Health Care Reforms - Assignment Example

Health Care Reforms Improving the performance of the healthcare system is one of the major challenges facing the United States of America. In recent years, improvements in standards of care and medical knowledge have led to longer and more productive lives for individuals. Research and innovations promise an even better future. From a social point of view, it is the hope of the relevant authorities that many people if not all are beneficiaries of these advances in the health care system.

However, healthcare is not only a social or scientific issue; it is also an economic issue. Healthcare reform decisions affect aspects of the economy such as living standards, economic growth, and government budgets. The healthcare sector represents a major part of America’s economy. Current expenditure on healthcare exceeds 15% of the GDP and Economists project it to hit $4.2 trillion or 20% of the GDP by 2016. Yet according to Commonwealth Fund’s analysis of World Health Organization data, America ranks last among developed nations in preventable mortality with over 47 million Americans lacking health insurance.

Additionally, healthcare continues to be one of the fastest-growing components of the economy, growing at a faster rate than the GDP. Health-related expenditure is a large and growing segment of government budgets. Last year, healthcare expenditure accounted for one-quarter of federal spending. From the public interest point of view, the economic stakes in healthcare reform are high. However, it is wise to note that for all the problems, the United States healthcare system has much strength and policymakers should not lose the good while addressing the bad.

Financial Challenges of Healthcare ReformsThe major financial challenge of healthcare reforms is controlling the costs. The problem here is not the high level of spending on healthcare but rather the rapid growth of spending on healthcare. The per capita spending in America continues to increase at a faster rate than per capita income. Economic projections indicate that persistence of this trend would lead to a relentless rise in income devoted to healthcare expenditure. A large portion of state and federal spending goes towards subsidization of health insurance.

In 1975, federal expenditure on Medicaid and Medicare accounted for 6% of total non-interest federal spending. Today, this figure stands at 23%. Due to the increases in the cost of healthcare, the CBO projects that, without reform, Medicaid and Medicare will account for about 35% of non-interest federal spending in 10 years’ time. This trend points toward increasingly difficult tradeoffs for taxpayers and legislators. Higher government expenditure on healthcare will require higher taxes, reductions in other government programs, or larger budget deficits.

On the other hand, increases in healthcare spending crowd out lower-income people from accessing health services. Out-of-pocket payments and health insurance for low-income earners continue to be increasingly unaffordable. Society attempts to address this problem by expanding government subsidies for healthcare spending. An example of such a program is the Medicare Part D program which assists the elderly with the cost of prescription drugs. Limiting the impact of healthcare reforms on the households’ budgets has led to governments absorbing increasing proportions of the nation’s total bill for healthcare, exerting more pressure on government budgets than official forecasts suggest.