Price increases, not a larger senior population, are responsible for exploding healthcare costs: analysts

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MedPAC will recommend site-neutral payments, but not for strokes
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Escalating healthcare costs in the United States cannot be pinned on an aging population demanding more services for chronic conditions. Instead, higher costs are primarily the result of price increases, according to a new analysis in the Journal of the American Medical Association. 

Researchers from a variety of institutions, including Johns Hopkins School of Medicine and the Alerion Institute in Virginia, examined publicly available data to discern healthcare trends since 1980. Healthcare costs have ballooned and now exceed any other industry as a share of gross domestic product, they found. This dramatic increase is not necessarily surprising, but the researchers said their findings “contradict several common assumptions.”

Perhaps foremost among them: The huge number of aging baby boomers is putting increased demand on the healthcare system, driving up overall costs due to rising rates of chronic disease and other conditions requiring long-term care and other services. But the researchers determined that price increases, not the aging population, has led to 91% of cost increases. Hospital charges, professional services, drugs and devices and administrative costs are “especially” higher now than they were 13 years ago, according to the analysis.

Furthermore, chronic conditions account for 84% of healthcare costs across all age groups, not just the elderly, the researchers found.

The analysts called for a national conversation that addresses the actual factors influencing spending. They said that other countries might serve as valuable models for reform and blasted the “political acrimony” in Washington.