The cost of health care in United States is rising at an alarming rate. Currently, health care in the United States is the most expensive and inaccessible in comparison with other similar states. Despite the fact that the government annually spends billions of dollars on carrying out medical research, the results do not live up to the expectations of an equivalent value for the money used. As a result, the United States experiences high mortality rate with reduced life expectancy due to unnecessary death, as the majority of individuals are not in a position to access health care (Christensen et al., 2009). In this case, there are various interrelated factors that contribute to the rising cost of health care in the United States. Some of these factors include medical technology and pharmaceuticals, private ownership of health care facilities, as well as lack of well-stipulated policies by the state and federal government to regulate the health sector. Therefore, this research paper establishes how these factors have contributed to the rapid rise in the cost of health care in the United States.
Medical Technology and Pharmaceuticals
Medical technology and pharmaceuticals have contributed to the rising cost of health care in the United States. In this case, medical technology defines procedures, processes and equipment through which medical care is delivered (Vicente, 2003). Notably, medical care experts argue that development and diffusion of medical technology is the primary factor that has caused the rapid rise in the cost of health care. Moreover, it causes a disparity between health spending and the average economic growth in the United States (Teisberg, 2006). New medical technologies are being incorporated into the health sector every day. As a result, long-term spending has been affected, thus increasing the overall cost of delivering health care services. Indeed, it is argued that medical technology contributes to about a half of the overall rise in medical costs.
Some of the changes in technology that have influenced the increased provision of health care services include new medical and surgical procedures. For example, the use of angioplasty and joint replacements involves new medical procedures (Gutkind, 1994). Moreover, biological agents and other medical services, including scanning and implantable defibrillators influence the cost of medication. Other support systems that have caused the rise of health care costs include electronic medical records and transmission of information (telemedicine) (Mahar, 2006). Indeed, all medical fields have been affected by advancement of technology.
Increased spending on new medical technology has resulted in development of new forms of treatments for the previously untreatable terminal diseases (Gutkind, 1994). Some of these diseases include diabetes, AIDs and end-stage renal diseases. Moreover, major developments in clinical research have made it possible to treat such acute conditions as the coronary artery bypass graft. There have been major advancements in the procedures that are used for diagnosing and treating other less severe diseases (Sherlock, 2009). These include the erythropoietin that is used for treating anemia in dialysis patients. On the other hand, there has been a remarkable extension of treatment procedures over time. This has resulted in a larger number of individuals who require treatment of various diseases (Johnson, 2010). Thus, the ongoing incremental advancements in the already existing capabilities are likely to improve the quality of medication. It has been noted that major improvements extend the scope of medicine to different conditions, such as mental illness (Teisberg, 2006). However, this has culminated in the rise in the cost of provision of these services, thus making them unaffordable.
There are several factors that determine whether new technology will reduce or increase health care expenditures. Some of these factors include the impact on the total cost of treating a single patient, whether the new technology can be used to supplement the already existing forms of treatments in the same field (Christensen et al., 2009). Moreover, it will also be determined by whether the substitution is full or partial for the present approaches. Likewise, the cost will be determined through the analysis of the changes in the health care spending for each patient. This implies that if the cost is high, the spending will be increased. Thus, the cost per patient directly affects the overall influence on the spending in medical care provision. In this case, whether the patient’s needs directly influence the cost of delivering or producing a certain technology will highly affect the changes in cost (Vicente, 2003). In addition, the cost of other health care services, such as hospital days and physician visits, will also influence the overall rise in cost.
The rise in the cost of health care technology is also influenced by a particular technology in terms of its level of use in a given developed technology. For example, the cost will be varied depending on the number of times the new technology has been used. Thus, a consideration is given as to whether the new technology extends treatment to the larger population or whether it addresses the previous diseases that were untreatable, as well as its abilities to extend the already existing treatments to the conditions being experienced. On the other hand, new technology can also be used to reduce utilization (Teisberg, 2006). This implies that new screenings or diagnosis can avail more treatment to the target patients. Since new technologies are said to have the capacity to increase the life expectancy by availing treatments for varied conditions, more patients are going for them, thus increasing the cost of their delivery.
The evaluation of new technology is also expensive and complicated. Indeed, when a single study is focused on a single innovation in the health sector, it can end up influencing the overall cost. If the new technology is not so beneficial to the population, there is a likelihood of lowering the average cost of health care (Christensen et al., 2009). However, most technological advancements in the health sector have had major improvements in the United States. Moreover, it has resulted in increased utilization than the old systems upon which health care services were provided. Thus, the innovation of new drugs is likely to improve their utility, something that is likely to cause increase cost, as their production requires the use of technology that is expensive to develop.
Innovations in the health care sector are continuous, as various fields are always under research. This makes it hard to measure the specific impact of new technology on the expenditure. However, it is evident that in most cases, the new technology results in the rise of health care costs. For example, in the United States, the size of health sector was approximately 16 percent of the total Gross Domestic Product in 2005 (Johnson, 2010). This rate continues to rise yearly as more innovations are being advanced. There are thousands of products, especially drugs, procedures and interventions, that have impacted the average spending in the health care sector. Indeed, economists have established direct approaches in order to measure the impact of new technology in the medical field. Some of the factors that are used in determining whether technology leads to an increase or decrease in the cost of health care include: the spread of insurance among Americans, the rate of increasing of per capita income, the aging population, the gains in the medical sector, as well as the supplier-induced demand on various drugs in the pharmaceutical field. Therefore, the enhanced capabilities of medicine have resulted in increased real medical spending (Johnson, 2010). Although the advancement of enhanced medical capabilities has had positive impact on the patients, it had disadvantaged the middle income earners who cannot afford certain medications due to their high cost.
New technology is influencing the rising cost of health care due to the rise in consumer demand. It evident that medical care rise with income. This implies that once a nation becomes wealthier, as in the case of the United States, there emerges an extensive market through which new medical innovations are advanced, as consumers demand quality medical care that enables them to maintain their lifestyles (DeNavas et al, 2008). This directly affects the cost of manufacturing and developing technology-related drugs among other forms of interventions. As a result, the increased consumer demand leads to an increase in public awareness of new medical innovations, something that culminates in increased cost (Christensen et al., 2009). On the other hand, health insurance systems are also responsible for providing payments for the new technological innovations in order to encourage more medical innovations. This directly affects the rate of expenditure in the health sector. As a result, medical cost becomes very expensive for ordinary people, unless they risk to use health insurance which is not readily available for the common citizen (Sherlock, 2009). Therefore, the promise of better health through technological advancements also affects consumers, as they seek treatment they want.
The flow of medical technology in the United States has resulted in increased spending. For example, it was estimated that $111 billion was used in medical research in 2005. The pharmaceutical industry received $35 billion for developing drugs for various diseases The medical technology received $10 billion to initiate research projects in the medical field (Oxley, 2004). Other organizations received a certain share of money in order to contribute to the developments in the medical field. This evidently shows how the desire to advance health care has affected the public. Public funds are spent on carrying out research in the health sector. Surprisingly, instead of lowering the cost of providing those services, the public continues to carry the burden of high cost when accessing the medication (Mahar, 2006). Indeed, medical technology industries spent greatest share of government budget than other industrial sectors in the United States in 2002.
Health Care Policies
Government also influences the health sector. Thus, government’s relationship with drugs manufacturers significantly influences the health sector. It is worthy of note that medical care in the United States is largely provided by separate legal entities (Oxley, 2004). This implies that most health care facilities are owned and operated by private companies. This explains why the government has been unable to negotiate for cheaper prices of newly-developed drugs with drugs manufacturers (Johnson, 2010). However, health insurance is provided by the government. Therefore, its provisions and spending comes from the public sector. Indeed, a report by the Institute of Medicine (IOM) stipulated that, “the United States is among the few industrialized nations in the world that doesnot guarantee access to health care for its population” (Sherlock, 2009).