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Free «Increased Medical Costs» Essay Sample

Health care costs have constantly registered a rapid increase in the last several years. For instance, health care expenditure in the United States was in trillions of dollars about three years ago. Factually, this was more that thrice the amount spent over a decade ago and over eight times the 1980 medical budget. Medical care has become a major concern that affects mankind in every corner of the globe. Governments, employers as well as citizens continue to struggle to keep abreast with the soaring health care costs. Economic analysts identify health care costs control as the key driver for wider economic stability for any sovereign state. In fact, President Obama made this a primary focus in his intended reforms.

Although citizens are the beneficiaries of the investments directed in health care, the constant rise in its costs places a great strain on the financial systems that fund the health care sector. This includes the private health insurance facilities sponsored by employers who have health insurance coverage programs to cover employees. In fact, these insurance institutions have raised their premiums by over 131% in the last twelve years (Kimbuende and Ranji, para.3). This has placed an ever-rising cost burden on workers yet wages grow at a snail's pace, relatively. As a result, the greater majority of citizens contend with the difficulty of meeting medical expenses out of their pockets. Government medical care spending has increased at a relatively slower pace than private medical insurance. Hence, the common citizen is left to struggle with the costs through out-of-pocket expenditure despite diminished incomes. This paper will explore the impacts of the rising health care costs on people's decisions on seeking heath care. Several key factors that drive health care costs will initially be discussed.


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In order to understand the impacts of rising health care on the common citizen, a solid understanding of the factors affecting the increase in spending is required. Some of the major factors will be discussed in this study. For a few years, adoption of new medical technologies and drug prescription has been identified as a key contributor to the rising health care costs. However, analysts clarify that availability of expensive and advanced technology, medical science and new drugs are the main factors that affect health care spending. The cost of developing these products is intensively high and they must be recouped by the respective industries. Moreover, they escalate consumer demand which in turn calls for more intense and expensive services that may not be necessarily cost effective.

Chronic diseases such as lung cancer continue to arise as centuries elapse. The nature of health care is drastically affected by the growing prevalence of chronic diseases. Health care systems are faced by the demand new medical solutions to these illnesses. The escalating need for treatment of the chronic illnesses calls for long term care services which include nursing homes. In estimation, treatment of chronic disease accounts for over three quarters of health expenditures. This factor runs parallel to the cost of maintaining the aging population. Nevertheless, aged individuals with or without the chronic illnesses contribute minimally to the increased growth of medical care expenditure (World Health Organization:75). This fact notwithstanding, an aging population that suffers from chronic ailments increases medical costs for the healthy majority. In fact, the higher rates of chronic diseases contribute mainly a great deal to the increased medical spending by the government.

Economy-wide inflation has also contributed a great deal to the increase in health care expenditures. For instance, the recent economic recession resulted in increased medical spending figures. General inflation accounts for an estimated 50% of the annual medical spending growth. However, this is affected by various external factors such as oil prices which make inflation of the economy difficult to control. Consequently, medical budgets increase significantly. Inflation affects the health insurance stability. In times of inflation, health insurance organizations have a tendency of insulating consumers from heath care costs which affects the prices of their products and services (Knowlton:69).

Rising medical costs affect a great deal of personal decisions regarding seeking health care or attention. A significant portion of citizens rely on insurance coverage through their employers during their working years. To the employers, increased health care spending erodes their profits which leads them to reduce, change or eliminate the health insurance coverage altogether. In fact, some employers have resolved to curtail the practice of hiring fulltime employees so as to cut on medical insurance coverage. In the same light, some organizations have increased retiree contributions to premiums besides increasing cost sharing requirements. Some of them even eliminate the subsidized medical benefits for the retirees. This has seen a decline of firms offering health benefits to retirees in past years, a factor that has created a negotiation frontier among employees and employers. Citizens are therefore discouraged by these trends since they do not expect any medical subsidies from their employers. As a result, they are more reluctant to seek help and resolve to out-of-pocket spending.

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Economists analyze wages and benefits when looking at employee compensation. Reports show that firms that offer health insurance focus mainly on the overall remuneration. While paying higher benefits, they may reduce the wages or wage growth so as to standardize worker payment. Therefore, health expenditure increase has a direct impact on wage levels; precisely reduction. It also increases cost sharing for employees or the number of hours that employees have to work for a standard payment. Failure to these eventualities, firms may resolve into worker layoffs and failure to replace employees after others quit. Similarly, some organizations increase the number of temporary workers (Effects of Health Care Spending on the U.S. Economy).

As health care costs escalate, less individuals or families are able to afford private medical cover. For those who afford it, it is more challenging to meet their day-to-day expenses since most of their income will go into medical care. Paying medical bills have been reported to cause financial problems to millions of American families. Since the costs of health care have a direct effect on household finances, most people find it hard to seek medical help in place of other basic needs. The fact that the finances that could otherwise be used for saving, paying other bills or purchasing other goods are used for medical cover discourages many people. In fact, it forces tradeoffs between medical care and other household necessities. It has been reported that over a half of surveyed families have difficulties with paying health care bills just as with paying for other necessities.

These impacts have affected the low income earners who have no government or private medical coverage access. The majority of individuals in this category that are chronically ill has major problems footing their medical bills since they have to cater for other living necessities. This contributes to delayed medical care. Subsequently, most of these individuals seek complementary and alternative medical aids which are more affordable than conventional medical care. The direct effect is on out-of-pocket spending which pushes such households below poverty line. Poor households are predisposed to using the resources allocated for medical care to purchase food and other domestic necessities. Income effect of high medical costs is also tied to household living standards. The effects of these health shocks are potentially large and endanger the life expectancy of the low income individuals. Policies should be devised wisely if governments are to curb the heath care spending menace.


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