There are several factors that are driving medical costs up to levels never seen before.
- TV commercials and magazine ads that promote drug therapy not only increase prescription drug use, but increase the frequency of office visits to health care professionals.
- In response to political and medical provider’s pressure, insurance companies and others are raising the reimbursement levels and easing plan rules for participants.
- Nationwide efforts to aggressively detect and diagnose disease have raised the level of preventive and diagnostic activity among the U.S. population. Unfortunately, the cost savings of wellness and early detection of diseases have not been realized on a wide scale basis.
- The U.S. workforce continues to age as members of the baby boom generation enter their 50s and 60s. In general, health needs increase as individuals age.
- In some markets and regions, in order to improve balance sheets, Managed Care Organizations are compensating for their aggressive under pricing in prior years.
- Technology has yet to reduce administrative costs within the industry.
- Increased government regulation leads to higher claims and administrative costs for health plans.
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