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March 2, 2015 | 11th Adar 5775

Health Care Cost Statistics

  • Excessive inflation in health care costs not only burdens the economy but is a major factor in increasing the number of the uninsured.

  • After several years of low growth, health care costs are now rising very rapidly. Health insurance premiums increased 10.9 percent in 2001, 12.9% in 2002, 13.9% in 2003, 11.2% in 2004, and 9.2% in 2005. The cumulative increase over the five years was 73%, while the cumulative increase in the CPI was only 13.6%.

  • National health expenditures are projected to reach $3.6 trillion in 2014, growing at an average annual rate of 7.1 percent from 2003-2014. As a share of GDP, health spending is projected to reach 18.7 percent by 2014.

  • Claims processing and other administrative functions cost the health care system $600 billion per year – money that could be better spent on patient care. America's fragmented health financing system is a major driver of these high administrative costs. In Canada, where health insurance is publicly financed and providers bill the government for all services rather than having to deal with a multiplicity of insurance companies with different rules and payment formulas, administrative costs are only about half as high as in the United States (16.7% of total health costs in Canada vs. 31% in the United States).

  • The administrative expense needed by the government to run the Medicare program accounts for only 3% of Medicare spending. By contrast, the amount of every premium dollar retained by private insurance companies for marketing, administration and profit is 14%.

  • Healthcare is one of the least efficient industries in America. Settling a single transaction in health care can cost as much as $12 to $25, whereas banks have cut their costs to less than a penny per transaction by using modern information technology.

  • According to a study conducted by the RAND Corporation, by utilizing advanced information technology and adopting electronic medical records for every patient, America could save over $160 billion a year by reducing duplicative care, lowering health care administrative costs, and improving quality.

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