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Factors Involved in Spiking US Medical Expenditures

The healthcare spending in the United States from 1995 to date has increased substantially as the expenditures in healthcare services currently have surpassed $10,000 per capita. This report has been presented by the Department of Health and Human Services virtually by the Journal of Health Affairs. It is predicted in the assessment that healthcare costs are likely to be growing faster in the coming years than in the national economy. According to the report, the health care spending from 1995 to 2017 comprised 18% of the national economy (Papanicolas & Woskie, 2018). As medical expenditures across the country continue to rise, there is an obvious relationship between increasing expenditures and factors involved in annualized healthcare spending. This essay quantifies 5 fundamental factors involved in spiking US healthcare expenditures and their impacts on the quality of the healthcare services provided to the Americans due to inefficiencies of the healthcare system.

Factors Increasing US Medical Expenditures and Their Impacts on Healthcare Provided

The official records of the US find that the ‘costs’ and ‘intensity’ of the healthcare services has increased nearly $1 trillion from 1995 to 2017 due to the following factors:

Population Growth

The growing population is a significant factor that effectively contributes to the rise in US medical expenditures. One of the single biggest factors behind sky-rocketing healthcare prices is overweight or obese. The reason why the growing population especially the younger generation consumes much of the healthcare services at an early age is the changes in diet patterns. (Evans, n.d.) The demand for a “western diet” has increased the health risks as people prefer “processed food products” more than natural food resources. Therefore, a good majority of the US population suffers from chronic illnesses such as heart diseases, high blood pressure, diabetes, cancer, etc. In this regard, lifestyle-related health risks in the form of chronic illnesses due to changes in diet patterns accelerate the medical costs for nearly 334 million of the US population.

Aging of the Population

The aging population consumes more healthcare services than other people in the country and therefore is a major acceleration in the rise in healthcare costs. The reason is senior citizens suffer from more chronic diseases as compared to the younger population. It is reported by the official US records that the annualized growth rate of the American population from the year 1995 to 2017 was 51% as the relative expenditures of treating unhealthy population, especially of age 65 grew more rapidly than healthcare spending on other patients (Mendelson, 1993). With the increasing healthcare costs, there is much pressure on states and federal’s national budget and the commoners have to face much pressure on tax rates. Although there are public healthcare programs for older people of age 65 and above that finance aging people’s healthcare however older people have to experience long-term strains on public funds.

Price of Healthcare Services

American Journal of Managed Care in its report provides an insight into prominent partnership trends between healthcare insurers and medical service providers. The study has found that the increased healthcare provider consolidation has increased hospitals’ greed in concentrated healthcare markets. Americans were charged considerably higher prices for the innovative treatments offered by private hospitals in the particular competitive market. The report clearly stated the rising costs for the procedures such as coronary angioplasty expenditure was found to be 30% higher while the procedure for the knee replacement was reported to be 20% higher. (American Journal of Managed Care, 2019)

Utilization of Costly Medical Technology

With the changes in lifestyle in many emerging states and the rise in chronic health problems, the demand for costly medical technology both from doctors and patients has increased. Doctors, as well as patients, prefer the newest and advanced medical treatments over traditional healthcare services that are often expensive. The demand for innovative medical technologies has kept the game up for the private hospitals as their corporate greed has led middle-class Americans to partially give up on their savings and lower-income Americans to bankruptcy.

Encouragement of Quantity Over Quality

Most of the insurers take full advantage of people’s ignorance of the insurance facility they avail from their jobs as the healthcare system of the US is not integrated as compared to other countries. An integrated healthcare system of the country means that medical providers, support teams, hospitals, insurers, and management are all on one table for effective communication on a patient’s healthcare. (Evans, n.d.) Whereas, the disintegrated US medical system results in patients paying for every visit, procedure, duplicate tests, and overtreatment rather than what patients truly need. A segment of urban people loses a lot of amount in healthcare because insurers including Medicare reimburse for overtreatment charges and redundant testing under a fee-for healthcare service system (Papanicolas & Woskie, 2018). Moreover, insurers along with providers encourage quantity over quality which has led a bunch of Americans to give up on their basic medical needs.

In conclusion, while there is no potential villain in the US healthcare system to blame for the spiking medical expenditures over the past years. The only villain is the factors because of the masses’ ignorance of their medical rights. People need to understand the above-mentioned factors behind the immense healthcare expenditures growth to make educated choices about their healthcare. An Affordability index should be implemented by dividing the average expenditure of income by an employer-sponsored plan. This viable solution would make a corollary between household income and insurance and will possibly reduce medical expenditures in the future.


Mendelson, D. N., & Schwartz, W. B. (1993). The effects of aging and population growth on health care costs. Health affairs (Project Hope), 12(1), 119–125.

Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health Care Spending in the United States and Other High-Income Countries. JAMA, 319(10), 1024.

Evans, M. (n.d.). What We Can All Do About Rising Healthcare Costs. Forbes.

AJMC | American Journal of Managed Care. (2019).



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