The Rise of Health Care Cost



The health of people in a country is very important because it makes the country more productive. The more healthy people are in a particular country the more productive they are. Country’s with poor health care services tend to lag behind in matters of development. It is the mandate of the government of any country to ensure excellent citizens health by providing healthcare centers. However, over the last decades there has been rise in the cost of health care in different countries. This rise is due to the high cost of turnover in hospitals. Majority of hospitals are spending a lot of money in employing and training hospital staffs. This study will narrow down to the causes of high cost of healthcare services in our hospitals. The study will also look at the effects of high health care cost to the citizens and the Government. In addition, the study will examine on the improvements that have been put in place to meet the high demand of health care services due to improve technology. The study will also determine how technology has improved healthcare services. At the end of this study on healthcare, many aspects of health will be covered. The main objective of this study is to show how quality healthcare programs have helped majority of people in their day-to-day activities and the effects of high cost of health care services.

Objectives of the study

  1. To identify the reasons for high cost of healthcare
  2. To identify the impact of technology on health care cost.
  3. To examine different healthcare programs developed to ensure improved and quality healthcare services
  4. To identify the impact of high healthcare cost on patients and the government
  5. To identify the measures developed to reduce the cost of health care services to patients

Literature review

Reasons for high health care cost

The main aim of the study was to determine the reasons for increased cost of health care. In this research, the following were the findings. Several factors have led to rise in the cost of healthcare. These factors have hindered patients from accessing quality health care services from hospitals and health care institutions. Majority of people interviewed identified the following as factors the main causes of increased cost of health care. First, is the use of new costly technologies and drugs (Finkler, Ward & Baker, 2007). This is the leading factor that has caused health care to increase. There use may be appropriate or inappropriate but in each case, they increase the heath care cost. An example of appropriate but costly treatment is the usage of fibrinolysis or angioplasty in treatment of ML before the 1980s. When the treatment of ML started, it was less costly but less effective. Many new and costly treatments for particular illnesses have been invented. Despite their invention, they are not effective but they only provide marginal advantages. An example is the use of lower lumbar spinal fusion in treating chronic low back pain. Many medical experts think that this treatment is ineffective or they are over used (Macintosh, 2009).The use of these costly treatments varies from one geographical area to another. They also vary from physicians practices in a geographical area. For some disorders like coronary artery disease the health outcomes are not better in places where adjusted health spending is high than in places where it is low. However, corporate and governmental subsidization at least removes some geographic disincentives to health care use. This has caused increase in the usage of health care services. The cost of health care has increased due to these inventions of expensive drugs for treatment. In addition, the technology used in hospitals has led to the increase of health care cost (Finkler, Ward & Baker, 2007).

Another factor identified is the increase in the cost of health care goods and services. The cost of drugs has increased. There is also an increase in the cost of developing new drugs. The cost of developing new drugs decreases the economic incentive. Some drugs have high cost of development but they have low profits potentials. A good example is the development of drugs to treat rare diseases. An increase in the cost of drugs has led to increase in the cost of health care (Macintosh, 2009).

The other factor is the high administrative costs. Administrative costs have increased tremendously. Most of the administrative costs are generated by private insurance and underwriting and marketing processes that do not improve medical care generate most of the costs. However, an affordable Care Act will provide limitations on the amount that a private insurance can use in administrative costs. In addition, the existence of several private insurance plans in one geographic area increases health care provider’s costs by making processing complicated and time consuming (Macintosh, 2009).

Another factor is the increase of physician fees. Physicians are being compensated more than other professionals are all over the world. The reason why physician fees are high is the high cost of medical education. The cost of medical education is very high compared to other professionals. This high cost of education adds direct to the health care sector in form of physician fees. This is later transferred to patients making the cost of health care to increase (Gray, 2009).

The other factor is the marketing of new drugs and devices. When new drugs and devices are developed there is need to put them in market. This is done through advertisement. The cost of advertisement for new drugs is very high due to the type of technology used. This cost of advertisement causes the cost of health care to increase because patients have to pay for this cost indirectly.

Another factor is overuse of specialty care. The rate of specialist care is increasing because of the decreasing number of primary care physicians and the increase in desire of patients to see specialists. Specialist care is more expensive than the primary care. To see a specialist you have to pay higher fees because they do extra testing compared to the primary care. The evaluation and treatment of a patient who could have required single primary care physician may need more than one specialist (Gray, 2009).

Another factor that has increased the cost of health care is the malpractice costs. This issue of malpractice adds to the cost of health care directly or indirectly. Direct cost consist of malpractice insurance premiums paid by physicians, health care institutions and the medical and drug and device manufacturers. The health care revenues must pay for these premiums and they cause the cost of health care to increase.

Solution to high cost of health care

From the results in this research, there is no simple formula of reducing the growth of health care costs. Different stakeholders have recognized many areas where a common ground for reducing health care cost can be found. Health care cost can be reduced by decreasing the reimbursement for care used. During the provision of health care, strategies can be formulated to decrease the amount of payment involved. They include the following. Lowering hospital fees through government and private sector intervention. This two can negotiate to lower the fees in health care institutions. This can be done through subsidization of the fees charged on patients (Gray, 2009). If the government and the private sector can intervene, it will reduce the cost of health care to patients. In addition, it will make health care services affordable to everybody in the society.

Another way is to reduce the use of specialist care and encourage the use of primary care. Primary care is cheap compared to the specialist care. Measures can be used to help increase the use of primary care, which is less costly. Some of these measures include patient-centered medical home model, primary care practitioners who will coordinate and integrate all the aspects of medical care. In addition, proposals on measures to increase the supply of primary care practitioners have been developed. They include shifting more funds of residency programs to primary care training and making primary care more attractive to medical students (Gray, 2009).

Another one is the formation of Accountable Care Organizations. These are integrated organizations of health care providers. They come together and agree to be accountable to the costs and quality of health care for a specific group of beneficiaries assigned to them. Their reimbursement is based on the measures of quality health care cost reductions for their beneficiaries instead of the volume of services provided. These organizations can use different methods of payments for its own providers.

Enhancing competition in providers of insurance to patients. This will lead to competition for subscribers and later lower the charges. Competition will be effective in lowering costs and maintaining quality health care if it is between large organizations. For example, insurance organizations can compete for contracts from employers like corporations or the government. Health care providers like practitioners and hospitals can compete for contracts with the insurance companies. However, competition has set backs because it results to multiple systems of claim submission and evaluation that requires a lot of time from providers and their staff. Competition will increase administrative burden of the health care system. The most important aspect with competition is that it will lead to decreased cost of health care. It will also lead to quality and standard health care from the providers (Gray, 2009).

Health care cost can also be reduced through elimination of unnecessary care. This type of care does not improve the outcome of the patient. It is difficult to recognize and eliminate unnecessary care but when recognized it should be eliminated to reduce the burden of health care cost to the patient. To recognize unnecessary care you need to conduct a study on comparative effectiveness and cost effectiveness to identify the best practice. Comparative effectiveness research can evaluate areas other than drugs like effects of exercise, physical therapy  from different providers and systems. Educating and monitoring providers may decrease practice variation and raise the cost effectiveness. Excellent coordination of services between providers will make evaluation and treatment efficient. It will also avoid unnecessary expenses to patients. Reducing these expenses will lead to a decreased cost of health care.

In addition, there is need for transparency in the health care and insurance institutions. These institutions should avoid fraud and corruption. Their responsibility is to control anything that can increase the burden of health care cost to the patients (Gray, 2009). Provided these institutions act responsibly by avoiding corruption and all means of fraud the burden of health care cost will reduce. In conclusion, the above measures will reduce health care cost and ensure there is quality health care in our institutions. Governments should enforce them and they will find it easy to address the issue if health care burden.

Impact of technology on health care

Today technology is affecting all aspects of the modern world. It is clear that every industry is affected by the hi-tech revolution. This impact of technology is more apparent in the health care and medicine sector. Technological breakthroughs have revolutionilized delivery of health care services. Modern technology has changed the structure and organization of the medical field. There has been widespread adoption of electronic medical records, advanced bio-medical engineering and technology in health sector. Delivery methods of healthcare services are changing at an increasing rate (Spekowius &Wendler, 2007).

Medical technology is without doubt indispensable to the health of people and improvement of quality of life. The widespread adoption of electronic system for storing health records has resulted in significant reduction in cost to health care. It has also made health care to be effective and efficient in delivering services. The records are kept in databases that can be accessed in different areas in the facility (Dick, 1991). Not only does it save time in transferring records from one department to another but also enhances better coordination of management. Reduced medical errors in the health care administration have reduced possible cost and lawsuit to these facilities. In addition, patients do not have to suffer as a result of medical errors. Technology has ensured efficiency in this field.

By providing new machines, technology has ensured that health care is more effective in fighting new diseases. These machines have helped cure many diseases that were once thought to have no cure. The machines have pro longed the lives of those patients suffering from chronic diseases. Technology and the machines that are invented every year have helped improvement of research on some disease and drugs for these diseases. New medicines have saved the lives of many people. Production of these medicines is attributed to the rise in technology to health care setting. The use of chemotherapy in helping cancer patient is an example, of these machines. A patient can be treated without having to be operated in any case. It has led too better treatment with minimal suffering to the patient being treated (Spekowius &Wendler, 2007).

Healthcare has been able to analyze information that users search online. Search engines such as Bing, yahoo and goggle have helped to predict medical trends accurately. Information technology has revolutionarized health care. Information in these engines can predict where flu is most likely to occur. This has enabled healthcare to control such scenarios from happening. Conversely, information technology has helped patients to consult a doctor at far distances. An amateur doctor in a rural place can use the internet for consulting on what course of action should be taken pertaining a certain circumstance (Dick, 1991). A doctor can access the information of a patient easily unlike the traditional ay were papers would be stacked so high such that finding medic records of a patient would be cumbersome. The practice of doctors consulting with patients and other doctors through texts, emails, videos or in conference facilities is known as telemedicine.

Technology through social media has boosted health care in many ways. Health care facilities are reaching patients in remote areas using social media. Health care can reach to a wider population at once through social media such as Facebook, twitter, radio and TV stations. Hospitals are using social media to keep contact with a patient. The hospital can ask questions and get answers immediately (Dick, 1991). Patients do not have to cover long distances anymore to get this consultation. Conversely, health care has been able to launch public awareness campaigns on certain topics through these media. The campaigns help the society to perform community outreach. HIV/AIDS campaign is a good example when it comes to public awareness campaigns. Social media has helped it to be a success.

Impact of high health care cost to patients and the government

High healthcare cost has several effects to the patients and the government. In government, the high cost has led to increased government spending resulting to a high GDP. This high cost has forced the government to channel funds for other sectors to health care sector. Patients are paying a lot of money to get health care services. Patients pay most of the health care cost burden. It has prevented them from getting quality health care services. Some are not able to pay hospital bills that forces government intervention.

Programs developed to ensure quality health care

Different programs have been developed to ensure there are quality and affordable health care services all over the word. A good example is the World Health Organization (WHO). These programs ensure patients acquire the right treatment and drugs in hospitals. The help in distribution of health care devices and drugs. However, some programs are for rescuing victims during calamity while others provide awareness of particular disease like HIV/AIDS in different countries. These programs have proved to be effective in ensuring quality health care services all over the world.

Findings and discussion

Generally, there is increase in cost of health care in different countries especially in US. Health care cost has increased because of several factors like increase in the price of drugs. However, researchers have invented different methods of reducing the burden of health care cost. These measures have played a vital role in relieving patients the burden of hospital and health institutions bills. Technology has great impact in health care. It has made it easy to cure diseases that were considered incurable (Dick, 1991). In addition, technology has eased the process health care awareness to patients through the social media. Countries with cheap access to medical services tend to be more productive compared those with expensive health care services. Citizens need to get quality and cheap health care services. The following chart shows the increase in the cost of some services offered in health care institutions between 2007 and 2014 in US. The values are in million US dollars.




variables 2007 2008 2009 2010 2011 2012 2013 2014


Personal health care 7000 8000 9000 10000 11000 12000 130000 14000  
Hospital care 3000 4000 5000 6000 7000 8000 9000 10000  
Professional services 2000 3000 4000 5000 6000 7000 8000 9000  
Physician and clinical services 1000 2000 3000 4000 5000 6000 7000 8000  
Dental services 3000 4000 5000 6000 7000 8000 9000 10000  
Other professional services 2000 4000 6000 8000 10000 11000 12000 13000  
Nursing care facilities 500 6000 7000 8000 9000 10000 145000 150000  


The following figure shows the graphical presentation of the above data in the increase of health care cost.




From the above table and graph, it is clear that health cost keeps on increasing. The data was collected from various aspects of health that included personal health care, hospital care, professional services, physician and clinical services, dental services and nursing services. The data was collected from various health institutions in US. Collected data was analyzed and compiled to get average values on the cost of health care. The cost of health care has continues to increase from 2007 to 2014 as per the above data. However, it is clear that there is improvement in the health care sector because of the different services offered to patients. A good example to show there has been increase in health care cost is the dental services. In the year, 2007 dental services were at 3000 million dollars but it increased to 10000 million dollars in 2014. This is a clear example to show how health care cost has increased in US (Gray, 2009).

The qualitative techniques used

The research used three qualitative techniques. They include doing participant observation, forming focus groups, and in-depth interviews (Boyce 2006. Participant observation was important in collecting data from health institutions. In-depth interviews were used to collect data from individuals (Watzlawik, 2007. In this research there was need to collect data from individuals in health institutions. In this circumstance, this method of qualitative data collection was suitable. Focus groups are effective for collecting data on cultural norms of individuals or the whole society. These data provides a broad overview of the phenomenon under investigation (Watzlawik, 2007). There is a huge difference between these three methods of qualitative data collection. Participant observation makes the researcher to participate in data collection through observation while in-depth interviews force the researcher to carry out interviews on individuals to get the required data (Boyce 2006. Focus groups entail research on particular norms of an individual or the whole society.

Advantages of participant observation

  1. It affords to access the back stage culture of the people.
  2. It allows detailed description and interpretation.
  3. It improves the quality of data collection and facilitates development of new research questions.

Weaknesses of participant observation

  1. Sometimes the researcher may not be interested in what happens.
  2. One must rely on key informants to get the required data
  3. The observer interprets the data on his own and this can lead to poor interpretation leading to loss of the data meaning.

Advantages of in-depth interviews

  1. Much comprehensive data is collected through other methods of data collection like surveys.
  2. Interviews make the researcher to interact with the participants.
  3. Interviews make the process of recruiting and scheduling easier and faster.

Disadvantages of in-depth interviews

  1. There are challenges in training the interviewers on how to answer the question
  2. It is time consuming since it involves the researcher to go interviewing individuals to get the required data.
  3. Interviewers may give incorrect information due to fear.

Advantages of focus groups

  1. There is authority role of the moderator in the groups
  2. There is interaction of group participants
  3. There is involvement of the client under investigation in the research
  4. It is easy to involve participants in the study

Disadvantages of focus groups

  1. The dominant people in the group may influence focus groups
  2. Focus groups are no effective when dealing with sensitive topics
  3. Focus groups may influence the responses given depending on the environment they create.


The cost of health services has increased tremendously all over the world. From the above explanation, various reasons have led to this increase in health care cost. However, measures have been invented to curb this huge health care cost. Technology has played a vital role in ensuring quality and affordable health care services.


Macintosh, E. (2009). Applied methods of cost-benefit analysis in health care. Oxford[u.a.: Oxford Univ. Pr.

Finkler, S. A., Ward, D. M., & Baker, J. J. (2007). Essentials of cost accounting for health care organizations. Sudbury, Mass: Jones and Bartlett Publishers.

Gray, A. (2009). Applied methods of cost-effectiveness analysis in health care. Oxford[u.a.: Oxford Univ. Pr.

Brent, R. J. (2003). Cost-benefit analysis and health care evaluations. Cheltenham, UK: Edward Elgar.

Spekowius, G., & Wendler, T. (2007). Advances in healthcare technology: Shaping the future of medical care. Dordrecht: Springer

Institute of Medicine (U.S.)., Dick, R. S., & Steen, E. B. (1991). The computer-based patient record: An essential technology for health care. Washington, D.C: National Academy Press.

Watzlawik, M., & Born, A. (2007). Capturing identity: Quantitative and qualitative methods. Lanham: University Press of America.

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