High Cost of Healthcare in the United States of America - Essay Example

HIGH COST OF HEALTHCARE IN THE UNITED S OF AMERICA High cost of healthcare in the United s of America Table of Contents Table of Contents 2 Abstract 3 Introduction 4 Factors behind high healthcare cost 4 1.High prices 4 2.Independent pricing 5 3.Non-standardized system 5 4.Overinvestment in technology 5 5.Administration cost 6 6.High salaries 6 7.Too much medical care 7 8.Insurance 8 9.Medical malpractice 8 10.Researches and studies 9 Possible solutions 9 Abstract The paper starts with an introduction which gives the reader the information of the matter at hand and the problem that the reports aims at addressing. The paper the proceeds to giving factors that lead to the high cost of healthcare in the US including: high prices; over investment in technology; overspending on administration; malpractices; independent pricing; high investment in labor compensation; and excessive investment in medical researches and studies. The recommended solution include: standardization of healthcare; regulation of pricing by government; reducing compensations; bulk buying of drugs; and full implementation of Obamacere. Introduction The cost of healthcare in the United States of America has been something of concern for some time. When the cost of healthcare services in the United States of America was compared to costs in some of the countries it was discovered that the cost of healthcare in the US was alarmingly high. In comparison to the other developed countries the United States of America has the highest prices for healthcare. In 1992 14% of the federal budget was allocated to healthcare. The percentage has gradually increased over the years. By 2012 the percentage had gotten to 22% of the federal budget. This report discusses the possible causes of the high cost of healthcare in the United States of America. The report will also go ahead and give recommendations of possible ways through which the situation can be improved. Factors behind high healthcare cost 1. High prices The most obvious explanation for the high cost of healthcare in the United States of America is the high healthcare prices in the country. A study on the prices of healthcare in the developed countries has proved that the prices of healthcare services in the United States in the US are very high. Factor such as frequency of visit to hospitals and quality of medical services have further proved that the high cost of healthcare in the United States of America. The German population was discovered to frequent the hospital more than the US citizens despite the fact that their healthcare costs their government less annually. The high cost was mostly attributed to the high healthcare services in the country. For instance, it was discovered that hip replacement could cost about $13,660 in Belgium while the same costs about $100,000 in the United States of America. This is a clear indication of high healthcare prices in the country. 2. Independent pricing Another thing that can be said to be a contributor to the high cost of healthcare is the fact that there is very minimal intervention of the government on the pricing of healthcare and healthcare services in the country. As a result of the minimal intervention by the government the players in healthcare provision in the country are left at liberty to choose the pricing that match their “maximization of profit” goals. This is very different from what takes place in other developed countries. For instance, in countries such as Britain and Canada the governments have the full responsibility of controlling the prices of healthcare and healthcare services in the country. This has been able to help these countries in containing the cost of healthcare in the country. 3. Non-standardized system Another challenge comes with the hardship in standardizing the practices in this sector. Much of the healthcare facilities in the United States are independently owned and run. It will be challenging to come and just say that the nature of services that are provided by all the medical institutions should be standardized. On a business level each and every business organization will have to have a unique brand through which their clients can associate. The creation of unique brands will definitely lead to a brand war that will only lead to an increase in the prices of healthcare products and services in the United States of America. 4. Overinvestment in technology The high cost of healthcare in the United States of America could also be as a result of the high rate at which technology is applied in the country’s healthcare sector. When too many resources are invested in technology there are always financial consequences of such practices. One thing that is certain is that acquisition of technology products will obviously come at a cost. The US healthcare sector has extensively and excessively invested in technology. Even after acquiring technology the financial burden does not end there. The sector still has to spend some financial resources in the maintenance of the technology acquisitions. There is also expenditure in integrating the healthcare institutions’ cultures and human resource with the acquired technology. This does not necessarily mean that the acquisition of technology is wrong. However, the acquisition of technology should not be considered without looking at the financial viability of such practices. 5. Administration cost It has also been discovered that a very big percentage of the healthcare allocation in the United States of America usually go to administrative expenditures. It is believed that about a quarter of this allocation usually go to issues with administration relation. This percentage is higher than any other country in the world. It is believed that by reducing the administration cost that is used in the country’s healthcare the country will be able to reduce their annual expenditure. For instance, some of the hospitals were discovered to have billing clerks who happen to be about 50% more than the total number of beds in the hospital. This is very unnecessary (Jacoby, Sullivan&Warren, 2001). In countries such as Canada hospitals have just a handful billing clerks. It would not make a sense for a hospital with a total of 1000 beds to have about of more than 1500 billing clerks. 6. High salaries Human resource compensation can also be a contributing factor to the high cost of healthcare in the United States of America. A good example would be the fact that Doctors in the US are the most paid doctor in the world. This does not only apply to doctors but to other healthcare provision professionals such as nurses. It might be argued that the reason for this high compensation is the shortage of such professionals in the country. However, the shortage of healthcare professional is not a problem that is only facing the United States of America, but all the countries in the world. Furthermore, the high compensation has not really resulted to better performance of healthcare provision professionals in the country. It has also not been able to attract a noticeable number of healthcare provision professionals to the country. The country would have highly benefited if they could reduce the compensation that they give these professionals. This will help them in reducing the cost of healthcare in the country. 7. Too much medical care People in the United States of America also receive more medical care as compared to the citizens of other countries. This is not specifically in terms of the number of hospital visits but the how the can access these services. For instance, a person suffering from a heart attack in the United States of America is likely to go through an open heart surgery as compared to people having the same medical problem in Canada. While Canada have only 11 hospitals the capability of carrying out open heart surgeries, the US has many hospitals which can do the same (Fisher,Bynum & Skinner, 2009). This is the reason as to why heart attack patients in Canada are less likely to undergo open heart surgery. The funny thing is that the life expectancy of heart attack patients in Canada is same as that of such patients in the United States of America. The United States of America also offers too much health healthcare. The quantity of healthcare does not always lead to quality healthcare. In the United States of America it has been noticed that sometimes health care is always given to people even when they are not necessarily in need of healthcare (Berwick, Nolan & Whittington, 2008). The unnecessary spending will always lead to the government spending more money on healthcare than they could have spent. In comparison to other developed country the US offers too much health care and this has not really reflected in the quality of healthcare in the country. When a person is given a healthcare service that they were not in need of in the first place the resources spent in the individual’s healthcare would have been used elsewhere. This clearly explains why the quality of healthcare in the US has remained at level with those of countries which spend less in healthcare. 8. Insurance The other reason as to why the cost of healthcare might be high in the United States of America is insurance. The main reason as to why people need health insurance is to make healthcare services financially accessible while protecting people against impulse expenditures. However, in a case where patients are over insulated against the actual cost of their healthcare, the patients will tend to use more care. such scenarios leads to the government having to part way with more money in order to take care of the extra healthcare attention that the citizens use. This factor is closely related to the giving of unnecessary healthcare in the country. As it has been seen the over cushioning leads to unnecessary seeking of medical attention be people in the United States of America. 9. Medical malpractice Medical malpractice can also be a liability that leads to the increase in the amount that the government has to spend on healthcare. A scenario that can be used to explain this best is one that a doctor orders multiple tests to be carried out on a patient in the bid of avoiding being sued. Another indicator might be seen in the country’s use of protective medicine. The thing with over investment in defensive medicine is that it is never known if the medicine is being unnecessarily used or not. This leads to expenditures that are not necessarily proved to be contributing to the improvement of the country’s healthcare. 10. Researches and studies Studies have also indicated that there is over investment in medical researches and studies in the United States of America. Something that is for sure is that sometimes it can be found that a certain medical research is carried out by more than just one medical institution in the country. The obvious result of such practices is that the government will have got pay more than once for a study or research too be carried out. The only difference is that the researches are always carried out by different institutes. In most cases the findings of these studies and researches are always almost identical. Possible solutions There are a number of things that the government could do to make sure that they intervene in the constantly rising cost of healthcare in the country. One of the things that can be done is standardizing healthcare in the country. This will be in the bid to make sure that they moderate the practices in the healthcare industry. During the research it was also noticed that the government had ignored the advantages of buying drugs and pharmaceutical products in bulk. Buying drugs and pharmaceutical products in bulk will enable the government to spend less on these products. Buying these products in bulk will give them an upper hand in negotiating the prices with the companies that produce drugs and pharmaceutical products. Such negotiations will mean that at the end of the day they will have been able to pay less per unit price for drugs and pharmaceutical products. This will reduce the market prices of these products and also reduce the amount of money that the government has to spend on drugs and pharmaceutical products. Another thing that can be done is making sure that they are more involved in the pricing and the setting of compensations for healthcare professionals in the country. If they get the full authority of setting the prices remain affordable while controlling of compensations will enable them to make sure that the professionals in this field are not overpaid. The full implementation of Obamacare is going to take care of allot of these problem. Obamacare is aimed at make sure that health insurance is affordable and accessible to all the citizens in the United States of America. It is also going to encourage automation of healthcare services in the country. One common characteristic of automation is that it is going to lead to standardization of health care practices in the country. Automation of healthcare can also reduce the need for administrative practices in the industry. The obvious outcome is that the government will be spending less on administration in the industry. This means that at the end of the day the government will have to spend less on the country’s healthcare. References Berwick, D. M., Nolan, T. W., & Whittington, J. (2008). The triple aim: care, health, and cost. Health Affairs, 27(3), 759-769. Fisher, E. S., Bynum, J. P., & Skinner, J. S. (2009). Slowing the growth of health care costs—lessons from regional variation. New England Journal of Medicine, 360(9), 849-852. Jacoby, M. B., Sullivan, T. A., & Warren, E. (2001).Rethinking the debates over health care financing: Evidence from the bankruptcy courts.NYUL Rev., 76, 375. Read More