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What are the causes of rising health care costs?

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There are a number of causes of rising health care costs in the United States.  Let us look at a few of them.

  • Lack of awareness of costs.  In our system, we are not really aware of what our health care costs.  We do not know what the various options will cost when we go to a doctor.  We do not really know how much they will cost us because we pay for them very indirectly, through health insurance plans that we don’t even pay the full cost of.  Because we don’t know what things cost, we have no incentive to keep costs down.
  • Increased levels of technology.   There is much more technology and there are many more kinds treatments available to us than there were before.  This means that we can now spend more on health care than we could in the past.
  • Population growing older.  This is a major factor.  As people age, they need more medical care.  The American population is aging.  This means that there is more need for health care per capita than previously.
  • Population growing fatter.  We are also becoming less healthy in many ways.  Our obesity epidemic leads to many health care costs that would not exist if we were healthier as a population.

Thus, the rising costs are a combination of the incentives (or lack thereof) that we face, the kinds of treatments available, and our rising need for those treatments.

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