Reasons for the High Cost of Health Care

Health-care spending is spiraling upward: According to data from the Kaiser Family Foundation, in 2008 Americans spent over three times the amount they spent in 1990, and over eight times what they spent on health care in 1980. The increases in health-care spending have translated into similar increases in health insurance premiums, which have grown over 120 percent over the last decade.

Technology

• The high costs of new health-care technologies account for over half the increase in health-care costs, according to the Hastings Center. Examples of recent new technologies include magnetic resonance imaging (MRI technology), biotechnology, including gene therapy, and new advances in the drug industry.

The Wealth Effect

• Americans pay more for health care because we can. Americans have a higher standard of living than the world at large, and have accumulated more net wealth that is available for health-care spending.

Longevity

• People are living longer--and they are living longer with chronic health conditions. Since technology allows people to survive an initial heart attack, for example, they are living longer with chronic heart disease--which costs money to manage. They may require expensive procedures from advanced pacemakers to heart transplants. The Centers for Disease Control and Prevention estimate chronic health-care expenditures make up 75 percent of total health-care spending.