Rise of Health Care Costs - Research Paper Example

?Introduction Health care services are necessary in ensuring that the overall productivity of a country does not decline. This is because; all persons forming the human labor force of a country are prone to becoming ill. Thus, it has been the mandate of the government to provide quality and affordable health services to its citizen. Due to the large number of patients, the private sector has intervened by setting up health centers, which assist in handling the patients. Currently, the private sector forms a large part of the health care service provider in comparison with the government. The government holds a great state in the provision of healthcare insurance through programs such as Medicare, Medicaid, TRICARE, and veteran health administration among others. Despite there being numerous health service insurance providers, about a quarter of the United States of America population is not insured. The cost of health services has been on the increase in many countries around the world. Leading the list of countries having large expenditure on health care services is the United States of America. This usually deprives the nation resources that would be used in other development projects, which would continuously improve the living standards of the citizens. This adversely affects the citizens, as they have to spend a quantitative part of their income in financing their insurances. As a result, other sectors of the economy do not realize the growth that would have been achieved taking into account our current capacity as a country. Despite the large expenditure, the services offered is far much below the cost charged. Moreover, the infant mortality is higher than most of the world industrialized countries. This paper seeks to give an in-depth analysis of the rise in health care costs in the United States of America. Rise in Health Care Costs in the United States of America Current Problems  A. High costs-current overall high costs and trends The health care cost in the USA has been on the increase in the last twenty years. In the year 2012, the health care benefit costs are expected to increase by 5.4%. This will be the lowest recorded rate in the last fifteen years (Helfand, 2011). Despite this, it is not a relief to the citizens as it is above the inflation and their salary is not increased in the same proportion. As a result, they will have to contribute more from their pockets. This is mainly because the employers have been observing this to be too heavy for them and have been passing it to the employees. This has been executed by the use of deductible plans, which are expected to be on the increase come the year 2012. In response to this, the number of employees attending health service providers has been on the decrease. This is mainly because; their total expenditure has been on the increase (Brunswick, 2011; Newswires, 2011; Anon, 2011). B. Impacts of the rise in health care costs From a study conducted by the Kaiser family foundation on the trend of health insurance on employer-sponsored health insurance, it was to be observed to be on the increase. The results showed a nine percent increase in 2011 in comparison with 2010. Considering the state of the United States economy from effects of economic problems facing Europe, this is a big blow to the citizens. Furthermore, the number of unemployed persons in USA remains high. According to the businesspersons, high costs of operations and the ever-increasing health cost has been posing a great challenge to their recruitment and overall development. The current cost of health care is double the one present at the start of the twenty first century. Despite this, the American citizens have hope in their health system (Jones, 2011). Due to the large number of health expenses encountered by companies, they usually decrease their wages of the employees in order to cater for it. In addition, the health benefits of the employees may be reduced. According to research conducted on the response of companies to increase in health premiums, it is observed that reduce wages and limits the benefit endowed to their employees. This is not favorable to the employees as they usually have less money for their other uses taking into account that the cost of living is always on the increase. In the national economy, the contribution of the citizen for its development cannot be neglected. As a result, when the citizens have little to spend and invest, they hinder the economy from achieving the anticipated growth (Young & Sultz, 2010). This not only affects the current generation but also generations to come. Currently, due to the decrease in overall income for various consumers, the numbers of consumer debts have been on the increase. This affects the upbringing of our children both directly and indirectly. Due to the increased rates in health care, the overall labor force is to be affected. The employers are not willing to employ more persons, which increases the unemployment rate and the probability of persons working part time. The impacts of unemployment are well known and they adversely affect the economic development of a country. Therefore, increasing the unemployed will make the United States of America economy slow down. Furthermore, due to the withdrawal of many persons from health system, it would require them to use more money from their pockets in order to finance their health care needs at old age. This would be very challenging to them, their family, and indirectly the country (Levey, 2010). The impact of government spending trickles down to its citizens. Due to the increasing medical care expenditure, the government raises taxes in order to raise the required revenue. This reduces corporations’ profits and increases the chances of tax avoidance. In order to maintain the economic growth, there have been strategies aimed at reducing government spending. This is mainly because the increase in medical care costs usually requires the government to cut on its spending in other sectors of the economy. This hinders it from achieving its set goals and objectives (Jonas, Knickman & Kovner, (2011). Causes of the high cost A. Technology and prescription Drugs There has been much development in the medical field, which has been strived at ensuring that the best health services are available to the citizens. This has been achieved through research, which has been observed to be too expensive. Currently technology that is more complex is used in undertaking of these researches. This escalates the health care costs. B. Chronic diseases Currently the life expectancy of persons in the US has increased in comparison with those recorded in the past. In addition, the number of chronic diseases has been on the increase. This has brought forth the necessity to increase the health-spending budget allocation. C. Aging of the population The number of old age citizen has increased. As a result, they require support from the government, which gets them from its resources. Despite them contributing to a low percentage in the overall rise in health cost, their contribution cannot be neglected. D. Administrative costs From the analysis of the budget allocation of the health care, it is observed that administration takes a significant part of the resource. If it is streamlined, then much would be saved (Social security Advisory board, 2009; Chambers, 2009). II. Solutions/Current Trends - where are the costs going?  A. Consumers-what are consumers doing to lessen costs Some health complications arise from different lifestyles applied by many in the United States of America. A good example is obesity, which results from eating too much food and undertaking fewer practices among other causes. As a result, the consumers should have an in-depth analysis of the health complications: how to prevent them, and how to control them. This would heal a great deal in reducing the amount of resources they usually use for their medication. In the availing of this information, the government should undertake intensive seminars to the citizens. The cost of the seminars may be considered high but the long run benefits are much rewarding. B. Legislation-what is the government doing to lessen costs The issue of the high cost of health care in the United States of America has been under consideration by the administration. The insurance rates have been a point of consideration with various rules set to be implemented in 2012 to regulate the increase. As a result, the insurers will have to give an elaborate explanation on the grounds in which they are to increase the rate by more than ten percent. In addition, more of the company’s premium collections are to be spent in health care. In addition, the government should implement strategies that would ensure that the current technology is implemented in the health care service delivery. This would help a great deal in streamlining the entire process by increasing efficiency and quality of the service. Moreover, uniformity and reforms in the conduction of the job would ensure that only the necessary services are provided at the health care centers. Although this has been implemented in some regions, it should be more intensive to ensure all parts of the country are covered (Scholl, 2009). C. Health Care Institutions, Hospitals, and Doctors-what are they doing to either lessen or increase the costs It is evident that fraud is present in the administration of services by the health care officers. This means that the high amount of resources directed towards the maintenance of health care is not necessarily used as expected. This is evident from testimonies from Professor Malcom Sparrow to the Senate that “The units of measure for losses due to health care fraud and abuse in this country are hundreds of billions of dollars per year. We just don't know the first digit. It might be as low as $100 billion. More likely two or three. Possibly four or five (Scholl 1)”. Thus with the reduction of overall fraud in the system, less resources will be wasted which will translate that the citizens and employees will thus be expected to contribute less. The provision of sufficient remuneration to the doctors and other health personnel in accordance to the evolving times is very necessary. Due to the underpayment of health official by the government, a quantitative amount leaves their duties in government health institutions. In most cases, doctors and hospitals usually charge an extra percentage to private insurance in order to raise money. Thus if fraud was eliminated and health official provided with sufficient remuneration, a significant part of the current rise in health care cost could be eliminated (Tuerck, Bachman & Head, 2011: Callahan, 2009). D. Insurance Companies-how are they lessening or increasing costs The health care cost increase has been attributed to the high rates charged by the insurers. The annual growth in premiums declined in 2010, which was a great thing to the citizens. The decrease is attributed to the decrease in the number of persons accessing health care services and stabilization. In response to their high return, the insurer claims that their expenses are expected to increase once the country economy fully recovers from the recession. As such, they claim that the people would be in a position to finance their premiums without struggling. Despite the slow growth in health insurer, it is expected that the cost is to continue escalating due to ever-increased charge by hospitals and drug makers (Abelson, 2011). Thus in ensuring that the health care service cost is reduced, coordination between the medical health professionals and the insurance firms is necessary (Society for human Resource Management, 2010). The cost of malpractice insurance has contributed to the rise in the health insurance cost in the USA. It is evident that various health professionals use a lot of time in the filling of documents in order to avoid lawsuits. From researches conducted, this contributes to about ten percent of the country’s spending. The reorganization comprehensive medical malpractice is observed to reduce the cost by up to a quarter of the current cost. This would be a great solution in solving the current problem. Conclusion There has been an increase in the cost of health care cost in the United States of America. This has had adverse effects on the industrial development. In order to ensure that the problem is controlled, various stakeholders such as the government, consumers, insurance companies and Health Care Institutions, Hospitals and Doctors have joined hand. Despite this, not much success has been achieved and thus more need to be done. References Abelson, R. (September 27, 2011). Health Insurance Costs Rising Sharply This Year, Study Shows. The New York Times. Retrieved from http://www.nytimes.com/2011/09/28/business/health-insurance-costs-rise-sharply-this-year-study-shows.html?_r=1&pagewanted=all Anon (September 27, 2011). US health insurance costs rise: Annual family premiums growing at three times the rate of 2010, and outpacing wage increases, survey finds. Retrieved from http://www.guardian.co.uk/world/2011/sep/27/us-health-insurance-costs-climb Brunswick D. (Sep 22, 2011). Health Insurance costs to rise 5.4% in 2012. Retrieved From http://finance.yahoo.com/news/Health-Insurance-costs-to-cnnm-610289887.html Callahan, D. (2009).Taming the beloved beast: how medical technology costs are destroying our health care system. Princeton, New Jersey: Princeton University. Chamber, D. (May 18, 2009). What is Driving Rising Healthcare Costs? The American. Retrieved from http://www.american.com/archive/2009/may-2009/what-is-driving-rising-healthcare-costs Helfand, D. (September 22, 2011). U.S. firms expect healthcare costs to rise at lowest rate since 1997. Los Angeles Times. Retrieved from http://articles.latimes.com/2011/sep/22/business/la-fi-employer-healthcare-20110922 Jonas, S., Knickman, J. & Kovner, A. (2011). Jonas & Kovner's health care delivery in the United States. Berlin, Heildelberg: Springer. Jones, J. M. (2011). In U.S., More Rate Own Healthcare Quality, Coverage Excellent. Gallup. Retrieved from http://www.gallup.com/poll/150806/rate-own-healthcare-quality-coverage-excellent.aspx Levey, N. (February 04, 2010). Soaring cost of healthcare sets a record. Los Angeles Times. Retrieved from http://articles.latimes.com/2010/feb/04/nation/la-na-healthcare4-2010feb04 Newswires, J. (November 21, 2011) US Health Care Costs Rise 4.3% For Insured Workers In 2Q. The Wall street Journal. Retrieved from http://online.wsj.com/article/BT-CO-20111121-709802.html Scholl, J.J. (September 29, 2009). Five low-cost solutions to health care reform. It's much easier than politicians would have you believe. Retrieved from http://www.cobizmag.com/articles/five-low-cost-solutions-to-health-care-reform/ Social security Advisory board, (2009). The Unsustainable Cost of Health Care. Retrieved from http://www.ssab.gov/documents/TheUnsustainableCostofHealthCare_508.pdf Society for human Resource Management, (2010). Increased Health Care Cost Shifting Expected in 2011. Retrieved from http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/CostShifting2011.aspx Tuerck, D., Bachman, P. & Head, M. (2011). The High Price of Massachusetts Health Care Reform. Boston: The Beacon Hill Institute at Suffolk University. Young, K. & Sultz, H. (2010). Health Care USA. Sudbury, Massachusetts: Jones & Bartlett Learning. Read More