan costs. Individuals, even those with health plans paid by their employer are discovering a new version of ‘Sticker Shock’. The patient’s portion of the cost of a hospital stay has risen approximately 37% from 2009 to 2013. According to a study by the University of Michigan, patients are paying at least $1000 per hospital stay.

The main cause is a severe increase in deductibles and ⅓ increase in co-pays, or the patient’s share of cost. The study uses data from major national health insurers such as Aetna, Humana, United Healthcare covering 7.3 million hospital stays. Findings included a 6.5% increase in and out of pocket spending per year! At the same time premiums rose 5.1%.

One possible reason for the hike in hospital stays is the decrease in competition when it comes to drugs. Hospitals are paying more for name-brand drugs because the generic versions have been bought and eliminated.

“There’s been a huge consolidation of these generic companies . . . everybody is buying everybody else,” stated Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health in a recent article published on the Chicago Tribune.

In a recent report from Bloomberg Business, prices for brand name drugs rose at least 10% annually since 2014. And hospitals have been footing these additional bills for years. Perhaps the most challenging aspect of the higher drug costs is that the price increase is not seen immediately by patients. It’s more of a trickle down system–the hospitals pay more which will eventually be charged to the insurance companies, who will in turn charge more co-pays to patients during their visits.

And while it may seem easy to target hospitals for the increase in pricing, hospitals are consistently placed in a difficult position. They have two options. They can spend the extra money in order to get the drugs that they trust and prefer to prescribe to patients. Or, they can choose not to buy the drugs and leave their patients without a suitable option for treatment. In them majority of cases, if not most, hospitals choose to fork over the extra money in order to get the drugs.  

A better system must exist and a balance must be met in order for all of the parts of the puzzle to align correctly. One thing that is certain? Health insurance is very complicated and will continue to fluctuate in pricing for the foreseeable future.

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