The Rising Cost of US Healthcare

Healthcare spending in the US is the highest in the world, and is continuing to increase. According to research, spending on healthcare reached $2.9 trillion in 2014, which is over 17% of the US economy and amounts to over $9110 per person. Spending between 2013 and 2014 alone increased by 5.3% and continues to rise.  But what is the cause of these increases and what can be done to slow done the speed of the rise of the cost of healthcare?

According to Dr. Joseph Dieleman of the Institute for Health Metrics and Evaluation at the University of Washington who conducted the study – “Part of the reason we spend more on health care each year is the nation’s growing and aging population. But factors relating to the health system, such as increased price, intensity, and utilization, are driving most of the spending increase.”

The study covers all aspects of healthcare spending, including money spent on outpatient care, inpatient care, nursing services, emergency departments, dental care and pharmacies. It also includes all types of funding including private insurance, Medicare, Medicaid and households’ own spending.

What is leading to this increase in US healthcare costs? The research indicates that the key factors contributing to the figures are:

·         An increase in population

·         The US has an ageing population

·         There’s been an increase in disease prevalence or incidence

·         There’s been an increase in the frequency of use of heath care services

·         There’s been an increase in the price of services in the US

Dielman also commented on the increase in spending, saying that “When we added up all the health conditions, increasing population size led to a 23% increase in health care spending. People getting older led to a 12% increase in spending, and increases in price and service intensity, that is the variety and complexity of services, led to a 50% increase in spending.”

One of the main factors in the increase in spending is the types of conditions and care required. For example, spending on outpatient care increased massively between 1996 and 2013 – an increase of 85%. This increase is down to an increase in patients using this service. Spending on inpatient care also increased by 59%, which is due to price increases for this service as well as service intensity.

Dr. Jay Want, executive director of the Peterson Center on Healthcare, who funded the study, commented on the results, saying that “These findings offer insight into why the US spends so much on health care. Increased health care spending is driven more by how care is priced and delivered to patients than by the population’s size or age. The research suggests the need for more efforts to address those forces that control pricing.”


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