Economics

From 1970 to 1993, we can observe an exponential growth in almost all the categories of national health expenditure. Some of the categories have initial year growth rate even exceeding 100, hence showing the doubling and tripling of expenditure figures. Growth rates of nursing home care, home health care, prescription drugs and program administration have gone as high as 127, 529, 161 and 169 respectively. However after 1997, the expenditure in all the categories was increasing at moderate rates but they are on the rise constantly. As we approach the year 2003, we observe the decrease in growth rates of most of the categories except public health activities which has grown at 164. The level of total NHE, NHE per capita and NHE as percentage of GDP has increased YoY but their growth rates have stabilized at 5.76, 4.43 and 2.68 respectively, showing a slump in the growth rates.
The cost of healthcare has increased because of extensive utilization by people however the price of medical care services can also strongly be related to the research and development costs and efforts. This is the era of extensive scientific research where millions of dollars are committed and success rate is very low. Every 4 of 5 researches in medicines fail. The research which gets successful is patented hence the company gets monopoly in controlling prices. (U.S. Health Care Today, 2010)
NHE as percentage of GDP has doubled because of two factors. First is the ageing population of US. According to statistics, the US population grew at 1.2 while people above 65 grew at 2 and those above 75 grew at 2.8. Secondly, increasing number of US population is getting obese. In 2003, 34 of the population is obese as compared to 13 in 1960. Obesity is associated with heart diseases, cancer and diabetes.

Considering the trends, we can observe decrease spending in prescription drugs as many drugs are given the over the counter status. Moreover people are more inclined to buy low cost generic drugs. We also observe drastic increase in public health activities because of increased subscription in Medicaid and Medicare program due to ageing population. This increase in public spending will also boost spending in nursing home care, home health care and hospital care.