New BCBSA Health of America report explores the health care affordability crisis and a proposed solution

By Regence
February 03, 2023
woman and pharmacy

Provider consolidation, drug manufacture patents and fee-for-service payment models cited as driving factors

Health care costs continue to rise in the U.S., creating an affordability crisis affecting people and families across the nation. According to a recent report from the Blue Cross Blue Shield Association (BCBSA), an employer-provided family health insurance policy’s average premium was $22,221 in 2021 – or nearly three times what it was in 2001, representing one-third of the 2021 median household income.

The report notes that while some of the growth is expected due to inflation and advances in health care, the Health Care Cost Institute (HCCI) found that the primary driver is rapidly increasing health care costs. In fact, the HCCI reports that health care prices increased around double the rate of general inflation between 2016 and 2020.

What’s driving unsustainable health care costs

The BCBSA report explains how the root cause of rapidly growing costs includes misaligned incentives and anti-competitive practices. Specifically, BCBSA lays out three key factors:

  1. As hospitals continue to acquire physician practices, the result is often using reimbursement to maximize revenue and drive higher prices for patients.
  2. Drug manufacturers have taken advantage of U.S. patent laws and Food and Drug Administration rules to delay equally effective alternative medicines from being available to patients, leading to soaring drug prices. On average, Americans pay prices that are nearly double what consumers pay in other high-income countries.
  3. Fee-for-service payment models incentivize the delivery of more health care services—even if unnecessary and often without better health outcomes.

A proposed solution to improve health care affordability

BCBSA’s full report, Affordability Solutions for the Health of America, identifies three focus areas for a proposed solution:

  1. Improving competition among health care providers
  2. Enhancing consumer access to lower-cost prescription drugs
  3. Ensuring patients receive high-quality care at the right place and time

More information is available on BCBSA’s website.

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