Health care is one of the most essential aspects of the social and economic fabric of a country. In the US, Health care has traditionally been an expensive service. In recent times, however, a number of factors have resulted in health care costs further escalating. Most experts argue that the Affordable Health care Act (ACA) has yet to contribute to the rising costs. All these factors point to the fact that in the US, health care is set to rise further. Some of these reasons for the rise in health care costs could be related to the structure of insurance and underwriting. However, the new scenarios have led to the emergence of newer causes at the primary level of health care and this are the causes that this essay seeks to explore. This essay will examine the three main causes that have contributed to the rise of health care costs in the US, namely Technology, Administration Expenses and emergence of the chronic as well as the lifestyle disease segment.
Technology – This is one of the most crucial aspects of health care in America today. Most experts concur on the fact that the advent and implementation of technology is one of the important contributors to rising costs. Sherry Glied (2013) found that the most significant rise in health care costs in America occurred due to technological breakthroughs in medicine. (p. 134) Further, they also found that unlike other fields, innovations and technological breakthroughs in health care actually led to rising costs since the sellers of the product (or service) felt that better technologies deserved a better compensation. (p.135) This price escalation has taken place at all levels ranging from outpatient diagnosis to critical care and even hospital services. For instance, even at the basic GP level, installing and implementing electronic health records works out to approximately $25,000 per doctor coupled with a monthly subscription fee. (Goodman & Norbeck, 2013) On an aggregate basis, the costs would skyrocket, thus ultimately affecting the consumers and other beneficiaries of this system. The Robert Wood Johnson Foundation notes that advancing technology might further lead to escalating health care costs in the U.S since the question of effectiveness and benefit of this technology for individual patients also comes into the picture.(Goodman & Norbeck 2013) One can therefore understand that a very significant chunk of the rising cost of health care comes from new technologies at various levels within the health care system.
Administration Expenses – One of the significant real time expenses in health care would be hospital costs and allied administration expenses. Since 2001, hospital outpatient expenditure accounted for almost16 percent of the entire costs. (Glied, 2003, p. 137) These administrative burdens have largely impacted physicians, most of who are at crossroads with regard to their practice due to these laws. We can see the evidence of this in the following statistic - forty percent of general physicians today who see patients at hospitals have the hospital as their primary employer, which has doubled since 2000. As further evidence, hospital costs in the US in 2010 constituted $814 billion or 31.4 percent of all health care expenditures. (Goodman & Norbeck, 2013) This ‘site of service’ differential leads to extremely significant markups in simple health checkups when one does it in a hospital than at a physician center. Further, health care programs such as Medicare focus on allowing higher payments for services performed in hospitals as opposed to independent private practices, the costs of health care will only keep rising with the passage of time. Thus, one can see that the administration expenses and rising hospital costs were also major contributors to the price rise in health care.
Chronic and Lifestyle Diseases – The emergence of the lifestyle disease segment is truly disturbing the apple cart in the field of health care. No one foresaw the fact that these diseases could have such a major impact on the health care system. Chronic diseases are the most common and the most expensive of all health problems, especially in those patients suffering from one or more of such diseases. While most of these diseases are preventable, chronic disease conditions generally fall into the costliest ones to treat for the health care system. The CDC lists a number of such diseases and their corresponding factors that are extremely damaging to individual health, but can be easily prevented. For each of these factors, an individual would suffer from one or more corresponding chronic or lifestyle disease with multiple incidences of disease resulting in higher costs for the health care system. Therefore, at an aggregate level, these diseases can spell disaster for the health care system. For instance, the US has one of the highest obese people in the world with almost one third of the population falling into this category, resulting in about half a million deaths arising from obesity and related complications. (Goodman & Norbeck, 2014) Patients with three or more chronic disease conditions generally fall into the costliest one percent of patients who account for 20 percent of all health care spending in the U.S. (Goodman & Norbeck, 2013) Obesity results in a number of complications such as possible heart disease, high blood pressure, diabetes, arthritis, cancer and stroke. These problems are, however, preventable and it is upto the government to supervise and introduce related steps into the healthcare programs to improve the quality and costs within the system. (Goodman & Norbeck, 2014) As such chronic and lifestyle problems decrease, health care costs will also proportionately decrease resulting in lower health care costs at the systemic level.
Reference
Glied, S. (2003). Health Care Costs: On the Rise Again. Journal of Economic Perspectives, 17.2, 125 – 148. Retrieved from http://www.jstor.org/stable/3216861
Goodman, L & Norbeck, T. (2013). Who's To Blame For Our Rising Health care Costs? Forbes Magazine. Retrieved from http://www.forbes.com/sites/physiciansfoundation/2013/10/03/whos-to-blame-for-our- rising-health care-costs/
Goodman, L & Norbeck, T. (2014). Large Health care Cost Increases Are Built Into Obamacare Implementation Forbes Magazine. Retrieved from http://www.forbes.com/sites/physiciansfoundation/2014/05/28/large-health care-cost- increases-are-built-into-obamacare-implementation/
