Addressing Overall Expenditures in the US Health Care Industry - Essay Example

Addressing Overall Expenditures in the U.S. Health Care Industry The United s, undoubtedly, has one of the highest health care costs in the world today. This is true from whatever or whichever criteria one could think of. For instance, in a comparison between several countries both wealthy and Third World countries, the United States will emerge to have the biggest healthcare expenditure. In a study by Edlin and Golanty (2009), it was found that countries such as Great Britain, Singapore, India and Japan, spend about half as much as the United States on health care costs (p.438). In all OECD countries, observed Kovner, Knickman and Jonas (2011), the US showed the most rapid increase in health care expenditure, with a share of GDP estimated at 16%, compared to 8.7% in the UK and 11.2% in France (p.68).One of the variables that mitigates the exorbitant cost is the claim that it pays to have the best and the US is considered to have one of the most excellent health care industry. However, this argument does not eclipse the fact that overall expenditure is still too high. In many rich European countries, as has previously been mentioned, the cost spent on healthcare is about half less, yet countries like France, Germany and Great Britain are able to provide universal health care. From the experiences of these countries, one can only wonder why their respective health care systems work for these countries and not in the United States. Or, put in another way, why do the health care systems elsewhere work and productive for all stakeholders and still cost significantly less than those in the US? This issue is particularly important now that the country has just been hit by a recession and that expenditures continue to climb while revenues fall (Getzen, 2010, p.320). It is safe to assume that there is something wrong in the system and it needs to be fixed. I would like to cite the Canadian experience to demonstrate this point. According to Edlin and Golanty, Canada saves enormous amount of money mainly because it pays for less health care administration costs than the United States (Woolhandler, Campbell and Himmelstein, 2003, p.773). Fuchs (2009) pointed out that such administration costs are reflected in the manner by which hundreds of insurance companies compete for the business of millions of individual firms as well as the convoluted administration by 50 state bureaucracies that govern subsidies, physicians and other clinicians (p.999). There are many other aspects that cause inefficiencies and complications that lead to high costs such as high drug prices resulting from the US subsidy for the world; high ratio of specialists to primary care physicians; open endued funding; malpractice claims and a host of others (Fuchs, p.999-1000). These inefficiencies need to be studied and evaluated so that a policy towards cost cutting can finally be attained to replace the current cost shifting rule permeating the industry. Cost shifting is like when the government subsidizes health care or when insurance companies are prohibited from raising premiums. For instance, Medicare changed the method of paying hospitals from cost reimbursement to a payment system based on the expected cost of each admission. Getzen noted that this reduced hospital expenses in Medicare Part A but it was accomplished by hospitals through shifting services to outpatient and day surgery categories under Medicare Part B (p.321). Here, it is easy to understand that present policies only shift the cost from one to another, which does not really cut the cost. When the cost is reduced for specific health care consumers, the cost is passed on to another consumer. What needs to be done is to look at inefficiencies that lead to high cost such as high administration cost and those others previously mentioned according to the American experience. In a study by Weinstein and Skinner, it was explained that additional health care spending in America does not always lead to improved outcomes that is why they introduced the concept of comparative effectiveness and cost effectiveness measures in an obvious recognition that cost-cutting can be done without jeopardizing quality. They cited the use of medical records in providing care and the adoption of a mechanism similar to National Institute for Health and Clinical Excellence (NICE) as an example. It requires cost-effective analyses for selected medical technologies in determining coverage recommendations. The same can be done in the US, with a mechanism tailored according to its needs and requirements. Unarguably, cost-cutting entails a reduction of supply on certain areas in health care. But the supply factor is not significant in terms of pricing and quality of outcomes. This is because the reduction of supply will be accomplished according to the principle of cost efficiency. It will ensure that the supply of inefficient variables is eliminated. So the overall impact is towards the positive movement in the area of pricing and quality of care. The solution being proposed here is not direct cost control as suggested by Getzen, wherein a complex mechanism will be designed so that price is regulated and adjusted according to a host of variables such as inflation and recession (p.322). The idea is to identify areas that jack up the cost and eliminate or reduce them. Of course, it will affect supply in some areas like when the digitization of medical records could mean the reduction of hospital staff. But, again, efficiency will be achieved and it will translate into lowered health care cost. So, all in all, the lowering of health care cost in the United States, first and foremost, can be done. Through the evaluation of the entire industry, inefficiencies that lead to higher cost can be identified. By focusing on this aspect, quality of care is not affected when supply is reduced or eliminated. This move is wide-ranging and will involve change in governmental policy and regulation. According to Getzen, policy change may be difficult to achieve because of the slow adjustment of the health care sector (p.322). But cost reduction can be realized. Secondly, and equally as important is the fact that the mechanism used to do it is not through direct government regulation of price in the industry. It will be induced by making the system work better, in a streamlined, cheaper but efficient condition. References Edlin, G. and Golanty, E. (2009). Health and Wellness. Sudbury, MA: Jones and Bartlett Learning. Fuchs, V. (2009). "Cost Shifting Does Not Reduce the Cost of Health Care." JAMA, 302(9), 999-1000. Getzen, T. (2010). Health Economics and Financing. Hoboken, NJ: John Wiley and Sons. Kovner, A., Knickman, J. and Jonas, S. (2011). Jonas & Kovners Health Care Delivery in the United States. Berlin: Springer. Weinstein, M. and Skinner, J. (2020). "Comparative Effectiveness and Health Care Spending -- Implications for Reform." The New England Journal of Medicine, 362(5), 460-465. Woolhandler, S., Campbell, T. and Himmelstein, D.U. (2003). "Costs of healthcare administration in the United States and Canada." New England Journal of Medicine, 349, 768-774. Read More