The palpable euphoria surrounding the election of Democratic healthcare professionals to key positions in the U.S. midterms as an opening to tame rising healthcare costs in the country may be over-optimistic, if an analysis by Harvard University’s Associate Professor Anna Sinaiko on cost drivers is anything to go by.
Those cost drivers appear to be more complex than can be fixed by newly elected officials like Abdul El-Sayed, Annie Andrews (incoming U.S. Senators), and Amy Acton, governor-elect in Ohio, among others.
Sinaiko explains that inflation contributes to rising healthcare costs but likely plays a small role in current cost growth. She says after the pandemic, inflation soared and drove up the cost of everything used to provide healthcare services, including basics like saline bags, medical gowns and gloves. Those higher costs inevitably end up increasing healthcare costs, although lower inflation alone would not reverse those increases.
Another cost driver that she points out is the increasing intensity of medical care today. Innovations like CAR-T cell therapy and GLP-1 drugs can change the lives of patients, and even save those patients from premature death, but those treatments are very expensive. As more people get onto those treatments, the overall average cost of delivering healthcare per person jumps significantly, and that partly explains why costs are climbing so fast.
She also says existing technologies and treatments are being used more intensively, driving up costs. For example, she explains that statistics on people needing knee replacements after an accident have remained flat over the years, but elective knee replacement surgeries have climbed dramatically. These procedures are costly and contribute to the skyrocketing cost of healthcare.
Additionally, there has been a jump in the average number of visits that each individual makes to their healthcare providers, especially after the Covid-19 pandemic. This increased use of medical services inevitably drives up overall healthcare costs. This isn’t to say that it is wrong for people to see their doctors, for example, more frequently. The bottom line is that as the uptake of healthcare services ticks up, the total cost of providing services also goes up.
However, Sinaiko also points out some cost drivers that could be unnecessarily contributing to rising healthcare costs in the country. She cites “upcoding” as an example of a cost driver that isn’t unavoidable. Here, a healthcare facility knowingly or unknowingly documents a higher number of diagnoses or inflates the complexity of care provided in order to obtain higher insurance reimbursements. This is wrong, and even unethical, yet it increases healthcare costs without offering any tangible results for patients. Administrative costs are also many yet they don’t add any value to patient outcomes.
While many analysts may disagree with the perspective of Sinaiko on drivers of healthcare cost increases, her voice adds to the ongoing debate about what is driving up costs and how this can be reversed.
For firms like Astiva Health that are on the ground in efforts to ensure that vulnerable communities get access to quality healthcare at an affordable cost, what matters is that concrete steps are taken to address the healthcare crisis that has gotten to an unsustainable level.
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