New CAHP Infographic Illustrates Rising Health Care Costs

SACRAMENTO, Calif., July 11, 2013 /PRNewswire/ -- While the Affordable Care Act will expand coverage to millions of Californians next year, a new infographic issued today by the California Association of Health Plans (CAHP) shows that health care costs have continued to outpace inflation and are expected to grow by 7.4 percent next year, driving up insurance premium prices.

The growth in health care spending has slowed in recent years, yet the "Health Care Cost Drivers" infographic illustrates how it has reached approximately $2.7 trillion annually in the U.S. While there is no single factor responsible for these increasing costs, obesity, chronic disease and rising prescription drug prices are major contributors to the growing expenditures for health care in California and across the U.S.

"Next year, many Californians will be eligible for new government subsidies to help pay for health coverage," said Patrick Johnston, CAHP president and CEO. "While subsidies will help make coverage more affordable, the underlying cost of health care continues to grow, and that will drive up insurance costs because 88 cents out of every $1 spent on health plan premiums goes to medical care."

Two in five California adults have a chronic disease, and chronic disease account for $3 out of every $4 spent on health care, or an extra $6,100 per person per year. One out of every three children in California is obese or overweight, and 61 percent of California adults are overweight or obese. Health care costs associated with obesity amount to $12.8 billion per year in California.

Prescription drug spending in California nearly doubled from 1991 to 2009, reaching $24.4 billion, accounting for more than 10 percent of all health care expenditures in the state.

While it is important to ensure people get the care they need at the appropriate time, one-third of U.S. health expenditures pay for tests, treatments, hospitalizations and drugs that were not needed in the first place. The Choosing Wisely campaign, representing 25 medical societies and 725,000 physicians, has identified more than 130 tests and procedures doctors and patients should question because they may be unnecessary and, in some instances, can cause harm.

In addition, some expensive new technologies don't improve medical outcomes—such as robotic-assisted hysterectomies (RAH)—and drive up the cost of care. For instance, more traditional surgical methods for hysterectomies carry nearly the same low risk for complications as RAH (5.3 percent vs. 5.5 percent) yet the price for RAH is 33 percent more ($8,900 vs. $6,700).

Health plans, medical providers, and individuals can all play an important role in lowering health care costs. For their part, health plans have implemented innovative programs to improve overall health outcomes while also containing costs. Plans' wellness programs, emphasis on prevention, and disease management programs are just some of the ways plans help patients and reduce costs.

"California health plans are dedicated to providing comprehensive and coordinated care to their members while seeking to reduce the cost of that care," said Johnston. "Our state's health plans have led the way in creating the managed care model, disease management programs and many other innovations that help keep their members healthy and reduce the cost of care. We must all work together to lower the underlying cost of care to ensure coverage is affordable."

To see the "Health Care Cost Drivers" infographic, please visit: http://www.calhealthplans.org/pdfs/FactSheetHealthCareCostDrivers071013.pdf.

CAHP is a statewide trade association representing 40 full-service health plans. Through legislative advocacy, education and collaboration with other member organizations, CAHP works to sustain a strong environment in which our member plans can provide access to products that offer choice and flexibility to the more than 24 million members they serve. For more information, please visit www.calhealthplans.org or call (916) 552-2910.

SOURCE California Association of Health Plans