For the past decade, health care costs have continued to rise, which can be attributed to an aging population, more expensive drugs and higher utilization. In particular, improving medical technologies have been the primary factor of growing costs, says Paul Fronstin, director of the health research program at the Employee Benefits Research Institute.
Among many industries, technological improvements often force down the costs, but with health care, those improvements have created an unprecedented demand.
"What we see happening is more new technologies tend to be more expensive than older technologies, and that tends to create demands that didn't exist," Fronstin says. "For instance, before a certain drug was available, if there was no drug to treat an illness, people went untreated, so now we're creating new health care services, rather than replacing them."
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