The Healthcare Affordability Crisis

Approximately one in every six dollars flowing through the American economy is spent on healthcare.

 In 1960, it was one in twenty.

  • Between 2006 and 2016, the average premium contribution paid by American families with employer-sponsored health insurance increased by 77 percent, from $2,973 in 2006 to $5,277 in 2016.

  • During the same period, median household income rose by just under 19 percent, from $48,451 to $57,617.

  • A 2012 study published in the Annals of Family Medicine, says if these trends continue and we don’t change the healthcare system, the average cost of a family health insurance premium will consume 50 percent of household income by 2021, and exceed the average household income by 2033.

The cost of healthcare is a crisis that is harming families and the U.S. economy—and the problem is getting worse. Healthcare spending is crowding out investments in infrastructure, education, and other societal priorities—many of which directly impact health.

We Need to Ask WHY Healthcare Costs So Much — and WHAT We Can Do About It

These are questions that NRHI and its members are keenly focused on, and there’s a lot we already know.

Healthcare costs are driven by prices, waste, and a payment system that incentivizes volume over value.

Anyone who has ever asked their doctor how much a recommended test will cost has probably been told “it depends.” Healthcare prices are opaque, complex, and wildly varying depending on where you live, who’s paying for it, and where the test is performed. This opacity leads to prices unrelated to quality and reflecting whatever the market will bear, and has led to a dramatic increase in prices over recent years.

We currently have a system where as much as 37% of all healthcare expenditures are wasted — either through unnecessary tests and treatments that can actually harm patients or because of administrative costs that burden providers and do nothing to advance health.

And, with payment systems that reward providers for tests, treatments, and admissions — even when unnecessary — and don’t pay for interventions and practices that can improve health, it’s no wonder we’re in the mess we’re in.

So, What’s It Going To Take?

First, we need to find out what’s driving costs in different cities, states, and regions. If we don’t know what the problem is we can’t fix it. This means we need data sharing within and across communities  — to identify the problems — and to fix them.

Next, we need to change the incentives so that providers are paid for helping people get and stay healthy, and not for providing services that they don’t need.

We need to cut the waste — both in terms of low-value services, and in burdensome administrative requirements that don’t lead to health and do lead to physician frustration and dissatisfaction.

And, we need to involve everyone with a stake in the healthcare system in working toward solutions. This means providers, insurance companies, hospitals, employers, unions, policymakers, and patients.

What’s Happening Now?

There are many organizations, associations, and government entities working toward the goal of better, more affordable healthcare. The Centers for Medicare & Medicaid Services (CMS) is implementing the Medicare Access and CHIP Reauthorization Act of 2015 — or MACRA — which was designed to move Medicare toward value-based care. NRHI is helping practices prepare for MACRA through its SAN and QPP SURS initiatives. We are also working with our member regional health improvement collaboratives to test, implement, and participate in initiatives in and across communities such as Getting to Affordability and Choosing Wisely.

NRHI and its members are making affordability a central focus of our work. In September 2017 NRHI sponsored the National Affordability Summit, a Washington DC event that brought together leaders from every segment of the U.S. healthcare system to discuss what actions, changes, and political will are needed to challenge the nation’s healthcare status quo. Since then, our members have begun their own efforts to change the conversation around healthcare to focus on the fundamental question of healthcare affordability.


Read what NRHI President Elizabeth Mitchell has to say on the HealthAffairs blog.



Browse through the  National Affordability Summit Event Bundle, where you can watch videos, see presentations, and read the perspectives of many of the speakers and participants in this September 2017 event.




Read the published report from the National Affordability Summit in this informative and honest depiction of the state of our healthcare system and the work we need to do to make care affordable for Americans.



Learn about MACRA on the CMS website.



Find out more about NRHI’s Getting to Affordability initiative.


Learn about the High-Value Care Support and Alignment Network (SAN), which provides learning programs and technical assistance to networks helping  clinicians succeed in a healthcare environment that is transitioning to value-based payment under the Transforming Clinical Practice Initiative (TCPI).


See how Choosing Wisely is helping people and their physicians communicate and make shared decisions about the type of care that is right for them.



Learn about Costs of Care, a non-profit organization working to help clinicians deliver better care at lower cost.