Question

Analyze why health care costs are rising

Answer 1

Health Care costs are rising because of the following reasons:

1. Administrative Costs

The administrative costs of running the healthcare system are the highest. One quarter of the healthcare cost is associated with administration which is way more higher than in other countries.

2. We are sicker,older, and fatter

Nearly half of the U.S. population has at least one condition such as asthma, heart disease or diabetes which are driving up costs. 2/3rd of adults are overweight which is also leading to increased medical spending.

3. Defensive Medicine

One more big driver of the health insurance bill is the practice of defensive medicine. Doctors are afraid that they will get sued, so they order multiple tests even after they are certain that they know the diagnosis.

4. Wages

Wages are also increasing the costs in healthcare. Specialists are commanding higher wages and the over-utilization of specialists is driving up health costs higher.

5. Branding

Healthcare providers who demand the highest prices are the ones who create a brand.

6. Expensive Treatments

Medical experts are using more expensive mix of treatments. 17.1% of the GDP of U.S. was spent on health in 2017. Specialists have come up who command higher pay and which drives up the costs for everyone.