NCPA - National Center for Policy Analysis

Economic Facts about Health Care and Health Insurance Markets

October 19, 2015

Although the Patient Protection and Affordable Care Act of 2010 still is being implemented, there are several economic challenges regarding health care and health insurance of which consumers should be aware.

  • 35 million U.S. citizens still do not have health insurance, although the percentage of the population that is uninsured has decreased to 10.4 percent.
  • In 2014 healthcare expenses were 8 percent of GDP and the increase of spending by Medicaid and Medicare increased to 36 percent of total health spending.
  • Prescription drug coverage is costing 34 percent more than necessary because seniors are choosing plans that do not meet their individual needs, resulting in $353 dollars consumers could have saved each year if better-informed.
  • Excessive spending on the latest technology is a waste of resources when the new technology has the same effective rate as existing therapies.

Higher healthcare spending may occur in regions of the U.S. where the trend is to prefer more-expensive treatments, or could be due to the market structure of hospitals. Matching beneficiaries with insurance coverage that meets individual needs to be improved to reduce the inefficiency that occurs when insurance coverage is inadequate or unvalued by the purchaser.

  • In 1988, conventional health insurance plans which covered all services and providers with a monthly premium were purchased by 73 percent of employees enrolled in an employer-provided plan.
  • Point-of Service (POS) plans in 2014 covered 8 percent of workers and allow out of network coverage with a generally lower copay but an annual deductible.
  • Up from 38 percent in 1996, in 2014 56 percent of the 116 million U.S. citizens employed in the private sector were allowed to choose their own health insurance plan.

Source:  David Boddy et al., "Six Economic Facts About Health Care and Health Insurance Markets After the Affordable Care Act," Brookings Institute, October 7, 2015.


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