Why Medical Bills Keep Rising

Julie Shenkman
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By the year 2021, medical costs will account for approximately one-fifth of the U.S. economy, which equates to about $4.8 trillion, according to Aetna. When compared with the $2.6 trillion that was spent on care in 2010, it’s clear that health care costs are on the rise. While many people blame doctors, there are actually quite a few reasons why costs continue to soar, and they’re complicated.

In the United States, more money is spent on health care than in any other economically advanced country. In fact, the amount that individual Americans spend on health care is almost twice the amount that people spend in other countries for the same care. One of the main reasons for this is that doctor bills are simply higher here than they are in other countries. The following are also driving up medical costs.

Market Saturation

When any company controls a large portion of the market, they can set their own prices, and hospitals are doing just that. Since 2009, the number of hospital acquisitions and mergers has skyrocketed. These business deals, while good for the hospitals themselves, are bad for patients. When one hospital monopolizes a local market, there is no competition to prevent medical costs from rising. In addition, unlike many services, people cannot do without health care, which skews the market power to the hospitals.

Expensive Technology

New technology costs money, and hospitals have to recoup that money somehow. Most do so by raising their rates for certain procedures or by raising their rates across the board. It is estimated that new technology accounts for more than 38 percent of increased medical costs.

Waste and Unnecessary Spending

Perhaps the most controversial of all factors, waste and unnecessary spending account for a large portion of the increase in doctor bills and medical expenses. The biggest contributors to wasteful spending are hospitals who routinely perform redundant or unnecessary tests and procedures. In addition, because of the way insurance is structured, the insurer has no obligation to lower costs on the behalf of the patient. However, patients who do not follow instructions or take medications as prescribed are also at fault since they often need follow-up care that could have been avoided.

Unhealthy Habits

Some chronic diseases and illnesses are caused by unhealthy habits, such as overeating, inactivity, smoking and alcoholism. Chronic diseases caused by unhealthy lifestyles include high blood pressure, heart disease, diabetes and sleep apnea. Unfortunately, these types of diseases are on the rise, and medical costs for chronic diseases are expected to increase as a result. As Americans continue to put on weight and perpetuate bad habits, these costs will continue to escalate.

There are many reasons why medical costs are on the rise in this country. While the rate of increase has slowed during recent years, medical expenses are expected to continue to rise for the foreseeable future.


Photo courtesy of Sura Nualpradid at FreeDigitalPhotos.net



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