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Why Do Healthcare Costs Keep Rising?

One reason for rising healthcare costs is government policy. Since the inception of Medicare for retired Americans and Medicaid for low-income people, providers have been able to increase prices with the knowledge that the government, not the individual, will be paying the bills.

A number of factors are responsible for the hike in health insurance premiums. One, the Insurance Regulatory and Development Authority of India (IRDAI) changed the terms and conditions of health insurance policies through its recent circulars. Previously, the maximum waiting period for pre-existing diseases could be four years.

Average family premiums for employer-based health insurance have jumped 47% in the last decade, outpacing wage growth and inflation

Where does that money go? According to the U.S. Centers for Medicare and Medicaid Services (CMS), healthcare spending can be broken down into 10 categories:

• Hospital care (31%)
• Physician services (20%)
• Prescription drugs (10%)
• Other personal healthcare costs (5%)
• Nursing care facilities (5%)
• Dental services (4%)
• Home healthcare (3%)
• Other professional services (3%)
• Other non-durable medical products (2%)
• Durable medical equipment (2%)