Why healthcare costs are rising and how your benefits can help

Why have healthcare costs increased?

Between the pandemic and inflation, the past few years have taken a toll on health systems worldwide. Healthcare costs are consistently rising, and the United States sits at the top of overall spending. 

The most recent available reporting from 2023 shows that health expenses per person in the US totaled $13,432 annually. That’s over $3,500 higher than in economically similar countries like Switzerland ($9,688), Germany ($8,441), and France ($7,136). 

There isn’t a single reason for rising healthcare costs, but rather a handful of factors at play. From prescription drug prices to the cost of new technology, here are some of the driving forces, plus a few tips on how your benefits can help.

Changing care needs

Around 90% of healthcare costs in the United States stem from treating and managing chronic health conditions and mental health conditions. That number might seem high — until you consider that six in ten American adults have a chronic illness, and four in ten have more than one. 

As we age, that number keeps increasing. Currently, nine in ten adults over age 65 have at least one chronic condition.

Since chronic illnesses are persistent, many of them require recurring medical care, like specialized prescription drugs, in-home visits, or physical therapy. These associated costs are a significant piece of the overall spending picture. 

Prescription drug costs

Over half of all American adults use prescription drugs, and they aren’t always cheap. 

In the United States, prescription drugs cost almost three times more than in economically similar countries like France, Germany, and the United Kingdom. That translates to an average price tag of $963 per person in America, compared to Germany’s $770, Canada’s $590, and Switzerland’s $524.

While these numbers date back to the most recent report on this topic in 2022, the trends are predicted to hold, and prescription drug spending is expected to increase by 5% annually through 2030. Luckily, there are ways to cut down on your prescription spending, like ordering generic drugs, clipping online coupons, and using funds from an HSA or FSA. 

New technology 

Healthcare is constantly evolving. In just the past few years, doctors have started using artificial intelligence to detect infection, implants to restore movement after paralysis, and intravenous infusion treatments for postpartum depression. These medical advancements are helping treat and cure more conditions every day. 

All of that is excellent news, but new drugs, medical devices, and procedures can be expensive to develop and implement. Some hospitals may raise prices across the board to fund these innovations. 

Administrative costs

Billing for healthcare in the United States can be complicated. Since the US operates under a multi-payer system — meaning care might be paid for by individuals, commercial insurance companies, or the government — there can be a lot of administrative hoops to jump through. Some of these increased administrative costs might be passed on to patients. 

In fact, the US spends just over $900 per person on administrative costs like billing and insurance claims each year. Other countries average $204 per person.

How your benefits can help with rising costs

When you’re worried about the associated cost, taking care of your health can be stressful — and even pushed to the back burner. Luckily, your benefits can help you save on medical care and relieve some of those concerns. 

Explore prescription savings

Plenty of people rely on prescription medications, but the increasing costs can make it tough to find room in your budget. Here are a few ways your benefits (and some online resources) can help you save the next time you’re at the pharmacy.

Shop around for medical services

Shoppable healthcare services are usually nonurgent and can be scheduled in advance — like lab and imaging services, surgeries, and outpatient appointments. Here are a few tips on shopping around for medical care and why it might save you more than you think.

Save with in-network providers

If a healthcare provider is in-network, it indicates that they’ve already negotiated a set rate with your insurance company. Typically, this rate is much lower than what you would pay for the same service without insurance or from an out-of-network provider. Here’s how you can start your search, plus a few tips on what to keep in mind as you do.

Check out Employee Assistance Programs

An Employee Assistance Program, or EAP, is like a complimentary toolbox your workplace provides, typically filled with free, confidential services. EAPs can help you save on all kinds of care, from free and reduced-price mental health services to wellbeing programs. If you’re curious about EAPs at your workplace, your HR department can answer your questions.

Keep up with preventive care

Preventive care is all about staying healthy and catching any medical issues before they become major problems. It includes things like annual physicals, vaccinations, and screening tests based on your demographics. Get a better idea of what preventive care can do for you, and explore the preventive care checklist for more details.