Health Care Cost Analysis

Health Care Costs Analysis

Healthcare is expensive and Americans want the best possible healthcare they can get. Consumers are demanding more tests, better drugs and insurance coverage. Americans desire a high quality of life and insurers/employers are trying to provide the means, but cost effectively and without raising costs. In order to do this, "consumers will have to make more decisions, pay more and perhaps demand greater value" (Barr, Paul).

"The common forces driving utilization and costs are medical technology advancement, demanding consumers, and an aging population" (Barr). Advancements can be seen all over the medical field in areas such as MRIs, new cardiology procedures, highly specialized drugs, cancer treatments, and new laboratory procedures. Consumers are savvy and know their options. There is advertising from pharmaceutical companies and medical technology corporations promoting their drugs and products nationally via the Internet, magazine and television ads. The aging population is also living longer.

This population is living longer due to technological advances and insurance coverage. A huge portion of this coverage provided is by Medicare. Generations have paid into and depended upon this source of funding for years. It is projected that Medicare will be exhausted within the next 14 years. Currently Medicare "is the biggest single payer for just about every hospital" (Barr).

Medicare was subject to a Medicare Modernization Act in 2003, which expanded benefits for prescription drug coverage. This Act creates a problem for the federal government: an even larger budget deficit. "Medicare eats up a large share of government expendituresÐ'...there [is] not Ð'...enough money to keep Medicare as it now operates afloat. Everybody's freaking about it" (Barr). Providers who currently accept Medicare have even stated that they will not continue to accept this form of payment if the rates for service decrease or fees are not paid.

There is also the issue of the uninsured and the underinsured whom generate charges for services that are not paid. There are currently 45 million Americans without insurance. These people are not denied services when they are life threatening, therefore their unpaid bills are absorbed by the hospitals and providers thus passed on to the consumer in the form of higher charges for service.

Those who have insurance and seek services are living longer. "As Americans live longer with chronic illnesses, the definition of good health that can be financed through insurance has been dramatically expanded" (Schaeffer, Leonard D.). This also translates into people expecting

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