Healthcare cost continues to rise and the Affordable Care Act (ACA) isn’t exactly affordable at all. The inflation of healthcare is rising faster than the American economies natural inflation rate. What is making healthcare rise faster than everything else? There are many contributing factors and one of the major ones is supply and demand. The demand for healthcare didn’t happen organically, it happened over night. When the ACA was passed the entire United States population had demand, but the supply stayed the same. Sadly the healthcare provider market hasn’t expanded much in response to the demand.
There are some new health insurance carriers that are trying to hedge their way into the market, but the successful ones get bought out by the larger more established companies. The inflation for healthcare is not just attributed to supply and demand though, it is also the result of political decisions and increased regulations as well as the cost of prescriptions, medical devices, and hospital care, according to an article on Forbes. Some of these were already an issue to rising healthcare costs before the ACA was passed, so why did congress put a 2.3% tax on medical devices under the ACA’s law? Doesn’t make much sense when you are trying to keep healthcare cost “affordable.”
Here is a graph that we pulled from Forbes comparing the natural rate of inflation against the healthcare rate of inflation. Will healthcare increases outrun our incomes if more competition doesn’t halt the monopolized lack of supply for the ever increasing demand? What are your thoughts on healthcare costs?
Read the full Forbes article HERE