Price of Healthcare - Essay Example

In 2005, the average person spent close to $6,000. Medical bills were of little concern to families in the 1950’s but the medical technology seems archaic by today’s standards. Half a century ago, a person’s lifespan was approximately 68 where today, it is a decade longer. Those in their 40’s today can reasonably expect to see their 80th birthday. Most, presumably, would prefer to spend more money to live longer which is what has happened. From this perspective, healthcare could be considered a good return on an investment.

The benefits and costs of healthcare are not unrelated yet many do not understand why they have to pay more than they did equivalent to the 1950’s or even to 1999. People generally consider healthcare costs to be a commodity in the same way they think of electricity or gasoline where price has little bearing on the quality of the product. The medical system of the U.S. does experience waste from sources such as bureaucratic expenses generated from insurance companies and unproven procedures that are expensive and are yet to be proven effective.

The main reasons for the increasing medical cost increases, however, are visible and obvious. They can be readily observed in hospitals and in people’s home medicine cabinets as well. CAT Scan and MRI machines, specialized neonatal apparatus and defibrillators in addition to numerous other high-tech hospital gadgets such as artificial hearts are very expensive. Prescription prices have also risen which adds to the total costs related to healthcare (Leonhardt, 2006). The price of prescriptions are not determined by production costs or by monies allocated to researching new drugs.

Competition, projected volume of sales as opposed to actual sales and estimates of revenue produced by the product are among other factors drive drug prices.