SOURCE: Kalorama Information

Kalorama Information

April 28, 2011 14:04 ET

In Weak Recovery, Consumers Bearing More of Healthcare Costs

NEW YORK, NY--(Marketwire - Apr 28, 2011) - Healthcare costs paid out-of-pocket by consumers have increased steadily in recent years, but according to Kalorama Information, the recession and weak recovery are additional drivers for the trend. In fact, the independent healthcare market research firm has found in its new report, Out of Pocket Healthcare Spending 2011, that out-of-pocket healthcare spending was $303 billion in 2010 and the rate of growth will accelerate at 8% annually in the coming years.

According to the U.S. Department of Labor, the average household's inflation-adjusted spending on healthcare has been rising by about 1.4% each year. Retirees have been particularly hard hit, with inflation-adjusted out-of-pocket healthcare costs rising by more than 2% each year as a result of increased spending on prescription drugs.

"The recent recession brought with it a high unemployment rate, exacerbated by increased outsourcing of jobs to lower cost countries, broad-based cost-cutting and reduced disposable income," said Bruce Carlson, publisher of Kalorama Information. "Meanwhile, affordable healthcare has become less available but more necessary."

The costs of healthcare products and services continue to rise briskly; in some cases, they have become astronomical. For example, in 2010, average annual healthcare premiums for a family of four ($13,770) approached annual earnings at the federal minimum wage ($14,500). As a result, Kalorama notes that managed care organizations are increasingly shifting the burden of healthcare costs to consumers by way of increased co-pays and premiums.

About 70% of consumers' out-of-pocket healthcare spending goes to premiums. And this is increasing as HMOs and employers engage in cost shifting. Co-pays make up a little over 3% of spending, which Kalorama also expects to increase due to cost shifting. Another 27% of out-of-pocket spending goes to direct payments.

The Health Care Reform of 2010 has significantly changed the landscape of the U.S. healthcare industry by extending healthcare coverage to approximately 32 million previously uninsured people. Although this could potentially decrease some demand for out-of-pocket spending from the previously uninsured, it may in fact, raise awareness of the value of basic care and bring more persons into the medical system, thus potentially increasing spending as newly insured consumers take a renewed interest in their health and wellness.

Out of Pocket Healthcare Spending 2011 provides more details on the topic of healthcare costs which are not paid for by government or private insurance. It reviews the type of expenditures and their distribution for non-elective procedures, companies that provide healthcare financing to consumers, and out-of-pocket spending data and forecasts.

About Kalorama Information
Kalorama Information supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. We routinely assist the media with healthcare topics. Follow us on Twitter and LinkedIn.

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