What is Driving the Rapid Rise in U.S. Health Care Costs?
By Rhondda Tewes Health care spending in the United States reached $2.4 trillion in 2007, or $7,900 per capita. It’s projected to reach $3.1 trillion in 2012 and $4.3 trillion in 2017 (20% of gross domestic product [GDP])1. A variety of factors are contributing to this escalation of cost, including: • Health Insurance Premiums: In 2008, employer health insurance premiums increased by 5% or twice the rate of inflation, with an annual premium averaging nearly $12,700 for an employer health plan covering a family of four.2 • Administrative Costs: Administrative overhead can cause health care insurance premiums to balloon: compare Medicare at 3% with an average of commercial carriers at 20%, and investor-owned Blue Cross/Blue Shield at 27%.3 • Percentage of Total Health Care Costs: The typical American family of four spent $15,600 on total health care costs in 2008, or 25% of the combined family income of $60,0003. In 2003, a comparison of health care costs in the U.S. and Canada found tha