High medical expenses and the consequences
In 2013, 56 million people were unable to pay for medical related expenses. That is one in five American adults. Among them, 10 million people have medical insurance to cover most of the expenses. But they can't reach an average deductible of $5,000 to $10,000 a year. That's because the average household income is $59,019. As time goes by, most people pay their bills as much as possible. But 16.5% of the people spent more than a year to pay off their debts. Another 8.9% of people can't afford it at all.
Consequences of high medical costs
Of those who can't afford the medical bill, 73% saved food, clothes or rent. 60% of people have used up their savings. More than 40% of people have taken extra work to pay their bills. Rising medical costs are forcing 34% of people to carry high credit card debt. Fifteen percent of people still lend, while 13 percent borrow money from paydays.
These families are not poor and they usually have good Medicaid. In contrast, two-thirds are homeowners and three-fifths are college graduates. They are middle-class Americans who have suffered from huge, unexpected, self-sufficient medical expenses. For those with private insurance, the average household income is $17,749. Those who lose insurance in the process will face a $22,658 bill. Those who did not have insurance were clearly the hardest hit, at $26,971 per household.
The first big reason for bankruptcy?
In 2015, the Caesar Family Foundation found that 1 million adults declared medical bankruptcy. This is more than the bankruptcy of credit card debts or mortgage defaults. Even more disturbing is that 78% of people's health insurance failed to cover all their bills. Sixty percent of people are dragged down by private insurance rather than medical insurance or Medicaid. Due to the high deductible plan, 10 million of them will have unrepayable medical expenses every year.
But even after Obama’s medical reform, many people are not prepared to accept high deductibles and joint insurance premiums. In 2017, 31% of insured found it difficult to pay copay. According to research by the Caesars Family Foundation, this percentage has risen from 2015 to 24%. Similarly, 43% believe that the deductible is too high, compared to 34% in 2015.
30% of medical expenses are wasted. Unnecessary services, such as over-opening antibiotics, waste $210 billion a year. The administrative costs of paperwork increased by $190 billion. Billing personnel must process different claims for each of hundreds of different insurance plans.
The poor use a lot of emergency rooms
In 2001, doctors in the emergency room spent half of their time on uninsured patients. Thanks to emtala, these patients received Medicaid. However, the Medicaid program limits payments. As a result, the hospital provided $46.4 billion in medical services and had to write off as bad debts.
The Institute of Medicine found that between 210,000 and 440,000 patients die each year from medical errors in hospitals. This is equivalent to the crash of 10 large jets each year.
Most expensive disease
The most expensive disease is diabetes, $26,971 per family, and neurological diseases such as multiple sclerosis, which cost an average of $34,167. The biggest cost was hospitalization, which led to half of bankruptcy.
A small number of people bear most of the cost
One percent of the population is responsible for 20% of medical expenses. In 2009, approximately 3 million people spent more than $90,000 each. Older people spend so much money every year. In contrast, 50% of people spend only $236 each. Two-thirds of these high-spending people are at least 55 years old. Nearly 25% of people are 75 years of age or older. Many people have lost the ability to take care of themselves.
More than 90% of high-spending people suffer from chronic diseases. The most common diseases are high blood pressure, diabetes and high cholesterol. The prevalence of these diseases is increasing. This is one of the four reasons for health care reform.
Prescription drug costs
Among all the participants in the healthcare industry, prescription drug manufacturers have the most profit. Doctors and hospitals have a profit margin of only 3.7%. Health plan income is slightly lower at 3.2%. This is partly because they have to set up independent companies for each state. They do not have enough bargaining power to fight against state equipment and pharmaceutical companies.
As a result, medical device manufacturers retain 9.5% of revenue. Medical device and supply company profits were 12.5%. Pharmaceutical companies account for 20.8%. They say this is because they have to do a lot of research over the years to develop an effective drug.
Medical fraud is a huge drain on the economy. The medical industry loses $600-200 billion annually due to fraud. It accounts for 3-10% of the entire medical industry.