Rising costs in healthcare are a product of both greedy pharmaceutical corporations and poor consumer behavior from everyday citizens. During the economic collapse and dawn of financial recession in 2008, costs for healthcare reportedly rose almost 7 percent (approximately double the inflation rate). However, as the years continued and the economy began its road to recovery, inflation rates in the double digits quickly became commonplace. Healthcare has become so expensive, that in 2014 an immense $2.2 trillion was spent; representing the gross domestic product at a rate of 17 percent (Dennis, n.d.). This growing issue in the economy can be attributed to several key factors, including the extension of the standard human lifespan, increasing rates of unhealthy habits and lawsuits related to medical malpractice, misuse and/or of the industry’s products and labor, federal programs that are subsidized, trials for new drugs, and increasing state and federal government regulations (McGrath, 2014).
There exists a great number of reasons to justify the theory of greed on the end of medical drug companies. For instance, in the United States, the costs of these drugs are not regulated by any means through the federal government, allowing companies to “set wholesale prices based mostly on what competing brand-name drugs costs and whether their new drug is better” (Johnson, 2015). Conversely, many drug companies introduce successful products that do not possess any sort of competition that would naturally hold down the prices (Dennis, n.d.). Finally, many companies believe their drug to be of extreme value if their product is designed to treat rare or specific conditions such as “a particular genetic mutation, so they might help just hundreds or thousands of patients” (Johnson, 2015).
As stated by the National Center for Health Statistics, the average American of the modern time possesses a life expectancy of approximately 78 years. In the previous century, this number was nearly 3 decades less, averaging somewhere in the 50s. When humans live longer lives and their bodies become fragile and weak in their golden years, costs of healthcare increase substantially. In fact, almost 33% of the entirety of the Medicare budget, nearly $500 billion per year, is funding the health care of patients in the final year of their extended life (Dennis, n.d.).
While the population may enjoy an additional number of decades to their life, the majority of individuals do not take care of their bodies during their bodies’ best years; taking on lifestyle choices such as “fast food, stress, smoking, and drinking” (McGrath, 2014). Approximately 50 percent of the costs for medical treatment of chronic diseases including heart disease are directly attributed to smoking, obesity, and other physical problems associated with bad habits. In total, these chronic diseases make up the vast majority of all of healthcare’s costs, up to 75 percent.
Nearly half of the entirety of healthcare spending is statistically found to be wasteful, totally to nearly $1.2 trillion per year. While some of this spending is the result of defensive medicinal behavior, a great deal points to the fault of consumers who go for routine care to the emergency room when there is in fact no emergency. According to the McGrath Insurance company, it has been found that both federal healthcare programs (Medicare and Medicaid) have been found to underpay healthcare practitioners and providers. Consequently, consumers of the system are charged higher and suffer larger premiums.
One final issue that stands as a way of defending rising healthcare costs are the trials associated with bringing a new medicinal drug to the pharmaceutical market. As of 2006, the estimated cost tabulated by Health Affairs suggests anywhere between $500 million all the way up to $2 billion to introduce a new drug. Adjusted for a decade of inflation, that cost increases to $600 million up to $2.4 billion.