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We Are Paying For Others – Like It or Not

Financially, we are all in this together, sharing each others’ health costs through insurance and taxes. If we want lower health costs, we need to help other people become healthier:

  • The healthy insured pay for the unhealthy insured. Take two people on the same private health insurance plan: the healthy enrollees cost their plans much less—but they pay the same premiums as the unhealthy enrollees with high annual chronic disease costs.
  • Our taxes subsidize others’ chronic conditions.  Our taxes reimburse the health care costs of public sector health plans—covering the costs of those on Medicaid/AHCCCS, Medicare, military personnel, the VA, other government employees, the ACA (“Obamacare”), etc. Those costs are driven overwhelmingly by chronic disease.

(Even with Medicare: while the feds track how much each of us pays in Medicare taxes & premiums, those payments don’t go into our own personal Medicare accounts—they are used to pay for current Medicare enrollees’ health care costs. And those payments are still not enough—Medicare is running out of money fast.)

Group shot
  • Private health insurance and private health care costs would be much less expensive, and public health care costs much higher, if Medicare and Medicaid were priced at their “true” costs. Instead, much lower government reimbursements of Medicaid & Medicare services are subsidized by the higher health care costs paid by private health care providers & plans, and therefore by private employers & employees, for exactly the same services.
  • The insured subsidize the uninsured. Health care services delivered by health care providers, for which they are never paid, create a significant burden of “uncompensated care”. Many of the uninsured effectively get their health care through hospital Emergency Departments—a very expensive approach. However, this care is not truly uncompensated—instead, those costs are passed on by hospitals to the insured. In other words, the rest of us end up paying for that care—via health care providers’ higher fees. Those costs are reflected in our health insurance premiums & co-pays and out-of-pocket costs…not to mention taxes for public plans.
  • Yet all of those health-related costs would be much lower, if more chronic conditions had been prevented—with more activity, healthier nutrition, and better stress management.
  • [Note: there is a misconception that the aging of America is driving the increase in our health care costs—but it actually only accounts for about 12% of health cost increases.]

Make no mistake: ultimately, individual employees and entrepreneurs, and to a decreasing extent employers including business owners, plus current & future taxpayers, end up picking up the entire health bill of the country.

And those with healthier habits heavily subsidize those without them.

The bottom line for health costsno individual or employer (or state) can escape others’ chronic diseases and related health care costs. (Nor can they escape the related fiscal and economic costs.)

How much is the growth in chronic disease impacting health costs?

According to the CDC, close to 90% of US health care spending is for the 60% of people with chronic disease (and most of those adults have multiple conditions). Chronic conditions cause at least 80% of Medicaid spending—“free health care for the poor”…which primarily middle- and upper-income taxpayers pay for.

Increasingly, those conditions are starting in young adulthood or middle-age! Unfortunately, early chronic conditions become inevitable, when our children have such unhealthy habits—when as just one example 1 in 3 of our teens have prediabetes (10x past rates)—with a very high risk of developing diabetes early in life.

% with condition chart

Sources: Ages 2-5: Frayer et al, 2018; Skinner et al, 2018. Ages 16-19 (2016): Imperatore et al, 2012; Andes et al, 2019; Skinner et al, 2018; Liu et al, 2022. Adults: Ward et al, 2019; CDC National Diabetes Statistics Report 2020; Lin et al, 2018 for 2030-2050 diabetes projections. See details in slide deck.

Most of these people will not be able to pay for their treatment on their own, without major employer premium subsidies or government assistance.

We are all in increasingly serious financial trouble from unprevented chronic disease.

Let’s do the honest math: our health care costs put the budgets of our families, schools, businesses, and governments—and the whole economy—at serious risk.

Unless we dramatically improve our health habits, future generations will be unhealthier and paying even more for their health care. And average health care quality will decline, as the quantity of care needed dwarfs the financial resources available.

At the same time, taxpayers will be trying to pay off a massive health-care-cost-driven national debt—now growing @ roughly $1 trillion annually—even during a “booming” economy.

We are all in this chronic disease epidemic together—AND we all have major school systems in our states.  So let’s work toward common, school-based solutions as a foundation for the future.

 Healthy Students Healthy State gets us there.