The American healthcare system is unsustainable

PONTIFICATION: The headline read “Health Care Costs Are Eating Us Alive, A New Survey Shows”. In the past 10 years, the average premium for job-based health insurance that covers a family has risen 54%, to $20,756. Moreover, the amount of that premium workers pays for family coverage has increased 71%, to $6,015. Simply put: this is unsustainable.

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American’s blame everyone but themselves for high healthcare costs

  • Most Americans are focused on what they’re being charged for health care, not how much they or an aging population are consuming, according to a new POLITICO/Harvard T.H. Chan School of Public Health poll.
  • Respondents blamed drug companies, insurers, providers and even the federal government for surging costs while dismissing overuse as a central issue.
  • 54 percent of respondents believe that high health costs are a serious problem. Asked about the reasons, nearly 80 percent said the prices charged by drugmakers were a major factor, while 75 percent held insurance companies responsible and 74 percent held hospitals responsible.
  • Our high cost of care and modest health outcomes will remain stubbornly fixed unless our behavior changes.
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Straight talk on drug pricing

  • While there is no excuse for the price increases on some drugs, like insulin other price increases are not aimed at consumers. They are aimed at PBM’s and insurers who are seeing their profits increase at a rapid rate.
  • Americans are among the most unhealthy in the world.
  • Millennials are so overweight, it has them on pace to be part of the most obese generation in history.
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Reducing the number of companies between a product and a consumer

  • Merck CEO Kenneth Frazier thinks something has to change within the pharmaceutical industry to fix the issue of drug pricing.
  • “I don’t understand where we live in a world where 50% of the value goes to the supply chain, ” Frazier said at an event at the Economic Club of New York last week.
  • Merck has published reports outlining the company’s average list and net price increases for its products. Merck’s average net prices after factoring in those discounts decreased by 1.9% in 2017 as list prices increased 6.6%.

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Freeze on drug price increases won’t effect patients

  • Several pharmaceutical companies have recently said they’ll delay some of their price increases, under pressure from the Trump administration. But hospitals have made no such concessions, even though they make up a much larger share of total health care spending.
  • Pfizer, Novartis, Merck and other drug makers have said they will delay, freeze or roll back price increases on some of their medicines. Experts largely dismissed those pledges as political bandages with little real effect on patients’ pocketbooks.
  • Drug pricing is the political controversy of the moment, but hospitals cost the health care system far more.  Retail drug spending represents 10% of U.S. health care spending, while hospital and doctor services consume about half of spending.

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Healthcare is broken

KEY TAKEAWAY:Health care is one of the largest costs for people in retirement.  Fidelity annually estimates what a 65-year old couple, retiring in the current year, will need to cover health care and medical expenses throughout retirement. The 2017 estimate is $275,000, a six percent increase over last year’s estimate of $260,000. Continue reading