As the new year begins, a trio of health statistics cast an intense and unflattering light on a nation in crisis.

These numbers, all unimaginable a generation ago, are setting the stage for financial reckoning in 2023 and beyond.

Shocking Statistic #1: The Number of Americans on Medicaid

Without looking it up, what percentage of Americans receive some or all of their health insurance coverage from the government?

You could assume a low percentage. Finally, publicly funded healthcare is commonly associated with Canada and countries in Europe, but you wouldn’t lump the United States into that group, would you?

The shocking truth is that most of the US population will soon be on some form of government-sponsored health insurance. Currently, 158 million Americans (almost half of the nation’s 330 million people) are covered by a combination of Medicare, Medicaid, and subsidized enrollment in the state and federal exchanges. Experts assume that the percentage will increase.

Within that population, there’s an even more shocking statistic: According to the Centers for Medicare & Medicaid Services (CMS), Medicaid enrollments topped 90 million in 2022.

This program has traditionally been associated with a small population of poor Americans will serve more than 100 million people in fiscal year 2023 (or 1 in 3 insured Americans). since 2020, Medicaid enrollment is up 30% thanks to expansion programs in several additional states under the Affordable Care Act and COVID-19 Public Health Emergency Financing.

The consequences for states are appalling. Although the federal government can spend hundreds of billions more than it collects in taxes each year, states must balance their budgets annually. To do this in the face of rising Medicaid costs, state leaders must (a) raise taxes, (b) reduce spending on things like education, road maintenance, and law enforcement, or (c) restrict access to medical services.

Medicaid recipients are already having trouble finding primary care physicians. They also face long delays in specialty care. Both of these results result from low Medicaid reimbursement rates for doctors and hospitals.

Accordingly, millions of Americans have turned to emergency rooms for routine care, which has created two life-threatening problems:

1. Fewer people are getting checkups or consistent help to manage their chronic conditions, leading to often preventable problems like heart attacks, strokes, and cancer.

2. As emergency room visits swell for non-emergency patients, patients with urgent and life-threatening problems will have to wait longer for evaluation and treatment.
This combination—more ER patients with preventable problems and unnecessary ER use—is bound to skyrocket our country’s medical spending.

As economic pressures mount on states, so does the federal government.

The Medicare trust fund, which pays for care costs for people over 65, faces default by 2028. Last month, Congress approved a cut in payments to doctors and hospitals to lower costs, opening up a scary new possibility: Health care providers could start turning down Medicare patients in the future, just like they do Medicaid registrants today .

Shocking Statistic #2: The Annual Percentage Increase in Employee Deductibles

The inflation in the health care system has not only cost a large part of the state coffers, but also hit the wallets of the privately insured.
Since 2000, Medical costs have increased by 4.85% each year, significantly outpacing the annual increase in GDP of 2.85%.

With healthcare premiums growing faster than revenue, companies have made the difference by shifting the financial burden to employees in the form of Health plans with high deductibles.

In 2022, despite below-average healthcare inflation, US workers paid a shocking 10.6% more in out-of-pocket healthcare expenses than the year before.

Already, medical costs are the leading cause of bankruptcies in the United States. If a recession comes, as many economists are predicting, millions more workers and families will suffer economic hardship.

Shocking Statistic #3: The Percentage of Seniors Who Choose Medicare Advantage

“Traditional” Medicare, passed by Congress in 1965, continues to use a reimbursement model that pays doctors and hospitals based on the quantity (rather than the quality) of the medical services they provide.

In 1997, Congress created an alternative program called Medicare Advantage (MA). Unlike traditional Medicare, this option is “capitalized.” That means the federal government pays healthcare providers an annual upfront payment based on the age and health of those enrolled.
Proponents of MA say the per-capita fee encourages doctors to keep patients healthy without over-treating and testing them.

However, there are some disadvantages. Although seniors enrolled in MA enjoy more predictable annual costs and added benefits like eyeglass coverage, they have fewer choices when choosing doctors and hospitals.

Despite this limitation, the program continues to grow in popularity, being chosen by 48% of all Medicare participants in 2022 Kaiser Family Foundation Projects that MA will soon be the dominant choice of Medicare members.

That fact would shock the politicians who passed the original Medicare law, and even those who introduced MA three decades later. You never imagined that most Americans would be willing to give up choices, even for added benefits and less financial risk.
Once again, the implications are profound.

in the past few years, Companies like Amazon, CVS and Walmart have invested billions in acquiring pharmacies, medical groups and insurance capacity in hopes of disrupting traditional healthcare. All of these retail giants are testing funded coverage models to reduce costs and improve coverage.

As Americans become more receptive to capitulation and constraint on choice, the door will be thrown open for these companies to step in and dominate US healthcare going forward.

Connect the dots

Healthcare inflation has outpaced GDP growth for half a century. As a result, employers, elected officials and American families are finding the cost of care increasingly prohibitive.

These three statistics show how precarious our healthcare system has become. And they indicate that something has to go – soon.

Robert Pearl is a plastic surgeon and author of Indifferent: How the culture of medicine kills doctors and patients. He can be reached via Twitter @RobertPearlMD.