Health Care Economics Essay Example | Topics and Well Written Essays - 1250 words

Health Care Economics - Essay Example However, with advances in technology scientists came out with the discovery of solar panels. Solar panels are just a one-time investment and once set up they’ll provide free electricity for their entire life. What simply happens is that the solar panels take up energy from sun rays and convert that energy to provide electrical power. This simple example goes on to show how technology has brought down the cost of various products. Health care has been one of the most important issues of the current time. With the ever increasing health care costs, people from all walks of life have been complaining they cannot afford proper treatment. Workers in America have so hardly been hit by the high health insurance premium payments that they often forego getting a recommended checkup rather than paying huge sums of out of pocket money. So why it is that business technology saves a lot on costs but when it comes to healthcare, new technology drives up costs? There are a lot of reasons to this and we’ll look at each in turn. Firstly, we’ll focus on simple demand and supply factors. The demand for health care has increased over the years as worldwide population increases exponentially. However the supply side hasn’t moved at the same pace as there are a limited number of medical technology producers. The demand supply gap is one of the main reasons why healthcare costs have gone up. Another important reason why health care technology has increased health care costs is that medicinal technology is different than other forms of technological improvements. When a new medicinal technology is launched in the hospital market, a new progress towards diagnosis of a disease or its treatment is made. However in other fields, technological innovation is just a continuation of a previous product to make it better. Such an innovation’s primary objective generally is to achieve an increase in the product’s efficiency and therefore reduce its overa ll cost. However when it comes to medicinal technology, a new purpose is accomplished every time a technological advancement is made and so the investment and the return (payback) process starts from the beginning every time. To recover such investments, patients have to be charged high so at least the hospitals breakup if they don’t make a profit. This is one of the main reason why patients end up paying high medicine bills as the recovery cost of technological improvements is ultimately passed on to the final consumers. Health care technology requires a lot of research. The major chunk of expenditure that’s made by pharmaceutical and health care equipment companies is on research and development of new products and technologies. These figures are often so significant that they take up to seventy percent of a company’s annual budget! It’s pretty obvious now that when such companies will develop their products, they’ll have real high costs attached to them. The latest machines for chemo therapy and drugs to contain cancer have very high costs associated with them. These high costs simply reflect the amount spent on research and development towards the innovation of these drugs and machineries. Whether a particular technology will reduce or increase the amount spent on healthcare will depend upon several critical factors. One of such