Cost increases remain the major challenge to the healthcare field today. Consider the following statistics:

1. Healthcare as a percentage of the Gross Domestic Product (GDP). According to a 2011 report from the U.S. Department of Health and Human Services, total national spending on health in 2003 (the latest year for which data is available) rose to $1.7 trillion, or $5,670 per person (Table 1). By 2013, national health expenditures are projected to reach $3.4 trillion, or $10,709 per person. As a share of GDP, health spending is projected to reach 18.4 percent by 2013, up from its 2003 level of 15.3 percent.

Table 1. National Health Expenditures

  1960   1985   2003
 Total  $27 billion   $427 billion   $1,678.9 billion 
  Per capita    $143   $1,765   $5,670
 Share of GDP    5.1%   10.1%   15.3%

Source: National Health Expenditures, Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Department of Commerce, Bureau of Economic Analysis; and U.S. Bureau of the Census.

2. Increasing government expenditures. Medicare and Medicaid expenses have been rapidly increasing over the past decade.

3. Increasing private payer expenditures. Since the late 1990s, employers and individuals have also seen their healthcare costs rise, principally in the form of higher health insurance premiums, where annual percentage increases moved from the single digits to double digits for many. Employers, which pay (on average nationwide in 2009) about 74% of employee health insurance premiums, have been shifting more of the cost of health insurance to employees. So employees as well as employers have been feeling the pinch of rising premiums and other healthcare expenses.

According to a February 2011 report by the Kaiser Family Foundation, the average employer costs for health insurance average employer costs for health insurance per employee hour (among workers with access to health benefits), rose from $1.60 to $3.35 during the 1999 to 2010 period-nearly an increase of 110% in average costs per hour.

So, employees as well as employers have been feeling the pinch of rising premiums and other healthcare expenses.

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