Question

Discuss the magnitude of the financing problem in medical care. What are the major reasons that medical spending is absorbing an increasing share of national output?

Answer 1

Medical care spending is absorbing an increasing share of national output, at least up until the last two or three years. The reasons for high and rising spending include

1) the increased use of medical technology, : the high cost machines cause more spending

2) rising medical input prices

3) an aging population : median age of US is 38 years so theres many people who are old and need medical treatments more often

4) the cost of medical malpractice litigation,

and most importantly,

5) the third-party payment mechanism.