The reasons for rising health care costs
All health care services are getting more expensive, from regular doctor visits to emergency hospital care. But why? Our new report, 2024 Employee Health & Benefits Trends: The Evolving Workforce, explores factors contributing to rising health care costs.
An aging population
Due to medical research advancements, people are living longer. This creates new challenges for the busy public health system.
People over 65 tend to spend more on medical care, especially if they have chronic diseases. Up to 95% of patients in this age category have at least one chronic condition, and another 80% have two or more. Costs are likely to increase as this population grows.
Some of this will be Medicare spending. Employers who offer private health insurance will also see higher costs.
More chronic diseases
Chronic conditions aren’t just for people over 65. Allergies, asthma, diabetes, and certain types of cancer can impact younger populations.
When people avoid health care services, chronic disease control becomes more critical and expensive. These conditions cost billions of dollars per year in medical fees and lost productivity.
Different needs
Every generation has different health care needs. That means there’s no one way to keep everyone healthy. This can increase costs in many ways.
Boomers (1946-1965)
People in this generation focus on controlling health spending. With 71% struggling with retirement savings and 27% having none, medical costs are a serious concern. Seventy-one percent say health insurance is a priority. Another 84% look for wellness perks to help them stay healthy and avoid primary care.
Gen X (1966-1980)
This group likely handles health care costs for children, elderly parents, and themselves. That means rising fees might hit them the hardest. Sixty percent say financial stability is one of their biggest causes of stress.
Millennials (1981-1996)
Millennials may not have as many chronic diseases. However, they tend to have higher student loan debt. This makes it more difficult for them to pay for medical insurance and health bills.
Gen Z (1997-2012)
Most people in this generation are worried about costs. They’re 1.4 times more likely to have financial stress than other generations. They also have more mental health concerns, with 45% saying they have high stress and burnout from work.
That means Gen Z might have a hard time paying for medical care. They may have fewer age-related illnesses, but they could have more stress and anxiety to treat.
Higher overall costs
Health care isn’t the only thing that’s more expensive. Inflation has led to higher costs for almost everything.
Seventy-seven percent of Americans are worried about money. Many must choose between going to the doctor and everyday needs like food.
These decisions can impact the whole body. Medical issues become more serious and expensive before they’re treated. The public health system is forced to use more time and resources to address these problems, which can lead to increased costs due to supply and staffing shortages.
Rising prices impact more than the patient. Medical supplies and technology have become more expensive, too. This means doctors and hospitals must pay more to offer the same care.
The lasting effects of the pandemic
Emergency responses to COVID-19 cost the health care system a lot of resources and left medical workers burned out. The pandemic also affected supply chains, caused people to cancel optional health visits, and increased telehealth and virtual care use.
Lingering impacts continue to change the way patients interact with health care. For example, demand for elective surgeries skyrocketed, disease prevention and mental health became more of a focus, and cost transparency became both expected and required. That means the health system’s already limited resources are being stretched thin, translating to higher costs for all kinds of care.
Changing behaviors
When costs are high, people make different health decisions, including how they eat, exercise, address symptoms, and seek health care. Employers keep up by changing the kinds of benefits they provide.
This creates a loop. Employers and workers respond to each other’s decisions. But so do insurers and health care providers. Prices can increase as everyone makes different choices to get through a tough financial time.
For example, nearly one in three health visits or services happens on a telehealth platform. But those numbers are changing as people return to in-person health care. That means the focus on funding and benefits might change. The price of virtual health services could go up as a result.
