Phil Hauck's TEC Blog

Monday, November 18, 2013

Sick Care Industry Stats

Recently, courtesy of TEC member Mark Herzog of Holy Family Memorial hospital system in Manitowoc, I sat in on a webinar sponsored by the American Hospital Assn., featuring commentary by industry expert Don McDaniel of Sage Growth consultants, Baltimore.  Among his points:
•  Right now, the patient pays about 13 cents of each dollar's cost of caring for him/her.  (In 1980, the patient incurred about 50 cents of each dollar.)  So, 87% is paid by Third Parties.  Very little incentive for the patient to understand and control costs.  With Health Savings Accounts, that is changing ... slowly.
•  Cost of our whole medical system is about $9,500 per every man, woman and baby ... about double the global average.
•  Sharply skewed!  5% of the population incurs 45% of the costs ... mostly in senior years.  But healthy lifestyle behaviors significantly reduce the medical costs incurred in those senior years.  The next 20% incur 35% of the costs ... and the bottom 75% incur only 20%.
•  In the last 20 years, health care productivity (despite all the technology advancements) has actually declined by 0.6%.  Its spending increased 2.3% annually, while employee growth increased even faster at 2.9%.  In contrast, Manufacturing output increased 2.6% on average annually, on an actual decline in manufacturing employment ... suggesting a productivity increase of 4.2%.
•  An un-publicized reason for delaying the Employer mandate a year was the inability to figure out how to account for self-employeds, partnerships and S-Corps, which are all employers but taxed and accounted for as individuals.
•  Massachusetts as a predictor for ObamaCare:  While insurance coverage of the state populace was increased, its cost increases have maintained it as the most expensive state in the nation.  Also, Waiting Time for appointments with Specialists has increased significantly.
•  The federal regulators will have a difficult time going forward building in private sector cost-saving improvements into the ObamaCare regulatory network.


  1. Phil, Health care costs are our biggest single expense. My wife's coverage, (she's not old enough for Medicare), costs over $500 per month...for a policy with a $5,000 deductible. We're 'incentivized' to hold down her medical costs...because we end up paying them out of pocket... As for those of us on Medicare, there are zero incentives for holding down costs. I rarely see a bill for anything other than my Medicare Deduction from Social Security and my supplemental insurance charges. Recently, my wife had 2 cataract surgeries. It was interesting to learn that if we applied her 'insurance' against the procedures, the net out of pocket expense would have been about $1,200 more than if we paid cash!

    It boggles my mind to think about the issues and expense for small business as regards health care and related costs. A self employed person with a family is really hammered. Our doctor told me that he is paying over $1,700 a month for health insurance for his family of 5...and this is a relatively young family!

    Take Care, Big Daddy Dave

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