California’s medical costs are on the rise. While that could be applicable to virtually any area of the country, the increase in California is significant. The result of those increasing costs is not just hard-to-obtain medical care for patients; it has also had an impact on settlement negotiations.
For victims of serious injury and other losses, filing a claim for compensation seems straightforward. However, if victims fail to account for these increasing costs, it could lead to avoidable financial strain.
Why California’s Healthcare Spending Is the Highest in the Nation
The cost of healthcare continues to rise in California at astonishing rates. Data from the California Department of Health Care Access and Information indicate that overall healthcare spending increased by approximately 30% from 2015 to 2020. That number has only grown further in the last few years. The increase is so significant that the state’s legislature is working on proposed bills to potentially limit the amount that medical providers can charge in annual increases.
But why? Why are costs so high and rising so quickly? There are several potential reasons why this could be a factor.
Hospital and Physician Practice Consolidation
It has grown more expensive to own and run a medical practice, pushing many providers to consolidate their practices to streamline costs. In numerous areas in the state, there are massive systems that control a large portion of the care provided, and many of these owners are private equity companies, not medical providers. They can charge more because they are the only care provider in the area.
While doctors’ offices and practices may maintain their individual names and operations, they are still linked to each other. This means costs are likely to be more in line and even the same from one location to the next. Consolidation of medical care markets has risen in the last few years, marked by the need to downsize and optimize.
Hospital and Administrative Costs
Another core reason costs are up is that, like many other things, the cost of providing care is more expensive. This has increased costs to operate hospitals and medical centers (and that is one of the reasons so many consolidations have taken place in itself). Inflationary pressures impact all industries, including the medical field.
Medi-Cal Expansion and Other Policy Decisions
The expansion of government -funded healthcare services, including Medi-Cal, has driven prices upwards. Changes in eligibility requirements have led to more demand for government-funded services, increasing costs as that occurs.
The Nursing Shortage
A continued nursing and labor shortage also adds pressure. Data indicates that California has the highest projected nursing shortage in the country, with a deficit of 44,500 registered nurses expected by 2030. That is three times the deficit of the next most affected state (Texas). Fewer nurses lead to higher wages as demand increases.
How These Rising Costs Affect Settlement Negotiations in California
For victims facing a long medical journey, these rising costs will impact them no matter who is to blame for their injuries and losses. However, when seeking settlements, it is critical to keep the following in mind.
Injuries Cost More to Diagnose, Treat, and Manage
When calculating settlements, attorneys and insurers must factor in the higher costs associated with providing care. Every component of the care process is likely to face increased costs, including initial emergency services, ongoing medical support, rehabilitation, and management of ongoing conditions.
Insurance Companies Are Trying to Save Money
As insurers are paying more for care, they are looking for ways to trim costs in other areas to meet profit margin goals. To keep as much money as they can, they may:
- Raise premiums
- Change deductibles
- Reduce the number of medical providers in-network
- Refuse to cover some types of care
- Refuse to cover certain medications, including generics
- Deny certain claims outright
This can translate into increased aggressiveness in reducing settlement values for their at-fault policyholders. While this may not be blatantly obvious, offering lower awards for accidents is one way they can save significantly, especially when victims are unaware of these practices.
Minimum Wage Is Higher
California’s wages continue to be higher than most other states. Higher wages mean there is a greater level of income loss when someone is hurt. This can lead to the need for higher settlements, rather than lowered costs. Insurance companies recognize that this is an ongoing concern and will take measures to limit settlement awards whenever possible.
How a Personal Injury Lawyer Can Help Negotiate Your Settlement
Hiring a personal injury attorney provides peace of mind. For a victim heading into a settlement negotiation with an insurance company, without knowledge of what the insurance company is doing – or may do in the future – to lower costs, it is impossible to know if you are getting fair compensation.
Your personal injury lawyer will aggressively hold insurance companies to account for the losses you have. For example, your attorney will calculate your actual, true loss of income that takes into account higher wages, loss of bonuses, loss of retirement contributions, benefit plans, and other perks. Your lawyer will gather more details about the expected medical care you will need in the coming weeks, months, or years, and apply the added costs of increasing wages. Without this insight, a fair settlement can't occur.
When you hire a personal injury lawyer, they will:
- Gather accurate details of the costs you are facing, including medical expenses, lost wages, and property damage, based on today’s dollars.
- Present evidence of losses with their values substantiated to the insurance company.
- Negotiate fair compensation or seek legal action in a court of law.
The risk of higher costs is very much a reality for anyone suffering from personal injuries in California. As a result of that, you can expect your settlement to be higher, not lower. If you do not translate these increasing costs into your settlement demands and convince insurance companies of those increased costs, you may not be getting fair compensation that makes you whole again. For this reason, it is critical to pursue support from your attorney before agreeing to any settlement value.
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