How Did Healthcare Costs Rise So Sharply?

Let’s first gain some historical context for American healthcare. Let’s use the American Civil War era to do it. Because of the destruction caused by modern tools and outdated practices combined with battle, terrible results were the result. The majority of fatalities on both sides of that conflict occurred after a battlefield wound was sustained, rather than as a direct result of fighting. To begin with, care of the injured was sometimes severely delayed since discharge of the injured often moved at the pace of a snail. Second, most wounds required amputations and wound-related procedures, which frequently caused severe infections. So, you may survive combat wounded only to die at the hands of medical professionals whose well-intended efforts were typically rather risky. In a time before prescription antibiotics, high mortality tolls might also be attributed to common illnesses and disorders. Over 2% of the population of the United States died from all causes in total, which was over 600,000 deaths.

For a different perspective and to bring us up to more modern times, let’s go back to the first part of the 20th century. The knowledge and treatment of specific illnesses, new surgical techniques, and medical professional education and training all saw consistent advancements after the Civil War in American medicine. But for one of the most important components, the greatest treatment that doctors could provide their patients was a “wait and see” approach. Medicine could repair bone fractures, perform risky surgical procedures, and other conditions (now increasingly practiced in sterile surgical facilities), but it was not yet possible to use medication to treat serious illnesses. The bulk of fatalities continued to be caused by curable diseases including measles, pneumonia, scarlet fever, TB, and/or related complications. Medical professionals were becoming more and more aware of cancer, heart and vascular issues, and other diseases, but they had almost no tools at their disposal to treat these ailments.

This very basic knowledge of American medical history aids in our realization that, up until quite recently (around the 1950s), we had almost no inventions with which to treat serious or maybe mild illnesses. Because there was nothing to treat you with, medical visits were limited to emergencies and, as a result, costs were obviously minimal. The second factor that has become a major driver of current healthcare expenses is that the medical services provided were paid for out-of-pocket. There was no health insurance, and it was certainly not paid for by another party like an employer. Costs were the obligation of the person and also maybe a few charitable organizations that, among other things, supported free medical clinics for the underprivileged and the destitute.

How does health insurance coverage affect medical expenses? It has a significant influence on healthcare costs. After the Second World War, businesses began offering health insurance to employees and their families as a way to avoid pay freezes, recruit, and retain workers. This created a sizable pool of funding for healthcare that appeared out of nowhere. A clever America was motivated to increase clinical research study efforts by money thanks to the schedule of billions of dollars from medical insurance pools. Finding a cure for almost everything has become incredibly profitable as more and more Americans are covered by Medicare, Medicaid, and other expanded experienced healthcare benefits in addition to exclusive, employer-sponsored medical insurance due to increased federal government funding. Additionally, this is the main reason why we have such a wide range of therapies available today. I don’t want to convey the idea that this is a bad thing. Consider the tens of millions of lives that have been saved, lengthened, and also made more effective as a result. However, increasing pressure on healthcare prices is unavoidable with a financing source extended to its current magnitude (hundreds of billions of dollars yearly). Doctors provide access to the most recent medical technology, medications, and surgical procedures, and many of us need and want these things. There is therefore more healthcare to spend our money on, and up until fairly recently, many of us were insured and the expenses were mostly paid by a third party (government, companies). This is the “perfect storm” for rising healthcare costs since costs are generally rising and the storm is intensifying.