Premium Aging: The Growing Cost of Nursing Home Care

About 0.4% of the entire population of the United States lives in nursing homes, making up one of the most high-risk medical groups in the country [1]. It is a common misconception that nursing homes are the best option for an elderly person with complex medical needs or dementia. While they are able to provide continuous care, the quality of the facilities is often poor, and many are understaffed and underfunded, causing them to crowd more patients into smaller rooms and spend less time with each individual resident. Many nursing homes and assisted living facilities in the United States are common breeding grounds for communicable diseases that put patients’ fragile immune systems at risk. To make matters worse, many high-end skilled nursing facilities won’t accept Medicaid coverage, creating a divide between those who can afford clean accommodations and high quality care and those who cannot. The transition itself can also be a detriment to an elderly person’s health, since it is often an abrupt and jarring change that may cause them to feel a loss of self and autonomy [2]. 

But nursing homes haven’t always been the only option. For centuries, people have lived in multigenerational households with parents, children, and grandparents all under the same roof, which allows elderly individuals to grow old peacefully in a familiar home, surrounded by family and friends who can provide the care and attention that they need. However, when independent societies like the United States put more emphasis on people owning their own homes away from family in the 1950s and 1960s, they started pushing the elderly out of family homes and into nursing homes [3]. Now, in the 2020s, multigenerational housing is on the rise again, as people feel the pressures of inflation and the cost of living crisis, and are turning to sharing homes with their extended family to save money on mortgages, rent, and nursing home fees. 

This idea is also the basis of the Medicaid-funded home and community-based care program that allows elderly people to live at home and retain their community connections while also being supported by a skilled medical team and receiving at-home care as needed. However, current budget cuts to Medicaid have left 700,000 on the waitlist for these home care programs and more people are being forced into nursing homes every day [4]. This problem is exacerbated by the flux of Americans returning to in-person work after the pandemic, with many opting to pay out of pocket for nursing home care for their loved ones, since they cannot take care of them any longer and the home-based care programs have decades-long waitlists. 

Additionally, many working-class Americans plan their finances under the assumption that they will be living at home for the majority of their elderly years, but many conditions, such as stroke or dementia, are difficult to predict and can have a very rapid onset. In one study, about 83% of adults reported that they would have great difficulty paying for the estimated cost of one year in a nursing home or one year of at-home assistance, which is between $60,000 and $100,000 [5]. This means that if these individuals needed the assistance of a nursing home, they would likely have to apply for Medicaid, which many higher-end nursing homes will not accept as payment, or rely on family or friends to partially fund their stay. The reality is that many elderly people are forced to enter overcrowded and underfunded nursing homes as a last resort either due to their financial situation or their family’s inability to care for them. The United States needs to amplify their Medicaid-funded home-assistance programs in order to provide the best quality geriatric care possible and allow elderly people to enjoy the final years of their lives with their family instead of being forced to live in a nursing home. 

Reviewed by: Ayan Jung

Designed by: Ariha Mehta

References: [1] Bakx, P., Wouterse, B., van Doorslaer, E., & Wong, A. (2020). Better off at home? Effects of nursing home eligibility on costs, hospitalizations and survival. Journal of Health Economics, 73(73), 102354. https://doi.org/10.1016/j.jhealeco.2020.102354.

[2] Grabowski, D. C., Chen, A., & Saliba, D. (2023). Paying for Nursing Home Quality: An Elusive But Important Goal. Journal of the American Geriatrics Society, 71(2), 342–348. https://doi.org/10.1111/jgs.18260.

[3] ​​Ruggles, S. (2007). The Decline of Intergenerational Coresidence in the United States, 1850 to 2000. American Sociological Review, 72(6), 964–989. https://doi.org/10.1177/000312240707200606.

[4] Stedman, N. (2025, July 2). How Medicaid Cuts Could Force Millions Into Nursing Homes. Penn LDI. https://ldi.upenn.edu/our-work/research-updates/how-medicaid-cuts-could-force-millions-into-nursing-homes/.

[5] Hamel, L., & Montero, A. (2023, November 14). The Affordability of Long-Term Care and Support Services: Findings from a KFF Survey | KFF. https://www.kff.org/health-costs/the-affordability-of-long-term-care-and-support-services/.

A Growing Monster: The Secrets Behind Increasing Pharmaceutical Prices

For every dollar spent in other countries, the United States spent 2.78 dollars on drugs in 2022 [1]. This ranged from being 172 percent of the prices in Mexico to 1028 percent of the prices in Turkey. Most concerningly, this gap is only continuing to increase. This not only impacts those who must pay out of pocket for medications, but also taxpayers and businesses that have to cover the cost of federally funded programs such as Medicaid and Medicare, therefore affecting the entire economy [2]. What is causing this disparity in drug prices in the US versus internationally?

The problem is not with general pharmaceutical drugs, but a specific classification of drugs. In the pharmaceutical industry, drugs are classified as either “brand-name” or “generic drugs”. While both are therapeutically equivalent, brand-name drugs are patented and are often more expensive to consumers. In the US, brand-name drugs make up 72% of prescription spending, yet only 10% of dispensed prescriptions [3]. This 10% of brand-name drugs results in the United States having high drug prices. In fact, US prices for generic drugs are only 67% of the prices of other countries, making them cheaper than other countries [1].

Upon the creation of a drug, pharmaceutical companies are given a period where they are the only ones allowed to sell and produce their drug. After this period, generic drugs can be created and sold by other companies. Historically, this period of exclusivity was to allow drug companies to reap the monetary profits to compensate for the research and development associated with the drug. However, the monster that is the pharmaceutical industry has grown increasingly greedy, opting to sell medications at the highest possible price.

Other than New Zealand, the US is the only country that allows pharmaceutical companies to advertise prescription drugs directly to consumers. While direct-to-consumer (DTC) marketing is supposed to make the public better informed, DTC advertising contributes to a whole array of problems, including higher prescription drug costs. Pharmaceutical DTC marketing spending increased from 11.9% to 32.0% of total spending from 1997 to 2016 [4]. This does not even include the money pharmaceutical companies use for marketing to health care professionals. Overall, this enormous increase in money being spent on forms of marketing is increasing the price of brand-name drugs.

While it is evident that there is a problem with the cost of prescription medication, the solution is not yet clear. In other countries, universal health insurance systems have shifted the burden of high drug costs to the government, causing many regulations in the pharmaceutical industry. Some forms of regulations include product-by-product price control (in France), limits on insurer reimbursement prices (in Germany and Sweden), and profit control (in the United Kingdom) [5]. This resulted in France, Germany, Sweden, and the United Kingdom experiencing minimal drug price fluctuation when adjusted for inflation from 1985 to 1991, whereas in the United States, pharmaceutical prices increased at an annual rate of twice the inflation rate during this period.

The problem of high prescription costs is a result of a lack of regulation and a set of unique circumstances that set the United States apart in an unfortunate way. The use of DTC advertising increases pharmaceutical companies' spending, and thus the price of medication. The lack of universal healthcare leads to high prescription costs becoming an individual consumer problem as opposed to a national problem. If no fundamental government change is made, the price of prescription medication will only continue to grow monstrously large. 

Reviewed by: Eva Samborski

Designed by: Jennifer Liu

References: [1] Mulcahy, A. W., Whaley, C. M., Gizaw, M., Schwam, D., Edenfield, N., & Becerra-Ornelas, A. U. (2021). International prescription drug price comparisons: Current empirical estimates and comparisons with previous studies (RR-2956-ASPEC). RAND Corporation. https://www.rand.org/pubs/research_reports/RR2956.html 

[2] Baker D. E. (2017). High Drug Prices: So Who Is to Blame?. Hospital pharmacy, 52(1), 5–6. https://doi.org/10.1310/hpj5201-5  

[3] Kesselheim, A. S., Avorn, J., & Sarpatwari, A. (2016). The high cost of prescription drugs in the United States: Origins and prospects for reform. JAMA, 316(8), 858–871. https://doi.org/10.1001/jama.2016.11237 

[4] Schwartz, L. M., & Woloshin, S. (2019). Medical Marketing in the United States, 1997-2016. JAMA, 321(1), 80–96. https://doi.org/10.1001/jama.2018.19320  

[5] Gross, D. J., Ratner, J., Perez, J., & Glavin, S. L. (1994). International pharmaceutical spending controls: France, Germany, Sweden, and the United Kingdom. Health care financing review, 15(3), 127–140.  

The Disposable Dilemma: Waste in American Medicine

It’s an American nightmare. Patients are always receiving exorbitant bills with charges they never even heard of. Even after insurance, it’s hard to understand why these costs are so high. Behind this everyday occurrence lies a massive system of waste that few healthcare professionals fully comprehend, yet all contribute to sustaining.

The scale of this hidden economy is staggering. Recent analyses estimate that waste consumes between $760 billion and $935 billion annually, representing ~25% of total healthcare spending [1]. Exacerbating this cost is that healthcare waste operates largely invisible to public scrutiny.

Administrative Complexity

Administrative costs dominate the waste landscape. The United States gives $265.6 billion annually to administrative complexity [1]. Breaking this down shows how far behind America is lagging. We spend $1,055 per capita on healthcare administration, while Germany, the next highest spender, pays $306 per capita [2]. Multiple payers mean multiple billing systems, authorization protocols, and documentation requirements. Physicians sacrifice an estimated $68,000 worth of time annually working through red tape and insurance requirements  rather than treating patients [2].

Every dollar consumed by administrative excess represents care that is not delivered, a medication that is not purchased, or a screening that is not performed. Resources diverted to billing specialists and claims adjusters don't heal anyone. But the system perpetuates itself because those who add administrative burdens rarely have to bear the costs [2]. Insurers demand prior authorizations, so providers spend hours securing them. Device manufacturers label products single-use, so hospitals pay disposal fees while reusable alternatives gather dust.

Addressing healthcare waste requires confronting entrenched interests. Waste represents someone's income. Each relevant group will resist changes threatening their revenue. However, the ethical imperative remains because a system consuming 18% of GDP while leaving millions uninsured/underinsured cannot justify wasteful practices that serve provider convenience rather than patient benefit [1].

 Single-Use Devices

Walk through any American operating room and notice how much gets discarded after single use. It’s everywhere in this country.  Many of these items were reusable just decades ago. The shift accelerated in the late 1970s as manufacturers introduced plastic alternatives and marketed disposability as synonymous with sterility [3]. Somehow though, European hospitals safely reuse many items Americans discard. Studies from developing nations demonstrate that properly sterilized "single-use" devices perform comparably to new ones without increased infection rates [4].

The environmental and economic costs are huge. North America generated 1.2 million metric tons of single-use healthcare plastics in 2023, imposing costs up to $29 billion on health systems. Without intervention, plastic waste could surge 28% by 2040, pushing annual costs to $37 billion [5]. 

Several factors explain American reluctance to use reusables. Sterilization requires infrastructure like autoclaves, tracking systems, and specialized staff. Because they calculate costs differently than other nations, American hospitals often find disposables "cheaper" when labor expenses weigh heavily in the equation. Liability concerns also matter. Device manufacturers explicitly warn against reprocessing to protect themselves from lawsuits and shift risk to hospitals that choose reuse [6].

It is a difficult topic to resolve because patient safety is the most important goal. Inadequate sterilization does risk cross-contamination, but labeling everything "single-use" without rigorous evidence that reprocessing causes harm represents a different ethical failure. Banner Health saved $1.5 million annually reprocessing compression sleeves and pulse oximeters [7]. One health system saved $3.5 million over four years switching to reusable gowns while reducing environmental impact by 60% [8]. This proves that a significant sum of money can be saved through these efforts. 

An Ethical Perspective

Healthcare waste poses a justice problem as much as an efficiency problem. When preventable waste consumes 25% of spending, that money cannot serve other purposes: expanding coverage, improving access, funding prevention programs, addressing social determinants of health. The opportunity cost of waste falls disproportionately on vulnerable populations who lack insurance or face crushing medical debt. They subsidize administrative complexity they never requested and defensive practices that don't improve their outcomes. Maybe most fundamentally, waste erodes trust. When patients perceive the system as exploitative and designed to maximize revenue rather than health, their caregiver relationships suffer. 

The path forward seems clear even if it is politically difficult. Simplifying administration through standardization/consolidation, basing clinical decisions on real evidence, and evaluating single-use device designations critically all can help improve the current system. Those defending wasteful practices should demonstrate patient benefit, not provider convenience or profit potential. Healthcare resources remain precious and finite, and they should be used in service of healing rather than their squandering in service of a system that lost its way.

Reviewed by: Jiyu Hong

Designed by: Maziar Salartash

References: [1] Shrank, W. H., Rogstad, T. L., & Parekh, N. (2019). Waste in the US health care system: Estimated costs and potential for savings. JAMA, 322(15), 1501-1509.

[2] Sahni, N. R., Carrus, B., & Cutler, D. M. (2022). The role of administrative waste in excess US health spending. Health Affairs Brief.

[3] FDA (U.S. Food and Drug Administration). (2000). Reuse of single-use medical devices. Retrieved from https://www.govinfo.gov/content/pkg/CHRG-106hhrg62970/html/CHRG-106hhrg62970.htm

[4] Krairiksh, M., & Blough, S. (2005). Reprocessing and reuse of single-use medical devices used in developing countries. International Journal of Infection Control, 1(2).

[5] MacNeill, A. J., McGain, F., & Sherman, J. D. (2024). Planetary health impacts of single-use plastics in health care: A quantification of greenhouse gas emissions and alternative strategies. The Lancet Planetary Health, 8(1), e45-e54.

[6] Health Canada. (2023). Reprocessed single-use semicritical and critical medical devices. National Collaborating Centre for Methods and Tools.

[7] Unger, S., & Landry, A. (2020). Reprocessing and reuse of single-use medical devices and the role of interprofessional collaboration: A literature review. Journal of Multidisciplinary Healthcare, 13, 403-409.

[8] NHS England. (2022). Delivering a net zero National Health Service.