RISING HEALTH

CARE COST

PRESENTATION BY
RANJUSHA R
MHA, AIMS
Increasingly Expensive Medical
Technology
 The increasing use of technology in medicine
clearly is driving up the cost of health care.
 The problem is that both patients and physicians
perceive technology as offering substantial
value to medical care, and often it undeniably
does so.
 A Rapidly Aging Population
 Old people use a lot of health care resources, because
the aging process even in the best of circumstances is
accompanied by health problems.

 While economists can argue about whether the aging

population or medical technology accounts for the bulk
of the increase in medical spending, the fact remains
that technology won’t cost much if there aren’t many
patients that need it.
 Since the elderly will
always need more health
care technology than the
young, a rapidly aging
population acts as a
potent multiplier of the
cost of that technology.
 These two factors go
hand in hand.
 CHANGING LIFE STYLE
Unhealthy life styles are resulting in Life
style disorders which requires long term
treatment. These diseases consume time
as well as money.
 MALPRACTICE SUITS
 Doctors seeking to avoid lawsuits have an
incentive to over treat all kinds of maladies.
 Doctors are forced to practice so called
Defensive Medicine.
 USE OF PRESCRIPTION
DRUGS
 Prescription drugs represent the fastest
growing health expense and costs are
projected to grow at 20 to 30 percent each
year over the next several years.
 New drugs have been developed to better
treat many conditions. In some cases,
these new drugs replace older, less
expensive medications.
 Developing these new drugs takes time and
money, as does obtaining regulatory
approval to market the drugs. In fact,
bringing a single drug from the laboratory to
the local pharmacy may take 15 years and
cost up to $400 million. Most research and
testing costs are passed on to consumers.
 Once drugs are introduced, they are then
marketed to consumers as well as
providers. Pharmaceutical companies
spend billions of dollars per year on direct
consumer advertising.
 As a result, many patients ask their doctors
for expensive, brand name drugs when a
generic equivalent is available that works
just as well.
 Heartburn
 Ranitidine - $19.64 (Generic drug)
 Zantac - $110.72 (Brand name drug)
 Diabetes
 Metformin - $31.98 (Generic drug)
 Glucophage - $73.84 (Brand name drug)
 TREATING UNINSURED
The growing number of uninsured has two effects
on health care premiums:
 The people most likely to drop insurance tend to
be those who are healthy and believe they can
get along without it. As these individuals leave
the insurance system, those left within the
insurance risk pool tend to have more health
problems. This causes premiums to increase
more rapidly for those maintaining coverage.
 Uninsured individuals often delay treatment until a
condition worsens and becomes more expensive to
treat. When they do seek treatment, it tends to be in
the most expensive place — the emergency room —
and these services often go unpaid. These
uncollectible costs are shifted to insured
patients, creating a “vicious circle” of increased
health care costs and decreased coverage for
those who cannot afford the higher rates.
HEALTH CARE – A LUXURY
GOOD

 It refers to any good that wealthy people

demand in disproportionately greater amounts
than less wealthy people.
 Richer societies, and richer people within a
society, have higher expectations for health care
than less wealthy people.
 We increasingly demand medical fixes -- and
have the technological capacity to provide them
-- for problems that our grandparents would
have just tolerated.
 Ex: Lasik eye surgery, Hip replacement
DEATH IS SOME TIMES A LOW
COST OPTION
 Any medical success merely begets some
later medical expense, particularly if we
continue to spend so much on end-of-life
care.
 Ex: A patient treated for some heart
disease or cancer die of something else or
the same disease later.
 BAUMOL’S DISEASE
 As societies become richer, labor-intensive
endeavors, such as health care, become
increasingly expensive relative to goods
and services that can be produced using
less labor.
 RECOMMENDATION

 Focus on Prevention rather than cure

 Go for generic drugs
 Adopt a healthy life style
 Avoid hospitalization when possible
 Use the emergency room for emergencies only
 Don’t be afraid to ask if there are alternatives to
treatment or surgical procedures.
 Going online: Providing health and wellness
information online helps reduce health care cost.
 Health information systems: Go for EMR as paper
records not only waste time but also lead to
duplication of effort, creating more costly errors.
 Shared decision making : Doctors spend the time
needed to explain to patients the tradeoffs
between potential treatments.