The costs of healthcare have increased dramatically for consumers and insurers, particularly since the 1980s. For example, in 1980 Americans spent $247.3 billion on healthcare. By 1999 that figure had more than quadrupled to $1.2 trillion, and it reached $2.3 trillion in 2007, according to one study.
One reason costs have risen is that Americans are living longer than ever before, and older people generally require more healthcare. In 1900 the average American had a life expectancy of about 50 years. In 2003 the average life expectancy was about 77.6 years. During the 20th century, the number of persons aged 65 or over increased 11 times. The elderly comprised only 1 in every 25 Americans in 1900, but represented 1 of every 8 Americans in 1994. By 2006 persons aged 65 or older represented 12.1 percent of the U.S. population. When older Americans join an insured group, the whole group’s healthcare risks—and costs—rise accordingly.
Advances in medical technology have also driven up the costs of healthcare and insurance. Medical procedures such as computerized tomography (CT) scans, magnetic resonance imaging (MRI) scans, and arthroscopic surgery are commonplace today, but they did not exist until the 1970s. Although such new technology sometimes allows healthcare providers to introduce less-invasive and less-expensive treatments, more often it provides new but expensive ways to treat conditions that were previously untreatable.
Increased use of healthcare has also led to a growth in healthcare costs. Americans are more likely than ever to seek professional health services for medical problems. For example, in 1991 there were an estimated 669.7 million visits to doctors' offices, or 2.7 visits per person. In 1999 there were an estimated 757 million visits to doctors' offices, or 2.8 visits per person. Many Americans today seek medical care for treatment of sexual impotence, attention-deficit hyperactivity disorder, and other problems that previously were not always considered health problems. Just as increased demand pushes prices up in other industries, increased demand for healthcare leads to escalating medical costs.
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