Health Care Spending in the United States

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Health Care in the U.S. is currently being provided by various separate legal entities. By large, the health care facilities are owned by the private sector. However, the expenditure of on health care by the U.S. government has been on the increase for several years. In 2008, the expenditure on health care alone was over 2.3 trillion U.S. dollars, which was three times more than the expenditure in 1990. According to the Organization for Economic Cooperation and Development (OECD), the U.S. has its health care expenditure at two and a half times more than the average of the OECD. As a matter of fact, the expenditure is the highest amongst the industrialized nations. However, it appears there is little to show for all the expenditure as America lags too far behind in the health care benefits.

In 2008, the health care spending was around 7,680 U.S. dollars per person, which accounted for about 16 per cent of the nation’s Gross Domestic Product (GDP). Moreover, it also grew at a yearly rate of 4.5 per cent the same year. This figure did surpass the inflation and the national growth on income. Despite all these, there is a general concern that there is need for more reforms on health care for positive outcomes. This has even proved to be politically divisive in matters dealing with sectors such as expanding social medicine. In 2009, things were not different; the country spent over 17 per cent of its GDP on health care. It is estimated that it would keep on rising to approximately 25 per cent if there are no reforms. Furthermore, a study done and released by Reuters proved that the employers’ health care costs had risen by over seven per cent in the year 2009. The U.S. Chamber of Commerce proved that the 12 per cent figure would be the most expensive benefit to be paid by various employers in the United States.

The spending is too much, when there is nothing to show for it. People have cast doubts on areas concerning the health care quality, access, right, fairness, choice, efficiency, and value. In my view, the system does not account or deliver the equivalent value for the dollars that are being spent. The United States lags behind other rich nations in areas of life expectancy and infant mortality. While noting that the U.S. health care cost the most, the Commonwealth Fund ranked the United States la the last in quality among similar developed nations. Moreover, it is the only industrialized nation that does not provide cover to all its citizens. Those who are uninsured face dangerous times as they account for about 44, 800 deaths, according to a 2009 survey by Harvard. However, recent times have seen numerous reforms being carried out but much more needs to be done. For example, the Patient Protection and Affordable Care Act (PPACA) became law on the 23rd of March, 2010.

There are economists who say that the increasing figures burdens companies that are in business in the United States and could put them at a disadvantage in the international market. Paying for the health care proves to be an expensive affair for large multinational corporations. It appears that health care is among the key factors that contribute to doing business in the United States being an expensive affair. These lead to many businesses thinking about relocating to other friendlier environments outside the United States. It is a surprise that Americans access fewer healthcare resources than their counterparts in OECD countries. This was measured in three categories: physicians and nurses per capita, hospital beds per capita, and MRI and CT scanners per capita.

Half of the increase in health care expenditure has been attributed to changes in medical care as a result of technology advancements, higher income levels, rising commodity prices, and changes in insurance coverage as well. It appears the largest part of the health care dollar goes to hospitals and physician spending as well (Berk & Monheit, 1992). There are also other economists who have suggested that the increased cost of health care could be due to Medicare and Medicaid programs. One thing that could be said about the health care spending is that it is concentrated (Berk & Monheit, 1992). Concerning Health care payment, hospitals as well as doctors are being funded by payments from insurance plans and patients. About 85 per cent of U.S. citizens have various forms of health insurance. Government health care programs have restricted eligibility; while on the other hand, there is no government health insurance company that covers each and every citizen. Those who have no insurance health cover were about 45 million in 2007, which is about fifteen per cent of the population.

For those who have their health insurance being paid by employers, the employee may be required to contribute part of the insurance cost (Jack & John, 2003). The employer chooses the insurance company and also negotiates with the insurance company. A survey done in 2004 showed that private insurance accounted for about 36 per cent of personal health expenditures, while local governments accounted for 11 percent, federal government 34 per cent, private 15 percent, and other private funds 4 per cent. Prescription drugs, insurance for dental and vision care are usually handled separately. What usually happens is that, hospitals negotiate with various insurance programmes so as to set reimbursement rates (Jack & John, 2003). About sixty per cent of Americans do receive their health insurance through both private and public employers, which is under group coverage. However, the cost for health insurance being paid by the employer has also been on the increase.

A study by Kaiser Family Foundation in 2007 states that premiums for family coverage have increased to 78 per cent, however, inflation has risen by 17 percent and wages by 19 per cent ever since 2001. Most if not all of the covered workers face additional payments on top of their premium contributions when they go for health care services, which is usually in form of copayments and deductibles as well. In summary, the government programmes do cover about 28 percent of the population, which includes the disabled, elderly, veterans, children, and some of the poor. Public spending is approximately 50 per cent of the U.S. health care spending. Examples of the government funded programmes include Medicare, Medicaid, State Children’s Health Insurance Program, The Veterans Administration, Government run community clinics and many more others.           

The United States may face very serious financial problems dealing with the funding of the health care. It is evident that the current programs like Medicaid and Medicare keeps on growing at an unsustainable rate. There has to be major changes if the programmes were to survive. A very important point is that, the solution to the current health care crisis should cover economic aspects. In my view, there should be a consumer driven medical care. The government should come in by providing the appropriate infrastructure. The government should also encourage a health care system that is consumer driven. It should address meaningful tort reform and withdraw mandates for insurance policies that are for an individual. The government should make health care a true indemnity insurance but not health maintenance. I also hold the view that; it could be only through a consumer-driven healthcare that the cost of care would be controlled.

Instead of enforcing major cut backs that could lock out many people out of health care coverage, the government should take another approach that is fair to everyone. There should be an approach that is closes the existing budget shortfall, which includes coming up with new sources for revenue and closing tax loopholes that are unfair, so as to provide the much needed funding for the current programs. People concerned should focus on wanting to restrain the rising health care cost. Research brings out the importance of chronic conditions as a main factor contributing to cost increases. I think the government should also try to put more efforts on prevention programmes that would help reduce the costs of treating preventable diseases. Some disease management programmes are better in improving the quality of health care and also cut the cost of diseases such as asthma, diabetes, heart disease, obesity, and hypertension (Thorpe, Florence, Joski, 2005). A survey done in 2002 pointed out the most expensive health conditions as cancer, heart disease, mental disorders, trauma, and pulmonary conditions (Thorpe, Florence, Joski, 2005).

In conclusion, it is evident that the current programs like Medicaid and Medicare keeps on growing at an unsustainable rate. There has to be major changes if the programmes and many more others, were to survive. It is a fact that the expenditure of on health care by the U.S. government has been on the increase for several years. A survey done in 2002 pointed out the most expensive health conditions as cancer, heart disease, mental disorders, trauma, and pulmonary conditions. Therefore, drastic measures should be taken to deal with the prevention of such diseases or reduction of new cases. Statistics has it that about 85 per cent of U.S. citizens have various forms of health insurance. Government health care programs have restricted eligibility. On the other hand, there is no government health insurance company that covers each and every citizen. Those who have no insurance health cover were about 45 million in 2007, which is about fifteen per cent of the population.

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