“I tell them it’s a combination of things,” says Craig Jones, Oklahoma Hospital Association president.
More patients entering the system, higher costs of technology and insurance company profit margins are to blame, he says.
Increasing utilization is a big driver of cost, and baby boomers leaving the workforce and entering retirement are putting a greater strain on the health care delivery system.
Estimates show some 44 million people were covered under Medicare in 2010. Beginning this year and continuing into the near future, an additional 2 million baby boomers each year will enter the system.
National health care reform is another big cost.
“They’re required to cover more preventive services, and there are certain mandates some states are putting in for coverage of autism, hearing aids and things of that sort,” Jones says. “And you have insurance companies that are trying to maintain a profit. There’s a lot of criticism about that, and certainly profit margins are all across the board.”
A study released in March by Health Care for America Now, showed the top five health insurance companies in the U.S. posted double-digit profits in 2010, and a 45% increase in profits when 2009 is factored in.
“The difficulty with health care reform is it really had more to do with insurance reform and very little to do, quite frankly, with any kind of curtailment of utilization of services,” Jones says.
Rob Lake understands the situation all too well. The former CEO, senior vice president and chief operating officer of four hospitals in the last 14 years, Lake says health care and its associated costs is an animal we’ve all created.
“It is expensive,” says Lake, who chairs the American Hospital Association’s governing council for small and rural hospitals. “I tell people to be careful what you ask for. It is expensive, but we have accessibility.”
Lake reasons that we all want quality health care, when we want it. But none of us are willing to make the sacrifices needed to cut down costs. Socialized medicine sounds great, he says, but who wants to be on a waiting list when it comes to open-heart surgery?
“There is waste in the system, but when it’s your dad and he’s 95, and you want heart surgery, and they say, ‘No,’” Lake says, “health care is personal. It’s gut wrenching.”
Health advances and the rising cost of technology are other factors.
Medicare and Medicaid are holding out a $30 billion carrot in the form of increased payments in 2015 for hospitals and doctors who can share their data, which should cut down on the number of tests.
“There’s some positive benefits from that, but there’s a tremendous amount of capital outlay that goes into upgrading those kinds of systems,” Jones says.
He says the state’s own health care funding system is in dire straits. The federal government pays the state $2 for every $1 it puts into Medicaid funding.
“What we’re anticipating for the state’s fiscal year beginning in July is there is somewhere in the vicinity of $350 million that the Oklahoma Healthcare Authority will be short, in terms of funds they have been using,” Jones says. “We don’t know where these other funds will come from in order to sustain the level of Medicaid payments necessary.”
He says the recession boosted the number of Oklahomans who qualified for Medicaid assistance.
The situation is so dire that Oklahoma hospitals are seeking legislation to tax themselves in the form of a provider fee that would ensure enough dollars are available to be spent to cover Oklahoma’s share in the Medicaid formula.
Both Lake and Jones agree the answer to rising health care costs is a simple one.
“Quite frankly, the thing that would have the most impact to curtail rising costs is if people took more responsibility for their own health,” Jones says. “That clearly is a huge, huge factor. We eat what we want to eat. We want to exercise or not exercise. If, in fact, we get ill, we want to be fixed quickly and noninvasively, and if we can, on an outpatient basis.
“I think the personal responsibility factor tends to get pushed aside, but it’s probably the No. 1 factor that influences a lot of expenditure on health care.”