Sample Healthcare Term Paper on Cost of Illness in the U.S.

The cost of treatment of diseases in the U.S. has escalated. The diseases include AIDs, Hepatitis, chronic lower respiratory disease, and cancer among others. The cost of treatment of the diseases is devastating to governments, families, and societies. Furthermore, there are economic and social impacts of these diseases that include the loss of manpower, trained skills, and expertise, and family support. The losses are especially detrimental to social and economic progress and development. Healthcare spending ranks as one of the top budgetary allocations for countries across the world. The United States is not an exception: it categorizes healthcare as part of mandatory spending and in the more than $4 trillion 2018 budget, the U.S. allocated 27% to healthcare that includes Medicare and Medicaid. Individuals paying for health care through out-of-pocket plans and health insurance companies also incur trillions for treatments and management of dangerous diseases.  The complexity, cost, and nature of dangerous diseases are a threat to the U.S., given their economic burden to the government and individuals in the country.

Health Care and Health Care Funding in the U.S.

Among the defining features of the U.S. health care system are its complexities and fragmented nature, which make it costly, especially in the treatment and management of dangerous diseases. Currently, around six forms of health cover modalities are implemented in the country. The first is Medicare, which caters to citizens aged above 64 years and patients with end-stage renal disease (Rice et al., 2014). As the largest buyer of healthcare for citizens, Medicare covers about 50 million people the bulk of who suffer from dangerous diseases (Rice et al., 2014). Aside from Medicare are Medicaid and Children’s Health Insurance Program both of which are state-administered programs that provide care for poor mothers, children, and disabled adults. The last category is the Veteran Affairs, Tricare, and Indian Health Services, and they cover veterans, active military personnel, and their families, and natives respectively (Rice et al., 2014). Part of the U.S. health care system is private payers who comprise of private insurance purchasers, uninsured and employer-sponsored health coverage. Employer-sponsored insurance constitutes the majority of individuals with private insurance cover. Such covers come from employee and employer premiums. The fragmented nature can, therefore, be defined as a hybrid system.

Funding the U.S. health care system is an economic burden that the citizens, federal, and state governments incur particularly in the treatment and management of dangerous diseases. The growing and aging population means that the nation will dig deep into personal, national, and state coffers to fund the health care system. Fichtner (2014) posits that Medicaid is the largest health insurance provider in the U.S., serving more than 69 million people enrolled in the system. Projections by the Congressional Budget Office (CBO) indicate that the number is set to increase by 30 percent by 2024, fueled by the expansion provisions introduced by the Affordable Care Act in 2010 (Galea, 2017). Expanding health care through Medicaid, Medicare, and other services means that the government will spend more on health care.  According to the Department for Professional Employees (DPE) (2016), the U.S. government spent $1,026 per capita on pharmaceuticals and other nondurable medical care. The bulk of the pharmaceutical spending went into the purchase of drugs for dangerous diseases such as Hepatitis, HIV, and cancer among others. The expenses were channeled through government-sponsored healthcare programs, such as Medicare, Medicaid, and Veteran Affairs, Tricare, and Indian Health Services.

Dangerous diseases take up the bulk of funding for government-sponsored health care programs come from taxes, which burdens the economy and taxpayers. According to the Congressional Budget Office (2020), the U.S. government spent $1.2 trillion on health care. Out of the amount, Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) and veterans’ medical care got $644 billion, $427 billion, and $80 billion, respectively. Moreover, the government lost $234 billion in tax revenues from healthcare-related tax provisions that included more than $152 billion in taxable income exclusion from employers’ contributions for medical insurance premiums and medical care (Congressional Budget Office, 2020).  With a projected 30% increase by 2024, the government will not only spend more but also lose more in tax exemptions, which aside from prompting budgetary deficits, would also reduce investment in projects and programs, which would result in greater economic development and progress.

Cost of Illness

Health care costs for the treatment of dangerous diseases and other forms of care have been rising over the years in the U.S. Most of these costs are prohibitive, particularly for people from a low-income background. Worsening the economic burden of health care are chronic and dangerous diseases, some of which may not be curable, while others are extremely expensive to treat or manage. The cost of treating the diseases is a threat to the nation, individuals, families, and societies, given their resource-intensive demands. Among the diseases with the highest economic burdens in the U.S. include AIDS, Hepatitis, chronic obstructive pulmonary disease, and cancer.


HIV and AIDS treatment is quite costly. The cost of treatment of the disease presents significant consequences for the United States economy. Among the high cost is the reduction in life expectancy. According to Schackman et al. (2015), HIV infection at 35 reduces the life expectancy of an individual down to 64 years compared to 73 years for the uninfected. Longer life expectancies are related to better parenting, investment in individual and children education, as well as a generally longer contribution to nation-building. According to Turan (2009), empirical evidence from studies shows that increases in life expectancy have a significant impact on national growth and development because they promote the transfer of skills and higher human capital contributions. Reduced life expectancy through HIV infection, development of AIDS, and eventual death, therefore, robs the nation in opportunity cost, skills, tax contribution, possible investment, and social capital.

There is great concern in the lifetime medication cost for the treatment and management of HIV. U.S. health care is especially expensive, a fact worsened by chronic conditions, including HIV. According to Rosenberg (2018), the triple therapy treatment introduced as the gold standard for the management of HIV costs $39,000 a year. With about 1.1 million people living with HIV in the country, about $20 billion is spent on HIV medication in a year (Rosenberg, 2020). The cost is particularly a concern in the U.S., considering that similar drugs within the triple therapy regimen cost only $75 in Africa (Rosenberg, 2018). Even for the rich, the cost of health care is high, which puts those from low-income backgrounds at a disadvantage as they may not only be unable to afford the cost of treatment but also pass the infection to others. Rosenberg (2018) points out that HIV therapy works by suppressing the virus to the point that it is undatable in the patient’s blood, making the patient healthy and noncontagious. However, the high cost of the drugs in the U.S. makes it hard for patients to access the drugs, making them contagious. Worse is that most of the infected do not know their HIV status and may unknowingly spread it to others. These factors are likely to worsen the HIV burden on the economy.

The lifetime costs of HIV/AIDS are high, thus causing devastating effects on the economy. Schackman et al. (2015) suggest that the discounted mean lifetime medical cost of HIV/AIDS is $326,500. 60% of the cost is spent on antiretroviral medication, 15% on medication for chronic diseases, and opportunistic infection prophylaxis, while 25% goes to nonmedical costs (Schackman et al., 2015). Undiscounted lifetime costs are at $597,300 compared with $197,100 (see graph 2 for comparisons) undiscounted lifetime costs for individuals uninfected by the virus (Schackman et al., 2015). The nation and the individual lose in lifetime savings from HIV-related medication. These savings would otherwise be appropriated for investment, human, and social capital development and progress.

Graph 2. The lifetime cost of HIV infection. Source (Schackman et al., 2015).


Aside from HIV/AIDS, hepatitis is another dangerous disease with a high cost of treatment among diseases in the United States. The cost of health care is estimated to account for 50 percent of the nation’s GDP in 2082, and the cost of treatment of hepatitis is also bound to increase with the ever-increasing cost of health care in the U.S. (Henry, 2018). Part of the reason for the high cost of medication for hepatitis and other diseases in the U.S. is the higher use of new drugs, particularly those developed through biotechnology. Evens and Kaitin (2015) argue, “While biotechnology has led to breakthroughs in patient care—through the development of biologics—it has also driven up health care spending on drugs.” Hepatitis treatment has come a long way from the pegylated interferon and ribavirin treatment options that came with a host of side effects and only being available as an injection (Evens & Kaitin, 2015). Although biotechnology has introduced more effective treatment options, the options are extremely expensive. A pill of Sovaldi, one of the drugs used for treating hepatitis C, costs $1,000, bringing the total 12-week treatment course to $84,000 (Henry, 2018). Other drugs used for treating the disease, such as Harvoni and Technivie, cost $94,500 and $76,653, respectively (Henry, 2018). Moreover, some drugs, including Sovaldi, require longer treatment durations of up to 24 weeks, which double the cost of treatment for patients. The huge demand and the cost of bringing the drugs to the market drive the drugs’ high cost. It costs pharmaceutical companies about $900 million to develop and bring hepatitis drugs to the market. Moreover, with only a few companies developing hepatitis drugs, there is little competition to drive down prices.

Hepatitis prevalence makes to its cost and threat to the nation. Henry (2018) highlights that since the U.S. has 3.7 million people living with chronic hepatitis C, it would cost the U.S. government $310 billion to treat patients with Sovaldi at $84,000 per patient. Such a cost is prohibitive even for the government, which spent a total of $360.7 billion on drugs in 2014 (Henry, 2018). Aside from being a lifelong illness that reduces the patient’s life expectancy, hepatitis can lead to other severe diseases such as kidney failure and cancer. According to Henry (2018), hepatitis C is associated with the development of severe liver problems, such as liver cirrhosis and cancer. Statistics indicate that hepatitis C-related deaths in the U.S. jumped from 15,106 in 2007 to 19,659 in 2014 (Henry, 2018). Heightening the burden and cost of treatment of hepatitis is the difference in the disease’s strains. There are about six genotypes of the disease, and while some respond well to treatment, others are more aggressive and resistant to treatment. Such a scenario causes even more economic strain on the health care system, the government, the individual, society, and family because it necessitates looking for alternative treatment and management of the disease’s symptoms, which are usually expensive.

Chronic Obstructive Pulmonary Disease

Like hepatitis, chronic obstructive pulmonary disease (COPD) has great financial implications for the U.S. economy. The disease is a debilitating respiratory condition that has become one of the top three killers in the U.S. COPD has resulted in “15.4 million physician visits, 1.5 million emergency department (ED) visits, and 726,000 hospitalizations each year” (May & Li, 2015, p. 5). With such high prevalence rates, individuals with the disease become less productive and cause organizations to incur high employee turnover rates. According to Guarascio et al. (2013), “half of all COPD patients (51%) state that their disease hinders their ability to work.” The inflexible work culture in the United States, where employers do not give paid leaves, means that workers continue to go to work even when they have COPD. Such employees are less productive and have high turnover rates. Both organizations and employees, therefore, incur economic losses caused by the disease.

Perhaps the most debilitating economic cost of COPD is the treatment burden. The direct and indirect costs of COPD in the U.S. in 2010 were about $50 billion, with $30 billion being attributed to direct cost while $20 billion to indirect cost (Guarascio et al., 2013). Direct costs refer to payments for the treatment and management of the disease. On the other hand, indirect costs are estimates that stem from the disabling effects of the disease largely evidenced by days off work. Estimates put the cost of treatment at $6141 per patient per year, with expectations that the costs will rise given the disease’s progressive nature, including lung impairment (Kirsch et al. 2019). The cost of hospitalization further drives the cost of managing the disease: it is estimated that it costs $6000 more than hospitalized non-COPD patients (Torabipour et al., 2016). Given that it is difficult to manage COPD out of the hospital, hospitalization is the main driver of the cost of COPD treatment. Hospitalization also drives the patients’ poor economic outcomes given the severed source of income, reduced productivity, and high cost of medication in the U.S.


Of the aforementioned dangerous diseases, cancer ranks among the top killers in the U.S. and has a negative economic impact. It was estimated that 609,640 Americans would die from cancer in 2020, bringing the number of deaths to about 1,670 a day (Yabroff et al., 2011). Such loss is alarming to the economy, which loses trained personnel. Cancer is the second most common cause of death, and the economic impact of the loss of life is massive (National Cancer Institute, 2020).  The loss to the economy in human capital and last rites impacts the economy, given the loss of investment and skill transfer.

One of the defining features of cancer is pain that patients experience at the onset, development, and during the treatment of the disease, which has crippling economic consequences. Sometimes the pain is so extreme that it incapacitates the patient. In a survey on the cost of pain caused by cancer, Gaskin and Richard (2011) found that the total incremental cost of health care due to pain ranged from $261 to $300 billion. Per the authors, “The value of lost productivity is based on three estimates: days of work missed (ranging from $11.6 to $12.7 billion), hours of work lost (from $95.2 to $96.5 billion), and lower wages (from $190.6 to $226.3 billion)”. The individual, society, organizations, and the economy in general, therefore, as a result of the disease.

The economic burden incurred in the direct and indirect cost of treatment of cancer cause greater concern. The economic burden is expected to soar due to anticipated growth and aging of the population as well as improvements in survival. The further economic burden will come from trends in treatment patterns and costs of care following a cancer diagnosis. The direct medical costs associated with patient care that includes hospitalizations, surgery, physician visits, radiation therapy, and chemotherapy/immunotherapy, often paid by insurance covers and out-of-pocket payments, are among the heaviest for cancer patients. According to Yabroff et al. (2011), the “mean monthly net costs in the elderly were $1,923 for female breast and $5,074 for female lung cancer patients in the initial phase of care.” While the cost of care for the two cancers tapered in the continuing care phases to $184 and $678, respectively, the cost increased in the last years of life jumping to $5,238 and $7,710 per month, respectively (Yabroff et al., 2011). Aside from the costs being out of reach of the majority of the poor in the country, the economy, family, and society incur the opportunity costs of investment in different sectors.


Health care is expensive across the world, and each country implements a different system. The U.S.’s hybrid system is unique in that it allows about six different input and health care management methods. However, the complexity of the system and the lack of universal health care in the nation are responsible for high-cost health care. A robust and well-functioning health care system is important for the health and economic development of a nation. For the U.S. AIDS, hepatitis, and COPD are among the most prevalent diseases with high economic impact. These diseases rob the country of human and social capital, cause losses in skilled employees, and prevent the transfer of skills. The diseases, additionally, present threats to the well-being of a country. Moreover, the economic burden of treatment and management of the disease amounts to billions of dollars, which, when channeled into an investment, can lead to greater economic development and progress. The intricate nature of the U.S. health care system, faster adoption of new drugs, and the absence of competition in the development of some drugs are among the reasons for the country’s exorbitant health care costs. Preventive measures, particularly for AIDS and hepatitis, can go a long way in reducing the economic burden. Additionally, prevention helps in capturing the opportunity cost lost throughout an individual’s lifetime in managing and treating the diseases and reducing life expectancy.





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