This is a subject of debate. The current 'pet peeve' for everyone around here is the pay given to non profit health insurance companies executives. But as this article points out, the real causes of the increases are (based on the increases from 2004 to 2009):
1. Hospitals - 33%
2. Doctors - 19%
3. Prescriptions - 10%
For hospitals it should really read 'chronic illness and prices of hospitals and doctors and medical advances and discoveries and technology'. Its those pesky medical advances that cost a lot of money. Face it, how much do you think an MRI machine or a CT machine or a 3D mammogram machine costs? What about service, calibration, and maintenance to ensure it is working correctly? These all add up. I think an MRI machine is a few hundred thousand a minimum and I could be off by a '0' for some other machines.
If a new technology becomes available with a new way to diagnose or treat something, why shouldn't we use it? Hospitals should be able to offer the latest technology and treatments to patients.
Chronic illness is another big cause. We are living longer due to the medical advances but we aren't cheap. Many illnesses that were a death sentence before are now expensive but chronic. I haven't checked recently but my medical expenses are probably around the $200,000 annually these days. Not including the year where I had chemo for five months which was probably significantly higher.
Doctor costs are cause for 19% of the increase? How much of that is not higher salaries but increased malpractice insurance costs? I would wonder about that split.
Prescription drugs only 10%? I believe that the biggest increases happened in the 1990s when so many new drugs were launched. I would hope then that as patents expire that the availability of generics would push that proportion down.
Apparently administrative costs which includes pay to board members is only responsible for 5% of the increases.
Hmmm... shall we stop the medical advances and stop having people live so long with chronic diseases? Cancer is now considered a chronic disease in many cases. Or do we figure out a way to balance this all out? Or just stop getting sick?