GENERATIONS – Journal of the American Society on Aging

ical, and social forces are compelling change. Runaway healthcare costs are undermining our country’s health and prosperity, fomenting a public health and financial crisis that is push- ing federal, state, municipal, and household bud- gets toward the breaking point. Meanwhile, containing healthcare costs is an urgent demo- graphic imperative for the nation’s rapidly grow- ing population of older adults, who require more intensive and frequent care and who have less discretionary income to cover growing out-of- pocket expenses. Now that a groundswell of voter demand is motivating Congress to act, the question remains: What direct and immediate steps can we take to attenuate the decades-long rise in costs and ensure that all Americans, including vulnerable older adults, can afford care? An abundance of data confirms the severity of the U.S. healthcare cost crisis and the urgency of immediately implementing reforms: According to a study by Gallup and West Health (Witters, 2019), more than 13 percent of American adults report knowing of at least one friend or family member who died in the past five years after not receiving needed medical treatment because they were unable to pay for it. That same poll, conducted in September 2019, revealed a rising percentage of adults reporting not having had enough money in the past twelve months to “pay for needed medicine or drugs that a doctor prescribed” to them. This percentage has increased significantly, from 18.9 percent in January 2019 to 22.9 percent in September 2019. The 22.9 percent represents about 58 million adults who experienced “medication insecurity,” defined as the inability to pay for prescribed med- ication at least once in the past twelve months. And though few Americans have to pay the full costs of hospitalization out of pocket, the nation’s population shares in the aggre- gate expense of dramatically inflated hospital The High Costs—and Impacts— of American Healthcare

costs. To illustrate, the average cost of a hospital stay has grown by 600 percent since 1990—five times faster than the average price of a new car. Granted, the complexity of a hospitalization has increased over time, but this extremely high rate of cost increase clearly is unsustainable. With healthcare spending per person grow- ing at twice the rate of household income, it is not surprising that one in four adults risks their health, and sometimes their life, by foregoing needed medical care due to costs. Another West Health–Gallup survey conducted in January 2019 found that 57 million Americans have cut back household spending to pay for healthcare or medicine, and 45 percent of adults fear that a major health event in their household could lead to bankruptcy (West Health–Gallup, 2019). Beyond the impacts on families and house- holds, rising costs are threatening the health of the American economy. The United States spends upward of $3.6 trillion per year on healthcare—or 18 percent of U.S. GDP (CMS, 2019a). If we don’t intervene now to reverse cur- rent trends, the nation’s total annual healthcare spending is on track to triple to $12 trillion by 2040 (West Health, 2019b). America’s workers shoulder a large share of this burden. As healthcare costs have risen dramatically in the past two decades, work- ers’ wages have stagnated (KFF, 2019c). In the same time period, the average premium for family health insurance increased by 54 per- cent and workers’ contributions increased by 71 percent; in contrast, average annual wages increased only 26 percent. Even with employer health coverage, a household earning $45,000 a year must try to budget at least 20 percent of its income for health expenses in order to cover the employee share of insurance premiums, deductibles, and other out-of-pocket costs for healthcare, according to a West Health analysis (West Health, 2019b). The healthcare cost crisis also hurts busi- ness investment and competitiveness. Employer spending on healthcare increased from $313 bil-

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