Soaring Healthcare Costs: A Look at the Reasons Behind Them and their Effects on Employers
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With the beginning of a new Presidency has come an increased awareness of the problems associated with the healthcare industry in the United States. Not only are there almost 3 6 million Americans who lack any type of insurance at all, but the costs for those who are insured are rapidly increasing. It is clear to everyone that costs are rising and that something must be done about them before they are completely uncontrollable. What is not clear is exactly what is causing costs to rise at their current rates. There is no single cause of the increasing costs. It is evident that a number of separate causes, when combined with each other, have resulted in the current situation. If actions are not taken swiftly it is estimated that healthcare costs could exceed $1 trillion by the year 1994, accounting for more than 16 percent of the Gross National Product (GNP) of the United States. The initial section of this paper focuses on the causes of the cost increases facing the healthcare industry. Some of these, such as the general inflation rate and the aging of the American population are background phenomena than cannot be addressed through changes in healthcare policy. Many other causes, such as the problem of the uninsured and the effects of the marketplace are structural, due to the nature of healthcare in our society. The remaining causes, such as unnecessary procedures and hospital stays, arise internally in the healthcare sector of the economy. Following the discussion of causes is my journal for the project which I worked on for MEDSTAT Systems, Inc. Although everyone is concerned about the rising costs of healthcare, few efforts to decrease costs have been successful. MEDSTAT is one company that has been successful in helping its clients to lower their healthcare costs. Their clients consist of nearly one hundred companies across the country, all of which have more than 10,000 employees. Since 1988, their clients have reported lower healthcare costs than the national averages tabulated by the A. Foster Higgins firm. . It can be seen that in 1990 MEDSTAT's clients paid almost 25 percent less per employee than other large companies. Through their efforts, MEDSTAT has succeeded in lowering costs for the employees of their clients, and therefore has helped their clients to contain costs on the goods and services which they offer. The final section of this paper will turn to the effects which the healthcare crisis is having on the employers of America. Some employers are being forced to cut benefits simply to remain in business, while others doing away with benefits altogether. Although it is generally believed that health benefits should be a part of employment, it is becoming evident that this may not be possible unless something is done about the state of the healthcare system in America.