The Increasing Prices of Healthcare Services in the United States

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According to JAMA, a renowned medical journal, the U.S. healthcare expenditure, as noted in the period1996-2013, increased by nearly $933.5 billion. Over 50 percent of this increase was due to a surge in prices for medical services.

The main author of this study, Joseph L. Dielman, collected data on 155 distinct health disorders and 6 potential treatment categories- outpatient, inpatient, nursing facilities, prescriptions, dental care, and emergency services. The researchers involved in the study also analyzed shifts in five key factors- the size of the population, disease incidence, aging, intensity, and price of service and use of medical services (1996-2013).

Here are the four key factors contributing to the rising cost of US healthcare:

1. Increased price of medical services

According to Dieleman, price, complexity, and a variety of services have together been the biggest factor contributing to the increased healthcare spending. Over 50 percent of the overall spending surge is due to intensity and price increases, particularly with regards to inpatient care.

2. More investment in specific medical conditions

Reports suggest that the maximum rise in spending was for diabetes, which increased by $64.4 billion in the period 1996-2013. A large chunk of the money was taken by pharmaceuticals that prescribed treatment. In the same time period, expenditure on the neck and lower-back pain increased by $57.2 billion. Other conditions that demanded a large chunk of expenditure included hypertension ($47.6 billion), high cholesterol ($41.9 billion) and depressive disorder ($30.8 billion).

3. Outpatient healthcare services

The expenditure on ambulatory healthcare, including outpatient hospital and ER services, was also a huge contributor to increased costs. The annual expenditure on ambulatory services increased from $381.5 billion to $706.4 billion in the thirteen-year time period. The approximate increase of $324 billion was reported to be more than all the other five analyzed categories of care.

4. Pharmaceutical medication

The last major driving force behind the overall surge in healthcare expenses is the spending on all kinds of pharmaceutical drugs. Out of the total expenditure on diabetes ($64.4 billion), about $44.4 billion was invested in medications prescribed for treatment and prevention.

According to Robert F. Graboyes, senior research analyst, Mercatus Center (George Mason University), the huge sum paid for pharma medication is partly a regulatory issue. Graboyes (not a participant in the healthcare cost research) says that the drug approval procedure under the FDA makes pharmaceutical drugs a lot more costly than they should be.

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