Rising Cost of Healthcare

The United States government spends more on healthcare compared to other countries in the world. According to World Health Organization, US spent 17.9% of its GDP in 2011, which is considered to be the highest in the world. Experts say this will increase to 19.5% of GDP by 2017.

From a report, of each dollar spent on healthcare goes 30% to a hospital, 20% to physicians, 10% to prescription drugs, 6% for nursing and continued care, 4% to administrative cost etc.

Even after spending much more on healthcare per capita, US healthcare system has not seen better outcome while other countries spend less, but their outcome is more. The following are some of the reasons why US healthcare cost is rising.

1. Growing Aging Population

.Life Expectancy of an American has significantly increased to 79.1 years in 2015 from 77.9 years in 2007, means the United States population ages 65 and older will nearly double in future.
The aging of the population also has important implications for future Medicare spending. Because an increase in population age has a significant impact on government’s Medicare Expenditure.

Yet population aging is one factor which is not directly related to increases in health care cost.

2. Technology Advancement

Technology is one of the major contributors to increasing overall healthcare cost. Medical devices or instruments help doctors to give effective treatment.
Technology opens up to the wide range of treatment options by replacing older less cost treatment and gives the highest order possible in terms of care delivery.
Understandably the US has a big market for medical technology.

3. Drugs

Another massive reason for increasing Healthcare cost is because of increase in drug price. Production of new drug incurs the most cost, as it involves years of research & development than producing an existing product. It is a competitive market, drug manufacturers fix their own pricing depending on the market needs and supply to demand ration, which has an impact on the patient’s medical bill.

4. Physician Fees

Physicians in the US are highly paid compared to physicians in other countries. However, availability of primary care physicians are less in number, hence patients are mostly treated by the specialist whose remuneration is relatively higher than primary care physicians.

5. Administrative Cost

Approximately, the US healthcare spends 20-30% on administration. Hospitals have many departments, bills to manage and to deal with payers. Other countries have single payer so they do not have work burden and cost is comparatively less. But US hospital deals with multiple payers and contractors which makes process complex and expenditure directly proportional to complexity.

6. Treatment Process

Physicians in the US are very cautious by nature, considering patient’s health conditions they take multiple tests to diagnose and ascertain any disease to avoid any negligible chances of wrong medication. This process increases the number of people involved, and dependence on technology which automatically increases the cost.

7. Lifestyle

Living for long years does not mean living a healthy life. Due to poor eating habits and lifestyle, many people are prone to diseases.

There may be many factors like this which may be directly or indirectly linked to increase in healthcare cost but the only goal of healthcare providers is to deliver a better care to their patients. The predominant cause for why cost inflicts high in healthcare is because of its less organized system, complex regulation, and poor management.

This problem can be solved by measuring the actual cost of the treatment and comparing it with the outcome. This process involves only a patient and his disease, it will help us realize measurable change by calculating accurate cost and value delivered into healthcare practices. But in current system finding the actual cost is challenging, and the value of care is not proportionate either.

Appropriate treatment has to be carried out immaterial of the cost. The health of an individual in a population should be given utmost importance without any monetary constraints.

If the US government takes charge then there will be a possible reduction in cost. Government starting to negotiate costs based on health outcomes might as well help in optimizing their spending on the annual bill while achieving desired results.

Promoting transparency in healthcare and providing affordable drugs will help people to get better health at less cost.

“We need more transparency in our healthcare system; we need to drive improvements in health IT; we need to make it easier to get data on how much treatments actually cost and how effective they are so providers, payers and consumers all can make better decisions.”- Clinton said at HIMSS14

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