Impact of Current Reforms on Healthcare Costs - Research Paper Example

?Impact of Current Reforms on Healthcare Costs Healthcare in the United s is one of the best in the world and keeping up such immaculate standards has proved difficult in the last few decades due to decreasing incomes, varied categories of beneficiaries, unemployment, and particularly due to the economic recession per se. Despite these drawbacks, United States continues to have one of the highest growth rates in healthcare spending amongst all developed countries as it spends more per capita as compared to other countries (Kaiser, Web). This raises the important issue of how the nation will manage to meet the cost of rigorous standards of healthcare it has visualized for its citizens in the immediate future. When the expenditure on health per capita is compared with other OECD (Organization for Economic cooperation and Development) countries, United States of America stands head and shoulders above the rest at $ 7,538 as per the current figures (Kaiser, Web). The standard used by economists to evaluate a country’s financial health is GDP (Gross Domestic Product), which is a periodically updated indicator of prosperity. A relational comparison of healthcare expenditure with the GDP can therefore illustrate the financial burden it exercises on the government. In fact, in layman’s language, per capita GDP translates into the ability of a citizen to pay for his or her healthcare needs (Reinhardt, 2008). Healthcare expenditure in the US has risen from 9% of the GDP to 16% through the years 1980 to 2008 (Kaiser, Web). Moreover, US ranks at the top amongst OECD countries when health expenditure and GDP per capita are taken into account. The annual growth rate of health expenditure is likewise much higher than other developed countries when the data for the last forty years is analyzed. Surprisingly, despite this high expenditure, the country is unable to provide greater health resources to its citizens, or achieve better benchmarks of healthcare as compared to countries that spend less on healthcare (Kaiser, Web). The primary reasons for excess spending on healthcare within the United States and the relatively low achievement of healthcare benchmarks as compared to other OECD countries have been explained to be due to higher prices of healthcare goods and services, higher administrative overhead costs, widespread use of high-tech equipment/procedures and higher treatment costs due to unique tort laws within the country (Reinhardt, 2008). In order to understand the factors underlying the high cost of healthcare within the United States, it is essential to dissect the manner in which healthcare has been administered in the better part of the last century when US dominated the international economic scenario. Unlike other developed nations in the continent as well as in Europe, US policymakers did not favor a state run universal healthcare system and cost of healthcare were mostly met through the private insurance sector and contributions by the private companies for their employees (Vladeck, 2003). Medicare in the country has been traditionally expensive and the insurance sector hitherto covered the costs for all US citizens. Universal healthcare was impracticable due to difficulties envisaged in the implementation of a single nation-wide program due to the vastness of the country, diversity in climate, regional uniqueness of healthcare needs, a wide diasporas of ethnic populations’ and administrative complications associated with such a venture. Moreover, historically, the divergent views of national and state health policymakers placed roadblocks in the implementation of universal healthcare. This is not the case in other OECD countries which are smaller, have ethnic uniformity and are easy to administer. Private Health Insurance companies and large corporate hospitals have been the providers of healthcare in the US for most parts of the twentieth century. Economists and corporate heads have been unified in their consensus that this healthcare system was the only feasible one for a country with dimensions as exist in the US. Recent reforms, initiated by the former President George Bush and the current president Barack Obama have however, brought about sweeping changes in the way healthcare is delivered in the United States. The ‘Medicare Prescription Drug Improvement and Modernization Act of 2003’ implemented as a law under the supervision of George Bush was a positive step which provided affordable healthcare access and prescription rights to senior citizens and invalids which were hitherto uncovered. President Barack Obama’s ‘Healthcare Reform Bill’ is an endeavor to deliver healthcare services to the general masses and the financially deprived sections of the American society, with an ambition to make available healthcare services to 95% of the US population. In addition, this law intends to unburden private companies off the healthcare expenditure for their employees (Gabbatt, 2010). Yet another reform, the ‘Young Adults and the Affordable Care Act’ is aimed at unburdening families and businesses by allowing young adults to stay on their parents’ healthcare plans until attaining the age of 26 years. Such reforms have placed newer choices for the average American citizen who can now opt for either employer sponsored or outside agency healthcare insurance plans, taking into account the new sources of subsidies that the reforms have brought forth (Pudlowski, 2011). The author believes that the actual implementation of the provisions inherent in the reforms is going to take years and healthcare organizations will need time to adopt and implement such changes. Companies will have to not only consider how employers will be affected but also fully comprehend the financial, administrative and operational implications of the reform provisions (Pudlowski, 2011). The National Health Expenditure Accounts (NHEA) broadly categorizes expenditure on healthcare into hospital care, physician and clinical services, other professional services, dental services, other health, residential and personal care, home health care, nursing care facilities & continuing care retirement communities, prescription drugs, durable medical equipment and other non-durable medical products as the foci oh healthcare expenditure in the United States (CMS, Web). The source of funds for these categories have been categorized into out-of-pocket expenses, from sate sponsored health insurance which include medicare, Medicaid, private insurance and from private health insurance companies (CMS, Web). From these categories, it is obvious that US healthcare involves a comprehensive care plan for every section of the society and accordingly plans have to be chosen according to the peculiarities of individual beneficiaries. The latest reforms have unburdened the aged, very young and disabled population from the costs of healthcare and brought into purview the unrepresented poorer sections of American society bringing the coverage figure to as high as 95% of the total American population. However, this still leaves around 23 million people uncovered, comprising of illegal immigrants and the poorer section of the society eligible for Medicaid (Gabbatt, 2010). America has believed for too long the notion that public ownership and pure tax based financing were the cheaper and technically simplistic modes of healthcare solidarity within the nation, but this belief has proved costlier in the long run (Baker, 2011). The author illustrates the situation in the form of a metaphor, which he calls a ‘four legged stool’ which had been missing its fourth leg, making it unstable for most parts of the previous century. The tree legs identified by him are Medicare, Medicaid and the large-group market’ which toppled the stool on occasions (baker, 2011). Providing the fourth leg in the form of the ‘Affordable Care Act’ under the new reforms has provided stability to US Healthcare, in his view by making healthcare accessible to individuals and small groups (Baker, 2011). Although United States is still struggling to meet the growing healthcare costs in the country, the drastic reforms undertaken by the Bush and Obama administrations have tried to rationalize healthcare policy within the country, the effects of which need to be seen, rationalized and modified in the future according to presented and emerging challenges. The economic downtrend has made the process difficult, if not impossible and full implementation of the reforms and reducing national healthcare costs is going to take time as well rigorous hard work for the future governments. References: Baker, T. "Health Insurance, Risk, And Responsibility After The Patient Protection And Affordable Care Act." University of Pennsylvania Law Review 159.6 (2011): 1577-1622. CMS, Web (). Quick Definitions for National Health Expenditure Accounts (NHEA) Categories, retrieved Oct. 30, 2011 from: https://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf Gabbatt, A (2010) Q&A: US healthcare reform bill, Retrieved October 30, 2011 from: http://www.guardian.co.uk/world/2010/mar/22/us-healthcare-reform-bill-details Kaiser, Web (2011). Health Care Spending in the United States and Selected OECD Countries April 2011, retrieved Oct. 30, 2011 from: http://www.kff.org/insurance/snapshot/OECD042111.cfm Pudlowski, Edward M. "Defining the Road Ahead: Thinking Strategically in the New Era of Health Care Reform." Benefits Quarterly 27.1 (2011): 34-41. Vladeck, B. (2003). Universal Health Insurance in the United States: Reflections on the Past, the Present, and the Future, Am J Public Health. 2003 January; 93(1): 16–19. Read More