How Trickle-Down Healthcare Costs Are Driving Up the Cost of Healthcare for Everyone

Nomi Health
Nomi Health
September 6, 2023

The cost of healthcare in the United States is rising steadily, and it’s putting a strain on everyone in the system. Patients are facing higher deductibles, copays, and out-of-pocket costs. Employers are paying higher premiums for health insurance. And physicians are struggling to keep their practices afloat.  

The Peter G. Peterson Foundation reports that the United States spent $4,255.1 billion on healthcare in 2021, or about $12,900 per person. (That’s twice what other developed countries spend – and sadly, with poorer outcomes.) And healthcare costs increased from 5 percent of GDP in 1960 to a whopping 18 percent in 2021, adjusted for the size of the economy.  

What's Driving Up Healthcare Costs?

There are a number of factors boosting healthcare costs, including:

  • Advanced medical technology: New medical technologies, such as gene therapy and robotic surgery, are often very expensive.
  • The aging population: The U.S. population is aging, and older people tend to use more healthcare services.
  • The overuse of services: In the United States, we tend to over-diagnose and over-treat. This is partly because we have a fee-for-service system and partly because we live in a litigious society.
  • Administrative waste: The healthcare system carries a lot of administrative costs, such as the red tape of processing claims and managing networks.
  • Hidden fees: There are also a number of hidden costs associated with healthcare, such as digital payment fees charged by insurers or third-party processors.

These factors are all contributing to the rising cost of healthcare and trickling down throughout the economy. In the case of healthcare, it means hospitals and doctors are passing on their escalating costs to patients and employers in the form of higher prices.

Low-Hanging Fruit: Increase Direct Care, and Lower Hidden Costs

According to a recent AMA report, of that $4,255.1 billion spent on healthcare in 2021, hospital care was primary at 31.1% and physician services was second at 14.9%. Addressing costs in those main categories would make a dent in healthcare costs, a key driver in America’s spiraling national debt.

But some of the factors driving up the cost of direct care aren’t always obvious. For instance, insurance companies now often charge fees for digital payment processing, which can be as high as 5% of the bill. These fees can add up to significant sums, without providing additional care to patients.

A recent ProPublica investigation of these stealth fees cited a 2020 complaint to CMS from a senior executive of AdventHealth, which has 53 hospitals in nine states. It stated that the hospital had to pay $1.8 million in hidden fees to payment processors.  

Most physician practices are smaller, though, so their estimated annual losses owing to onerous digital payment fees were $100,000 or less. Even that figure is more than enough to cover the salary of a registered nurse, which would directly benefit patients.  

A 2021 survey found that almost 60% of medical practices said they were compelled to pay fees for electronic payment, at least some of the time. These fees, of course, result in lower reimbursements and a fiscally precarious practice. But they often didn’t have a choice, even if they were to opt out in favor of paper checks as payment.

Doctor and patient

What Can Be Done About Out of Control Healthcare Costs?

Nomi Health’s Open Network saves members money by removing the hidden costs that come through insurers and their unnecessary fees. By paying directly, members can trust it will go towards services received, not fees siphoned off to insurers and middlemen.  

Our mission at Nomi Health is to slash healthcare costs in half by:

  • Negotiating lower rates on behalf of patients, physicians, and employer groups. (Members pay no copays or deductibles.)
  • Eliminating hidden fees for digital payment processing and other services.  
  • Providing transparency to patients, physicians, and employer groups about the cost of healthcare, for more informed decision making. (Members can count on upfront, trustworthy pricing.)
  • Managing quality of care for patients via care coordination and case management services.  
  • Ensuring employers get better pricing for their employees and gain control of their overall health benefits costs.

The Trickle-down Future of Healthcare  

The healthcare system is ever-changing, but one thing is for sure: the cost of healthcare is not going to go down on its own. We need to be proactive about finding solutions to this problem.

Together, we can create a healthcare system that is more affordable, accessible, and equitable for everyone.