Healthcare costs have now soared to a record high, leaving American workers in significant distress. Inflation has soared past wages, such that access to affordable medical care has become more challenging for American workers.
According to annual survey by Kaiser Family Foundation (KFF), healthcare costs spiked more than 7% for the second straight year, outpacing overall inflation rates for both consumers and employers. This trend has created a challenging environment for American workers, as rising premiums, deductibles, and out-of-pocket expenses have eaten into household budgets. For example, family premiums for employer-sponsored health insurance reached nearly $25,500 per year on average this year, with employees contributing around $6,000 of that amount
These rising costs have impacted families directly. About 20% of insured adults report having skipped or delayed medical care in the past year due to high out-of-pocket expenses. This figure climbs to over 60% among uninsured adults, who face even greater challenges in affording care
Employers, particularly large corporations, bear a significant share of the healthcare cost burden as they cover a substantial portion of insurance premiums. In response, some companies are investing in healthcare navigation resources to assist employees in accessing appropriate and cost-effective care. Despite these efforts, nearly 25% of U.S. businesses report struggling to keep healthcare costs sustainable. Small businesses are especially vulnerable, as they often lack the resources to cover steep insurance premiums for employees.
Healthcare Cost Drivers
The high cost of healthcare in the U.S. is driven by a complex web of factors, which combine to create one of the most expensive systems in the world, including administrative costs, rising prevalence of chronic diseases, rising drug prices and prices of hospital services, as well as high physician salaries.
The Role of Chronic Diseases and Delayed Diagnoses
The prevalence of chronic diseases such as diabetes, heart disease, and obesity is high in the U.S., accounting for about 90% of total healthcare expenditures. Chronic conditions require ongoing treatment, medications, and management, which place a significant financial burden on the healthcare system.
The impact of the COVID-19 pandemic revealed significant vulnerabilities in the U.S. healthcare system, particularly in chronic disease management. Many Americans postponed routine screenings and preventive care during the pandemic, leading to a spike in late-stage chronic conditions, including cancer and cardiovascular disease. In fact, cancer has now surpassed musculoskeletal issues as the leading driver of healthcare costs for large employers
Moreover, the delay in early diagnoses has translated into higher costs for late-stage treatments, which are often more intensive and expensive. This is one reason why both employers and healthcare experts emphasize the importance of accessible preventive care. However, with out-of-pocket costs for medical visits and prescriptions becoming prohibitive for many, preventive services may continue to be underutilized.
Approximately 77% of large employers have also reported an increase in mental health concerns among employees, with 36% actively working to expand access to mental health resources in 2024. Unfortunately, the cost of mental healthcare can be prohibitive, even for those with insurance. High co-payments and limited in-network options often deter people from seeking help, perpetuating the cycle of untreated mental health issues.
Administrative Burden on Healthcare Providers
Administrative expenses in the U.S. healthcare system are among the highest globally, consuming nearly 8% of total healthcare spending, compared to an average of 3% in other developed nations. These costs come from billing, insurance processing, and compliance requirements, which lead to inefficiencies and increase the price of care for patients.
According to the American Hospital Association (AHA), almost 74% of healthcare providers report increased administrative tasks required by insurers, leading to inefficiencies and higher operational costs.
Hospitals and clinics face growing demands for documentation and processing, which translates into higher expenses passed down to patients. Additionally, many hospitals are struggling with rising labor costs and supply chain issues, further compounding financial pressures.
McKinsey & Company estimates that total healthcare expenses could increase by nearly $112 billion by 2027, driven largely by non-labor costs like supplies, utilities, and equipment.
Tackling Rising Healthcare Costs – Medical Tourism
To manage costs, some employers are prioritizing preventive and primary care, aiming to reduce long-term expenses by keeping their workforce healthier. However, these preventive services often do not address the immediate needs of employees dealing with chronic health conditions. This divide has fueled an ongoing conversation about the need for a more cohesive healthcare system that provides seamless integration across providers, insurers, and employers.
One viable alternative for most employers is exploring the opportunities in medical travel. Cost is the main driver of medical tourism. For example, a heart bypass surgery that might cost over $100,000 in the U.S. can be performed for around $10,000-$15,000 in India. Similarly, dental implants can cost up to 70% less in Mexico compared to the US. Many top international hospitals are accredited by organizations such as Joint Commission International (JCI) and Global Healthcare Accreditation, ensuring their offerings meet global standards for quality and safety. These facilities often provide specialized staff, modern technology, and multilingual support, catering specifically to U.S patients, ensuring comparable patient experience.
In addition to cost savings, U.S. patients, particularly those seeking elective surgeries, may face long waiting periods. In contrast, many medical tourism destinations offer faster scheduling and immediate care, reducing the wait time significantly. Medical tourists can access a wide variety of services, from major surgeries to elective procedures like cosmetic surgery, dental care, and fertility treatments. Some countries also offer treatments and therapies not yet approved in the U.S.
Better by MTA: Revolutionizing Medical Travel to Cut Healthcare Costs
The rising cost of healthcare in America represents a significant challenge to the workforce, creating barriers to accessing necessary care and placing financial pressure on families and employers alike. Without intervention, these trends are likely to continue, further straining the healthcare system. Medical tourism offers a viable option for American patients to meet their healthcare needs at a fraction of the U.S. costs.
Better by MTA presents a revolutionary ecosystem that connects patients with accredited healthcare providers that deliver high quality healthcare services at affordable rates. Better features accredited providers that guarantee excellent patient outcomes, wholesome patient experience, and transparent cost payments. This eliminates the barriers to healthcare within the U.S., ensuring patients receive swift treatments at up to half the U.S. price.
To learn more about Better By MTA, click here.