Vera Whole Health Blog

A Brief History Of Healthcare Costs In The US

Written by Vera Whole Health | Jun 13, 2019 3:00:00 PM

Healthcare isn't free. It's one of the largest industries in the country, perhaps even globally, and will only continue to grow.

As life expectancy rises, people will need regular treatment, prescription drugs, and urgent services for even longer. This increased demand for healthcare isn't a new trend; it's been growing for the last 30 years. However, if we look at the recent history of healthcare in this country, we can see that we're positioned like never before to bring substantial change and make the future of healthcare better than ever.


Managed care and centralization

The system has moved steadily towards centralization, starting with managed care over 30 years ago. The goal was to manage costs and consolidate control,  but primary care became little more than a gatekeeper to specialist care.

However, with this centralization and the shift to a diagnosis-based reimbursement (instead of treatment), insurance companies started raising red flags about the fee-for-service payment model. More importantly, patients were receiving care and diagnoses that were inappropriate.

The corporatization of healthcare

Next, healthcare underwent a transformation. More specifically, a corporatization. Premium costs started increasing exponentially and insurance companies began clamping down on medical claims. And who was stuck with the bill? Patients.

As a result, healthcare costs started rising at double the rate of inflation. By the 1990s, 16% of Americans didn't have health coverage at all. People weren't getting any healthier, and they were having a harder time paying for healthcare.

However, the fee-for-service model had many incentives built into the system — incentives for a provider to deliver as many services as possible to as many patients as possible.

We still see this today in traditional clinical settings. You get your referral to a specialist, only to start at the beginning of your care journey again — initial diagnostics and tests. These not only waste time, but they also delay the actual care a patient needs at that moment.

Value-based primary care

In a value-based system where primary care is the focus, the patient-provider relationship is the key to containing costs. This is especially true when each party has an incentive to work together, plan, and coordinate care to ensure appropriate treatment, low cost, and quality care. Much like the original intent of managed care, it's centralized, but it utilizes the full extent of primary care's capabilities.

It also makes access for patients even more accessible, especially when a patient can receive care at little or no cost through an employer-backed plan.

Is it worth it? Absolutely — especially over the long term. For employers investing in the advanced primary care model through Vera Whole Health, many are realizing that spending on employee health before anyone gets sick will reduce the cost of care in the future.

A healthcare system driven by primary care is better for everyone. Here are four main reasons why:

  • Primary care drives down claims in less than a year by catching problems before they become acute.
  • A healthier workforce is more productive. People are more focused at work, and need to take fewer sick days.
  • Once claims go down, cost increases slow or stop.
  • Return on the initial investment happens fast (Vera clients have seen it happen as quickly as within 12 months).

What's clear is that thanks to our imperfect past, we're faced with opportunities for innovation in healthcare. It's time to create tomorrow's system.

What does the future of healthcare look like? Read our most recent white paper, How Empathetic Listening Improves Primary Care Patient Outcomes.