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The Facts About Today’s Health Care Costs

The Facts About Today's Health Care Costs

Everyone wants to receive the most from today's health care system - the most benefits and the most care. But not everyone is aware of the true cost, and why it's important to distinguish between the type of medical care that is needed vs. what is chosen. Information is key to understanding why health care costs are rising and what factors affect your costs:

  • Increased use of high-cost technology. As medical technology has advanced, so have associated costs - especially in the area of high-tech imaging. A simple $70 x-ray can diagnose sinusitis. Yet the diagnostic procedure of choice is an MRI (magnetic resonance imaging) -- at 10 times the cost for the same diagnosis.
  • Tennessee is No. 1 in prescription drug use. Tennessee leads the nation in prescription drug use - with 17.3 prescriptions per man, woman and child. The nation's average is only 11. TV and magazine drug ads are effective, powerful persuaders, encouraging consumers to ask their physicians to prescribe certain costly drugs, when equally effective and less expensive medications may be available instead.
  • People are seeking more care, more often. Tennesseans are spending more money faster on health care, yet overall the state is one of the top 10 unhealthiest in the nation, with a lower life expectancy than the U.S. average. Consumers are using more health care services, seeking more care, more often as the population ages.
  • Unhealthy lifestyle choices are driving costs up. Genetics are only part of your health story. The greatest impact is your personal health behavior. Diet, smoking, drinking and fitness levels have the potential to influence your health status by 50 percent. Smoking and obesity, in particular, create added health problems that are expensive to treat.
  • Mandates and legislation add to increasing costs. Federal and state mandates and legislation add costs to your health care premium. Government mandates have increased 25-fold in the past generation. Experts estimate that regulations represent about 15 percent of overall medical cost increases nationwide, roughly $10 billion a year.
  • Insurance fraud and abuse takes its toll. Like shoplifting, insurance fraud and abuse ends up costing everyone more. The American Medical Association estimates the annual cost of health care fraud to be between 3 and 14 percent of benefits paid. In 2005, BlueCross BlueShield of Tennessee paid $16.4 billion in health care benefits -- so the potential impact is enormous.

Sources: State and nationwide health statistics drawn from BlueCross BlueShield of Tennessee studies. American Medical Association; Bureau of Economic Analysis, Department of Commerce; Centers for Disease Control, J. Rovner; Centers for Medicare and Medicaid Services; IMS Health; Novartis Pharmacy Benefits Report; Organization for Economic Cooperation & Development; RAND; ReliaStar Health Index; Sherlock Company; and Tennessee Department of Health