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Issue Brief -- Cost Drivers in Health Care

Almost two dozen factors are contributing to the high cost of health care, according to a new issue brief from the Alliance. To download, click here.

Drafted by Jack Ebeler of Health Policy Alternatives and supported by a grant from Eli Lilly, the four-page publication divides the drivers into three groups: national demographic and economic factors, determinants of the health of individuals and societies, and health system factors.

Among the demographic and economic factors, the paper notes that as a country’s national per capita income goes up, so does per capital health spending. Similarly, the mix of diseases in a population and the relative health of the population can produce marked differences in health spending from one country to the next.

Factors determining the health of individuals and societies can make a big difference in health spending the paper reminds us. It’s well known that a person’s diet and exercise level can affect the person’s health. But the person’s surroundings matter too. Exposure to contagious disease, toxic hazards, a dangerous working environment and violence can drive up health costs. In addition, women and men have differing health care experiences over a lifetime – differences that can affect costs.

The bulk of the cost drivers cited in the issue brief fit under the "health system factors" umbrella. These include the supply of health care providers (the greater the supply, the greater the spending). Consolidation among providers dampens competition and can cause price increases. Our present fragmented health care delivery system leads to inefficient care and duplication of services, the paper notes.

 

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