Health Care Costs: Trends & Reducing Personal Costs

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

After reading this lesson, you will see why health care costs are rising and how the Affordable Care Act has affected this rise in prices. You'll also learn some ways you can help lower your medical costs.

It's a sad truth, but health care costs have risen so high and so quickly that many people and many employers can no longer keep up with them. For example, in 2000, an employer could purchase a family health insurance plan for his employee for around $6,500. Fast forward 13 years to 2013 and now that same employer has to forgo giving his employee a well-deserved raise. See, this employer now has to pay over $16,000 for that same family health insurance plan.

Not only is the cost of health insurance rising, but the cost of medications and hospital procedures are also rising. According to the 2014 Consumer Reports, a single Tylenol pill costs $37.50 when you stay in the hospital. Also, just because the maker of a medication has control of the only patent for this medication, they charge $1,000 for each pill of this medication that will treat Hepatitis.

Actually, the cost of health insurance is directly related to the cost of medical care. The higher the cost of care, the higher the cost of health insurance.

In this lesson, we'll look at some reasons why our health care costs are rising. We define health care as the care needed to maintain physical and mental health. Health care includes preventive measures along with medical treatments.

Why Costs are Rising

One of the reasons that health care costs are rising is that there is not a right price to pay for any one service or treatment plan. Prices are made and set by either the hospital or the insurance company, whoever has the biggest influence. If an insurance company has a lot of people signed up for its plan, then that insurance company has a greater influence on the prices that are set. The same with hospitals. If a hospital is large enough, then that hospital can set its own prices and override any prices set by the insurance companies. Insurance companies, hospitals, and other medical facilities are all fighting behind the scenes with each other for the most patients. A health insurance company will want to do business with a hospital that everyone always chooses to go to. A hospital will want to do business with a health insurance company that everyone chooses to purchase insurance plans from. The more patients a company has, whether a medical facility or insurance company, the more say it has in choosing who to work with and what prices to set.

Also, many people are being overtreated and given extra services that are unnecessary. Why? Just so the medical facility can charge more for the additional services. If a medical facility can charge you for 3 blood draws instead of 1, why not? It's more money for them.

Some doctors are also promoting the latest and greatest and expensive treatments available. These treatments may be high-tech, but they may work just as well as older treatment methods that work just as well and are less expensive.

What's Being Done

Of course, this rising cost of health care has not gone unnoticed. President Barack Obama put into place the Patient Protection and Affordable Care Act on March 23, 2010. Referred to as the ACA, this act was put into place to help improve the quality of health care we receive as well as to make it more affordable.

Also, now preventive care is being taught to the public. For medical facilities, more money is made if you have a heart attack versus helping you with your preventive care, such as eating right and exercising.

Reducing Your Cost

In addition to what is being done, there are things that you personally can do to help reduce your own health care costs.

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