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Reasons of Rising Healthcare Cost Assignment Help

The project subject is about ‘'Reasons of Rising Healthcare Cost''.

You need to write the following parts only:

- The role of supply and demand

- The role of innovation and patents

- The role of new technologies and procedures; new drugs, etc

- Lawsuits increase health care costs (tort reform).

- Role of third party payment system (insurance).

- RecommendationIncrease in Health Care Cost in UAE

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I. Abstract

Spending on health is growing faster than the rest of the global economy. Healthcare cost is the actual cost of providing services related to the delivery of health care, including the cost of procedures, therapies, and medications.

The increase in health care costs have captured the attention of everyone and is considered a major global challenge. There are certain number of factors that has contributed to this trend.

This paper will discuss on the cost of health care in UAE. Further to that are the factors that causes health care to rise and its impact specifically in the UAE Region. This paper will also show the initiatives that the UAE has adopted.

Based on the data collected, it can be assumed that the top determinants of the increase in healthcare not only in UAE but globally are the aging population, the new technologies and treatments, and lastly the increase in cost of healthcare goods and services specifically pharmaceutical drugs.

Furtherly, the UAE government have taken actions to provide both adequate medical personnel and contain cots. The government entities of UAE have adopted a series of initiatives to resolve these challenges and guide the sustainable growth of the healthcare sector.
It can be concluded that the UAE healthcare sector is set to continue its impressive growth in the coming decades.

II. Introduction

Health, in humans, is the extent of an individual's continuing physical, emotional, mental and social ability to cope with the environment. Health is a human right and everyone need to prioritize efficient, cost-effective specifically in primary health care as the path to achieving universal health coverage and the sustainable development goals (Soucat from WHO). Many factors influence health status and a country's ability to provide quality health services for its people.

Humans are dynamic beings whose state of health can change from day to day or even from hour to hour. Better health is central to human happiness and well-being. It makes an important contribution to economic progress, as health populations live longer, are more productive, and save more.

Healthcare cost are rapidly rising nowadays. According to a 2017 study published in the Journal of the American Medical Association, the healthcare spending in the US nearly rose a trillion dollars from 1996 to 2015. The study further tried to established how five determinants namely population aging, disease prevalence or incidence, medical service utilization and service price and intensity associated the increase in healthcare overtime. The study authors have found out that service price and intensity, including the rising of pharmaceutical drugs, made up more than 50% of the increase.

As sited by Kaplan and Porter in their article, there are number of factors that contributed to the increase in healthcare costs. The topmost factors are the aging population and the medical technology.

Concluded in the journal of Michael Chernew et al., the relationship of medication adherence and the income of the people may account for a portion of the observed disparities in health across socioeconomic groups. Rising cost may worsen disparities ad adversely affect health, particularly among patients in low-income areas.

As per to Dr. Schreck, the healthcare costs in the United States are disproportionately high for many reasons. Few of these are: the use of expensive new diagnostic tests and treatments, contribute to the high cost and health care, use of new tests and treatment does not necessarily result in better health, administrative cost, mostly related to private insurance, account for 20 to more than 30% of health care costs, reducing doctor fees is not likely to reduce healthcare cost very much, and lastly the aging population has contributed greatly to the increases in healthcare costs but may do so as baby boomers age.

Further to the US healthcare costs, in 2017 it was $3.5 trillion and comprising 17 percent of the country's Gross Domestic Product. Expected to rise by 19.7 percent (or $5.7 trillion) GDP by 2026. That makes healthcare one of the country's largest industries. The cause of massive increase is mainly the government policy and the lifestyle changes of the people.

In UAE, the healthcare sector has expanded over the past four decades and will continue to grow over the next few years. UAE was ranked with the best health care sector in the Middle East, while also faring high scores on a global scale. In global survey, the UAE was ranked at 10th place, and scored higher than Norway, Canada and Sweden.

As presented in the latest report from the US-UAE Business Council, the UAE healthcare sector is expanding rapidly to meet both the evolving needs of a growing population and the nation's ambition to become a regional medical tourism hub. This expansion is challenging the ability of UAE to provide both adequate medical personnel and contain cots. The government entities of UAE have adopted a series of initiatives to resolve these challenges and guide the sustainable growth of the healthcare sector.

According to Ben Stanley, the UAE has actually seen incredible growth in the last few years, with the mainly oil owned economic climates of the region doing better compared to many in weathering the challenging monetary climate of recent years. Nevertheless, as many developing and developed countries alike have come to realize, increasing accessibility to modern technology, food and comforts commonly brings with it boosts in certain conditions and health care expenditures in tow. The UAE as actually felt such a pinch quite really in the fast few years, with their expenses on health care climbing to US$ 1,200 each annually. While this could be considered as great news for healthcare providers and the pharmaceutical industry, the expanding prices and the underlying illness causing the fast rise in health investing have major ramifications both for the lifestyle of the citizens as well as the monetary wellbeing of the nations as they attempt to make certain access to high quality solutions.

As mentioned in the study by Willis Tower Watson., the UAE healthcare costs are recording a sharp upturn. It rose by 9.9 per cent in 2017, where costs rose by a fifth. The rise is 20 percent higher than in Singapore, which is similar in size to the UAE and also depends heavily on expat workers.

The healthcare cost may continue to rise by as much as 9 percent in anticipation of a rapidly aging population and because of above average medical inflation rates and the implementation of mandatory health insurance, according to a new report from Alpen Capital. The growth is being driven by expanding populations, a high prevalence of non-communicable diseases, rising treatment costs and the increasing penetration of health insurance. In its GCC healthcare industry report, the current healthcare expenditure is expected to reach $104.6 billion in 2022, registering a compound annual growth rate of percent from an estimated $76.1 billion in 2017.

The role of supply and demand

One of the main reasons leading to the rise of price in the market of healthcare in the UAE could be due to the issues related to supply and demand of the services. On one hand, the demand rises. On the other hand, the supply falls. The healthcare sector of United Arab Emirates faces the increasing cost due to limited services while struggling from the hiked demand. The cost for the services is often not paid in full by the consumers. This creates problem from the demand side (Elliott et al. 2017). Another issue faced by the demand side of the health sector of the United States Emirates is the lack of medical research that gets conducted. This hinders the path towards further progress, which is absolutely essential. The supply side also faces a lot of trouble with the issues of price rise. There are suppliers who are extremely powerful from the market point of view. The price of the market power is something that needs consideration. Global market considerations are the trick to deal with the issues of the price rise related to supply and demand. Maximization of profits is another issue that is associated with price rise and the supply and demand graph of the healthcare sector in the United Arab Emirates. The demand of healthcare arises from the fact that people are desirous of being healthy instead of sick. Healthcare demands heavy investments. Today's spending would benefit people in the future. Demand is not elastic. Health is something that cannot be used for marketing purposes. Demand and supply are interwoven. This could lead to market failure situations. Consumers tend to make decisions regarding the choices of health care. They might opt in for visits to the clinics, for making surgeries and for various other purposes. The demand arises as per the need. Some may opt for vaccination for small children. The supply does not always meet the demands. The price rises in the absence of required supplies.



The role of innovation and patents

Innovation with respect to the human capital is an important consideration that is made towards the rise of price. Skilled professionals are an important requirement for the health care services and that demands heavy costs. UAE has taken many initiatives to this regard which includes a big number of nations spread across the world. To this regard a lot of collaborative efforts are also involved (Alva et al. 2015). This includes media, various organizations both entrepreneurs and educational ones. That involves a lot of cost. Systems of support are also coming up which leads to a rise in the price. This comes in the form of mentors and other factors like incubators. Education system is getting geared up ad UAE is doing a lot towards global innovation. Abu Dhabi for instance is doing its part to help out innovation progress further ahead in the healthcare services in the United Arab Emirates. Rise in price is associated with the heavy expenses in the advancement of technology or the expansion that takes place in the market. Competition also plays an important role for the rise of price. Costs that are involved with that of the labor with respect to the health care services are also important elements that affect the rise of price.

The role of new technologies and procedures; new drugs, etc

Technology gets hiked up with the advancement in the culture of the medicines and healthcare services. The introduction of drones facility demands heavy costs. That leads to the rise in the price of the services involved in the healthcare sector in the United Arab Emirates. Easy distribution of drugs is facilitated via this technology. Technology has made it easier for patients as information about various cases of the diseases that are extremely chronic in nature are now transferred easily. This relieves the patient from any sort of extra effort. However, the implementation of this technology demands heavy costs. This becomes a factor leading to the rise in the price of the healthcare sector in the United Arab Emirates. The introduction of telemedicine in the United Arab Emirates is another example of the advanced technology, which demands heavy investment (Rosella et al. 2016). This involves digitization, which transports medicine to remote places. This again is a place of heavy investments leading to the rise in price. The dearth of high-skilled practitioners in the field of medicine is taken care of by the United Arab Emirates and this again demands heavy expenses. This becomes a factor leading to the rise in the price in the healthcare sector in the United Arab Emirates. UAE introduce the E-health cards to enhance the medical services further. It uses the concepts of e-signature. The project is worth US$55 million. Around 440,000 cards have got issued. Online prescriptions are in action. A new system is supposed to get introduced to improve safety of patients and enhance services. E-claims have also been introduced in the UAE. It is supposed to reduce the burden of the paper work. It is meant to foster the processes of transactions. Transparency would also be enhanced. The Health Information Systems of the UAE have many projects in hand. Management is to be made more efficient. The authenticity of the users accessing the database is enhanced further

Lawsuits increase health care costs (tort reform)

The impact of tort reform over the increase of the costs of the healthcare service in the United Arab Emirates could be visualized from various perspectives. Healthcare costs are affected by several malpractices, damage and lead to rise in price in the healthcare services. The different risks that are involved also lead to an increase in the price of the healthcare services. Liability associated with the medical services leads to an increase in the costs of the healthcare services (Delpech and Phillips, 2015). This primarily happens due to various kinds of medical errors that get introduced. The tort reforms normally affect the healthcare when a big number of services are affected by it. This also affects the quality that is given out and which is extremely important from the perspective of healthcare services. The tort reforms also affect the intensity of treatment and which in turn again affects the price leading to a hike in the costs. The costs that are involved with various reforms and liabilities are also affected by the tort reform. Insurance costs affect the price rise in the healthcare services of the United Arab Emirates. The power of the market also affects the hike that happens in the prices.

Role of third party payment system (insurance)

Many issues are being faced by the United Arab Emirates surrounding health care services. The recent inclusion of the expatriates is having issues related to global health insurance. A large number of companies get involved with factors associated with insurance coverage. The insurers who deal locally serve the native people. All along, the costs involved were relatively low. Free services of healthcare were also very much enjoyed by the people of the United Arab Emirates (Grosse et al. 2016). Next, the government adopts the federal plan for health insurance. However, new legislation over the globe, will lead to hike in the prices that are associated with the insurance. The price rise of insurance in the healthcare sector prevents sufficient investments in the IT sector. The decrease in the ratio of doctor-to- patient ratio is a major factor leading to rise in price. The health insurance network of the UAE and the expenditures associated with is reaching peaks. Dubai's Mandatory Health Insurance Law 11 of 2013 is fully operational. This law makes it mandatory for residents and the visitors to have a minimum coverage of health. In the year 2012, there was no mandatory health insurance. The private insurance expenditure was high for Dubai in proportion to the total expenditure of health at the rate of 33%. A look into the premium report reveals the fact that the total premium is 6.5 billion AED. The Emirates accounted for around 4.6 million who had their names registered for health insurance coverage.


Ensuring that the healthcare services are efficient is extremely important from the point of view of the health care services in the United Arab Emirates. A large amount is spent on the healthcare as per the budget report of the United Arab Emirates. Some trillions of dollars are spent. However, as per the budget report some billions that are spent on the services of the healthcare go waste. This is so because improvement never occurs that are expected from the services. Efficiency means using making the best out of whatever is available. The United States makes it a point that wastage is avoided. This revolves around various issues like use of energy, resources like the different ideas and many others. Efficiency is also required in the use of technology in the field of medical science. Efficiency is required with respect to the allocation of the various resources. Efficiency is also needed while dealing with the social affairs (Atasoy et al. 2017). At the same time, it is also extremely important to ensure sustainability while dealing with the various healthcare services.


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