Healthcare Spending in the USA - Statistics Project Example

HEALTHCARE SPENDING IN U.S.A Name Institution Date Introduction Health care spending in the United States has been growing quickly than the economy for numerous years, representing a challenge for the government’s two main insurance programs, Medicaid and Medicare, as well as the private sector. The United States spends an approximated two trillion dollars yearly on healthcare expenses, more than any other industrialized nation. As health care expenses takes up a greater share of the country’s economic output in future, U.S. citizens will be faced with progressively more choices amid health care and other priorities. Though U.S. citizens benefit from numerous of the investments in health care, the latest fast growth, together with the general economic slowdown and increasing federal deficit is placing immense strains on schemes utilized to fund health care, entailing private worker sponsored health indemnity coverage and civic programs like Medicaid and Medicare. The level of current national health care expenditures Health care expenditures have been increasing for numerous years. Health care expenditures in the United States surpassed 2.3 trillion dollars in 2008, over 3 times the 714 billion dollars spent in 1990, and more than 8 times the 253 billion dollars spent in 1980. In 2008, United States health care spending was around 7, 681 dollars per person and accounted for 16.2 percent of the country’s gross domestic product. National health care spending was 2.3 trillion dollars in 2008, a rise of 4.4 % from 2007. This calculation entails spending for health care services and goods, private health insurance, public health, program administration, and the money spent on medical equipments, structures and noncommercial research.( Centers for Medicare and Medicaid Services, 2010). Government programs like Medicaid and Medicare, account for an important share of health care expenditure, but they have risen at a slower speed than the private insurance. Medicare per person spending has expanded at a faintly lower rate, than the private health expenditure, at approximately 6.8 against 7.1 percent yearly respectively between the year 1998 and the year 2008. Similarly, Medicaid expenditures have grown at a slower rate than private expenditures, even though enrollment in program has expended during the present economic downturn, which might lead to increased Medicaid expenditures figures soon( Centers for Medicare and Medicaid Services, 2010). The figure below represents United States national health expenditures, 2008 with a total of 2.3 trillion dollars. The United States is spending is too much on health care The U.S. spending on health is too much because the country spends an approximated two trillion dollars annually on health care expenditures, more than other industrialized nations. The country spends 16% of gross domestic product on health care, contrasted with 8-10 % in most main industrialized nations. The growth rate in United State’s health care spending has outpaced the rate of growth in gross domestic product, population and inflation for numerous years. Between 1940 and 1990, the yearly growth rate in real health expenditure per person ranged form 3.6 percent in the 1960s to 6.5 percent in the 1990s. In the same way, the share of gross domestic product accounted for by health spending increased from 4.5 percent in 1940 to 12.2 percent in 1990. In the year 2005 health care expenditure was approximately two trillion dollars or 6, 679 dollars per person, which signifies 16 percent of gross domestic product (Burton, & Peterson, 2008). The sustained rise in United States health expenditure over four and a half decades is likely to go on, and total expenditure is projected to get at 4 trillion dollars of gross domestic product by 2015.The centers for Medicaid and Medicare services projects that growth in the health care expenditure will continue to outpace gross domestic product over the next ten years. The figure below represents how richer countries spend on health care from 1970 t0 2008 and it is clear that United States is an outlier in global comparisons of health care expenditure( Centers for Medicare and Medicaid Services, 2010). Growth in total health expenditure per capital, U.S. and selected countries , 1970 to 2008 Where the nation should add or cut health care spending In order to address the high and increasing health care expenditures, the United States government should eliminate unnecessary or duplicative care and reduce administrative overhead, prevent complications or illnesses and detect conditions at an early phase, prevent unneeded hospitalizations and enhance efficiency and productivity in provision of health care. According to Gerard et al, (2008), the nation should increase funding in information technology because greater utilization of technology, like electronic medical records will result to efficient sharing of information and lessen overhead costs. In order to make health care scheme highly efficient and of superior quality and subsequently more cost effective, the nation should decrease unwarranted deviation in medical practice and redundant care, especially geographic variation. This is because higher expenditures on health care in particular geographic regions don’t correspond to improved health outcomes (Fisher S, & Wennberg, 2003). The government can cut on the current high heath care expenditures by adjusting provider compensation. The present scheme of provider compensation pays physicians a particular payment per test or procedure as dictated by Medicare physician schedule guidelines. Therefore the government should refurbish numerous provider payments to make sure that the charges paid to physician’s rewards health and value outcomes, other than volume care. This will result to elimination of unnecessary care and thus decrease costs. Additionally, the nation should increase funding for comparative effectiveness research which will act as a way of determining which treatments are largely cost effective for particular conditions, so as to offer physicians with the essential information to make best choices for the care of the patients. The burden of chronic illnesses like cardiovascular disease and diabetes have dramatically risen and both chronic diseases are known to be associated with diet, smoking and obesity and are very costly to treat over long durations of time. This has placed terrific demands on the health care scheme, especially an expanded need for treatment of the ongoing diseases and long term care services, like nursing homes. It is approximated that health care expenses for the treatment of chronic illnesses account for more than 75 percent of nationwide health expenditures. Therefore, nation must emphasize prevention through increasing funding incentives to employees to engage in wellness and prevention, so as to lessen the prevalence of these chronic diseases and prevent incurring long term treatment costs( Thorpe, 2004). Through modifying the tax preference for employer sponsored insurance, the United States will be able to reduce its health care expenditures. Presently, workers don’t payroll or income tax on the money their employers expend on their health insurance, in spite of the outlay of those benefits. The nation should eradicate or change the tax exclusion for the employer sponsored health care to assist finance the costs of increasing coverage together with reducing incentives for the highly generous and thus expensive health plans( Davis, & Schoen, 2007). How the general public’s health care needs are paid for, such as being financed by various payers, while indicating the percent of total expenditures they represent United States health care is financed via a combination private and public source. Public spending entails funding by the state and federal governments on public health insurance programs like Medicare and Medicaid and government civic health activities. Private spending entails private insurance premiums paid by employers and individuals and consumer out of pocket spending for co-payments and deductibles. Most United States citizens under 65 years of age have private health insurance attained via an employer. According to CBO’s estimates approximately 63% of U.S population) had employment based coverage in 2006, whilst approximately 4% directly purchased private coverage from an insurer. The two major sources of public funding for health care are Medicaid and Medicare. Around 43 million disabled or elderly individuals were enrolled in Medicare in 2006, and approximately 61 million low income persons were enrolled in Medicaid (Alemayehu, & Warner, 2008) In 2005, nation expenditure on health care amounted approximately 1.9 trillion dollars or 14.9% of the country’s gross domestic product. Some 55% of the total amount was financed privately, while the rest was financed by public sources. Expenses by the private health insurers accounted for 37 % of national health spending while consumers out of pocket expenses accounted for 13% of national health spending. Other sources of private funding from philanthropy together with on site clinics that employers maintain for their employers accounted for 4% of the total national health spending. The table below represents national spending on health care by source of funds in 2005               Billions of Dollars Percent Private Spending 1,013.5   54.5     Private health insurance 694.4   37.3     Out-of-pocket payments 249.4   13.4     Other private spending 69.8   3.7     Public Spending 847.3   45.5     Medicare 342.0   18.4     Medicaid 311.0   16.7     Other public spending 194.3   10.4     Total 1,860.9   100.0   A forecast for United States health care spending Over the last 30 years, United States total spending for health care has been more than twice as a share of gross domestic product. According to congressional budget office’s projections, under the extended baseline situation, this share is going to double gain by 2035, to 31% of gross domestic product. After that, health care spending will go on to account for a gradually increasing share of the economy arriving at 37% of gross domestic product by 2050 and 46% by 2080. In 2009, Medicaid’s and Medicare’s spending each was approximately 3% of GDP but by 2035, Medicare spending will have increased by more than twofold to around 8% while by 2080, it will have increased to 15%. CBO forecasts that the growth of expenditure for Medicaid will be slower than spending growth of Medicare, because the rate of excess expenditure will be lower and that of aging of population will influence Medicaid to a lesser degree that does to Medicare. The total expenditure for Medicaid will increase to 5% by 2035 and by 7% by 2080 (CBO, 2009). Conclusion Health care spending in the United States has increased for the past numerous years and surpassed the economy posing a challenge for both public and private health care sectors. Additionally, the country spends approximately 2.3 trillion dollars on health care and this presents it as an industrialized nation that spends a lot on health care. Therefore, in order reduce public spending, United States by investing more on information technology and increase awareness on chronic illnesses like obesity and cardiovascular diseases. References Fisher S, & Wennberg E, (2003). The implications of regional variations in Medicare spending. Part 1: The content, quality, and accessibility of care. Ann Intern Med 2003; 138 (4): 273- 87. Thorpe KE, Florence CS, Joski P, et al. (2005). Which medical conditions account for the rise in health care spending? Health Aff (Millwood) Jul-Dec; Suppl Web Exclusives: W4-480-6. Gerard, F., et al, (2008). , "Health Care Spending And Use of Information Technology in OECD Countries,” Health Affairs, Vol. 25, No. 3 Thorpe E., (2004). "The Impact of Obesity on Rising Medical Spending," Health Affairs, Web Exclusives, October 20, 2004, pp. w4.480–w4.486. Davis, K, & Schoen C., (2007) Slowing the Growth of U.S. Health Care Expenditures: What Are the Options?, The Commonwealth Fund. Centers for Medicare and Medicaid Services, Office of the Actuary. (.2010). National Health Statistics Group, National Health Care Expenditures Data, January 2010. Burton, R, & Peterson, C., (2008). The U.S. health care spending: Comparison with other OECD countries. New York: Nova Publishers. Alemayehu B, & Warner K, (2008).The lifetime distribution of health care costs. Health Serv Res 39(3):627-42 Congressional Budget Office (CBO), (2009).Technological Change and the Growth in Health Care Spending, Washington, D.C.: Congress of the United States, Congressional Budget Office. Read More