Population Growth and Technology Impact on Health Expenditures - Article Example

Does Population Growth and Technology Impact on Growth of Health Expenditures Lecturer: The US health expenditures have seen a booming rise since the mid 1970’s (Rettig, 1994). With increased population growth and advanced medical technologies, there is still no sight that health care expenditures will come down any time soon. Does technology impact on growth of health expenditures? According to Zuckerman and McFeeters (2006), technology changes and medical improvements are the number one reason as to why health care expenditures have been on the rise in the US since the mid 1970’s. Other factors that have led to the increase in health care expenditures have been categorized as either “minor influences” or “new factors to explore”. Apparently, between 1993 and 2003, the health care expenditures in the US grew from a total of $900 billion to $1.7 trillion which was equivalent to an increase from 13.3% of the total gross domestic product (GDP) to 15.3%. When these values were compared to the health expenditures in Canada, Germany, Japan and the UK, it was realized that the US had the highest health care costs and expenditures (Zuckerman and McFeeters, 2006). The table below summarizes the trends in health care expenditures. Source: Zuckerman and McFeeters (2006) As noted by Rettig (1994), new and improved medical technologies have been seen in areas such as: the development of new treatments for terminal conditions such as AIDS, cancer and diabetes; treatments related to untreatable acute conditions such as coronary artery bypass graft; clinical progress for patients with mental illness and/ or substance abuse; procedures for treating secondary diseases within a disease, for example erythropoietin which treats anaemia in dialysis patients. Moreover, technological equipments such as sonogram machines and dialysis equipment together; new procedures such as laproscopic gall bladder surgery and new treatments such as statins to control cholesterol and cardiac catheterization have also contributed largely to the total health care spending. Despite that, it was noted that technology can equally increase the standard costs for treatments and it can also lower the standard unit costs of treatments so as to allow more people to benefit from the treatments being offered. For example, cardiac catheterization has increased the standard cost of treatments since it is highly used to treat and monitor heart attacks while laproscopic gall bladder surgery has lowered the unit cost of treatment so as to allow more patients to undergo the procedure as compared to using the open gall bladder surgery (Zuckerman and McFeeters, 2006). Does population growth impact on growth of health expenditures? The aging population has been increasing rapidly over the past few years. This segment includes individuals who are aged 85 years and older. It is estimated that this age segment shall continue to rise in the next 25 years; hence causing an increase in the amount of spending needed to provide care to the segment. In 1982, approximately $2.5 million was used to care from the aged population. The values increased to $6.9 million in 2012 and to date the values are still increasing (Ray et al., 1987). According to the World Economic Forum (2013), it is estimated that the cost of Medicare in the USA will increase to $24 trillion in the next 75 years and apparently this value will be higher than the taxpayer’s income. Zuckerman and McFeeters (2006) noted that the aging population will be a factor of consideration in the coming years due to the fact that its costs are seemingly increasing. This notion was also supported by Smith et al. (2000) stating that, despite this being a variable that has not yet outrageously aggravated, it still constitutes to the total health care expenditure in the US. Outcomes of increased health care expenditures Increased health care expenditures have had an effect (positive and negative) on the following: Increased costs of treatment: New medical technologies have to be funded by the public and not only by the government. Therefore, a majority of these costs are always shifted to consumers and/ or patients through services such as doctor visits, hospital days, insurance covers and premiums. In a survey that was conducted, it was revealed that employer based premiums had risen each year since 1996. An individual’s average annual premium was approximately $2,196 in 2011; while that of a family was $4,968 (EHealth, 2011). These costs escalated to an average annual premium of $5,884 for an individual’s cover and $16,351 for a family cover in 2013 (KFF, 2013). Hence, this clearly projects that medical technologies have a huge impact in increasing health spending. Inflated medical prices: Medical prices have also slightly increased due to the adoption of medical technologies in health care (Smith et al., 2000). Impact on the national economy: The rise in health care spending has had an impact on the national economy. This is due to the reason that there exist policies that advocate for the payment of health care insurance and premiums of employees by the company. As such, some companies prefer to hire part time employees as compared to full time employees so as to avoid the payment of these health care insurance covers. A good example is Starbucks - it was projected that the amount they spent on health premiums was higher than the amount the needed to purchase raw materials (Sood et al., 2007). As such, this affects the national economy since companies may prefer to downsize so as to retain their profits. Increased job opportunities: It was estimated that increased health care expenditures over the past years stimulated employment growth in a number of care segments such as pharmaceuticals and care. In a 2001 report, it was revealed that 1.7 million jobs were created in the health care segment due to increased health care spending (Sood et al., 2007). Increased care spending improves health care and productivity: According to Murphy and Topel (2006), increased health care spending led to better health and productivity of US citizens. This is due to the reason that better technologies and treatments were being developed to cater to acute and chronic conditions. Conclusion At the present state, there is very little that can be done to contain the health care expenditure costs. However, some efforts such as: the government regulating the pricing of care and medical prices can effectively assist to reduce the escalating health care expenditures. In addition to that, other strategies that could help to manage health care spending include: consumer directed health care plans; chronic care management and pay for performance (Zuckerman and McFeeters, 2006). With regard to caring for the aged population, there is very little that can be done to reduce the amounts that are being projected to that segment. However, the government could advocate for individuals to save money to cater for their old age retirement needs so as to reduce over reliance on government aid. Bibliography EHealth. (November 2011). Cost & Benefits of Individual and Family Health Insurance Plans. Web. Retrieved from: http://news.ehealthinsurance.com/_ir/68/20125/2011_Cost__and__Benefits_Report_FINAL.pdf Kaiser Family Foundation (KFF). (August 2013). 2013 Employer Health Benefits Survey. Web. Retrieved from: http://kff.org/report-section/2013-summary-of-findings/ Murphy, K.M., and Topel, R.H. (2006). The value of health and longevity. Journal of Political Economy, 114(5). Rettig, R.A. (1994). Medical Innovation Duels Cost Containment. Health Affairs, 13 (3), pp. 7-27. Ray, W. A., Federspiel, C. F., Baugh, D. K., & Dodds, S. (1987). Impact of growing numbers of the very old on Medicaid expenditures for nursing homes: a multi-state, population-based analysis. American journal of public health, 77(6), pp. 699-703. Smith, S.D., Heffler, S.K., and Freeland, M.S. (July 2000). The Impact of Technological Change On Health Care Cost Spending: An Evaluation of The Literature. Web. Retrieved from: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/tech_2000_0810.pdf Sood, N., Ghosh, A., and Escarse, J. (2007). The Effect of Health Care Cost Growth on the US Economy. Office of the Assistant Secretary for Planning and Evaluation, US Department of Health and Human Services (September). Web. Retrieved from: http://aspe. hhs. gov/health/reports/08/healthcarecost/report. html World Economic Forum. (January 2013). Will an aging population bankrupt us? Web. Retrieved from: http://forumblog.org/2013/01/will-an-ageing-population-bankrupt-us/ Zuckerman, S., and McFeeters, J. (March 2006). Recent Growth In Health Expenditures. Web. Retrieved from: http://www.commonwealthfund.org/usr_doc/Zuckerman_recentgrowth_914.pdf?section=4039 Read More