Flickr: Juliano Pavan

By Erin C. Lieber

Just like the cost of most goods and services in the U.S., the cost of health care is rising and quickly. What is fueling this increase is at the center of every health care reform debate that we see on TV and in the news. The National Coalition on Healthcare reports that National health spending is expected to reach $2.5 trillion in 2009, accounting for 17.6 percent of the gross domestic product (GDP). By 2018, national health care expenditures are expected to reach $4.4 trillion—more than double 2007 spending. However, healthcare is not like most other goods and services as it deals with the health and well being of ourselves and our families and an emotional attachment that is absent in the consumer experience of most other products.

For example, in May of 2008, when the price of gas went up past $4.00 in Chicago, informed consumers wanted to know the economics behind it, in other words, where was the money going? It was reported that 80 cents was going to city, state and federal taxes, and the rest was due to the price of oil and overwhelming economic factors correlating back to higher retail prices for consumers, providing us with an answer that was about as clear as mud. The reaction from consumers was to stop filling up their tanks as often or even at all, until prices went down.

I use this example of gas prices in the context of health care to really highlight the unique nature of health care as a consumer product and to instill the significance of developing a fundamental understand ing of the health care debate, so that you can make a difference. We are beginning to see similar consumer reactions to the rising cost of care as we did with the gas prices. People are actually going to see their doctors less or not at all, which of course leads to decreased prevention and more reactive and complicated treatments, which translate into increased expenses and rising costs.

Since our nation’s goal should be a healthier population, let’s try to inform ourselves as much as we can about the cost of health care in the United States, what’s fueling the rise and ultimately, what we can do about it to keep ourselves and our family’s healthy and contain costs. The following findings from PriceWaterHouseCoopers, “Factors Fueling Rising Health Care Costs 2008” provide us with a very granular and specific example of where our health care dollars go, by dissecting just one dollar and the increases we have seen in the cost of our health care premiums.

WHAT MAKES UP A HEALTHCARE DOLLAR? (Measured by increases over 2006-2007) (PriceWaterHouseCoopers, “Factors Fueling the Rising Costs of Health Care Costs, 2008).

Take a look at the following table and test some of your assumptions on why our health care premiums are increasing.