Report on the Cost of Health Care in the United States - Research Paper Example

Report on the Cost of Health Care in the United States Introduction Health care is one of the significant subjects, which attracts the attention of human beings. Every individual is concerned about their own or others health as it is one of the important aspects of the lives of human being. In this regard, health care system is quite crucial. It has been observed that the health care system of the United States of America is considered as one of the best and advanced in the world. However, there have been many controversies as well as dissatisfactions regarding the health care system in the United States. These controversies would be taken into consideration in this paper1. Thesis Statement The paper aims at discussing the health care system of the United States of America. The paper intends to illustrate the trends regarding cost and expenditure in the American health care system and recommends certain inputs to improve the drawbacks associated with the prevailing system. Data and Explanations Health Care Cost and Expenditure in the United States It can be stated that cost and expenditure related to health issues of human beings is one of the prime concerns for the United States. The cost and expenditure in the health care system of the United States of America has seen fluctuations over the years. It has been observed that the health care expenditure of the country was recorded to be around US$2.6 trillion in the year 2010 which as compared to 1980 report of expenditure had seen an increase of over ten times. As it can be noticed from the table below that the health care expenditure of the company is in a constant rise from the year 1960 till date. It has been learnt that the United States has always noted to be spending more on health care than any other nation of the world. From the report of a survey, it has been recognized that half of the population of the United States spend a very little amount on health care while only 5 percent of the population of the country spend half of the total amount recorded as health care expenditure. However, the increase in expenditure of health care can be up to an extent justified from the fact that the population of the country has also increased form the year 1960 to till date. The table below depicts the increase in health care expenditure in the past 50 years2. Figure: Health Care Expenditure in United States3 Comparison of Health Care Expenditure of the United States with Other Countries It has been mentioned earlier that the health care expenditure of the United States of America has seen a considerable rise over the years. The health care expenditure of the United States of America is quite high as compared to other countries of the world. It can be observed from the table below that the health care expenditure per capita of the United States is quite high as compared to countries like Japan, Germany and France among others. The rise can be demarcated to be double the expenditure of other countries4. Figure: Health Care Expenditure of Certain Countries of the World4 In addition, it has further been learnt that in spite of having similar Gross Domestic Product (GDP) of other wealthier countries, the health care spending of the United States is quite high from those countries. The graph below would be providing a lucid picture about the mentioned fact4. Figure: Comparison of GDP Per Capita of the US with Other Countries4 It has been further observed that the total health care expenditure of the United States annually is also much more than that of the other similar wealthier nations. The increase in expenditure is depicted to be at a much rapid pace and by a broad margin. The graph below presents the actual scenario of the comparison of expenditure of the United States with other countries of the world4. Figure: Comparison of Annual Expenditure on Health Care of Certain Countries4 Rise in Health Care Expenditure of the United States From the above discussion, it can be affirmed that the health care expenditure of the United States of America is quite high as compared to other nations of the world. This aspect has been a major reason for controversies in the health care system of the United Sates. However, there are some crucial reasons for the high health care expenditure of the country. In this regard, it has been noted that the high extent of per capita income of the United States is one of the vital reasons for the increase in health care spending of the United States. As health care expenditure is directly related to per capita income of the country, the health care cost in the US is higher. Furthermore, it has also been observed that the annual spending of the US on its physicians is five times higher than that of other countries. Moreover, the country also has spent a huge amount of money in its specialist doctors, which also increases the health care spending of the country. The extensive use of expensive treatment tools is also a prime aspect for the increase in cost in the overall health care system5. Another commonly depicted reason for high health care expenses of the country is that the utilization as well as the supply of health care services is much greater than that of other countries of the world. The below table provides the hospital spending of the US for per discharged patient for the year 20096. Figure: Hospital Spending of the US per Person6 Issues of Health Care System of the United States It has been learnt from the discussion that increases in cost and expenditure is one of the major issues of the health care system of the United States of America. It can be viewed that as compared the cost of health care of other countries, the United States replicates a much higher expenditure. The increase in cost is much higher and at a rapid pace as well. For this reason, the rise in expenditure and cost of health care system can be said as the major issues of the health care system of the United States of America today. However, it has been distinguished that rise in cost is not the only issue of the health care system of the United States. There are certain other issues among which expensive technology is the prime. It has been observed that at times doctors instruct patients for costlier tests for regular minor stress and increase their hospital bills. This aspect is condemned by many of the critics. It has been accused that the doctors in the US give out tests ever so frequently at times without much critical need. It has also been learnt that most of the tests performed on patients are not capable of solving any kind of mystery diseases or illnesses. It merely costs high amount for the people but there are quite less complaints about such aspects. This is also considered as a prime issue in the health care system of the United States7. Theory of Cost Disease The theory of cost disease of Baumol is a phenomenon proposed by William J. Baumol. It is a theory that is related to the prices effects which is caused owing to the difference in growth of productivity in diverse sectors of labor market. It can be further understand form the comparison of two sectors where one sector experiences less productivity than that of the other sector. It has been observed that the cost disease theory is frequently used to explain the penalty of lack of productivity in services like colleges and health care centre. According to Baumol, cost diseases are amid the major reasons for rapid increase in costs in the service segments belonging to the economy. He stated that effective response can only be taken once the diseases are found out. According to the further postulation made by Baumol, it is not the cost that is a matter of concern but it is the pace at which the cost is rising. With regard to cost crisis, Baumol said that people in other countries pay less in health care as compared to the Americans and yet they have better health than the Americans. However, Baumol has also mentioned that in spite of the fact that other countries pay less in health care than that of the US there is still increase in cost in those nations. In this regard, he said the cost disease is universal and exists everywhere. In certain portion of his book, the author described the increase in tuition fee in most of the colleges is a major concern and can also be considered as a cost disease that affects all the people of a family where a boy or a girl read in college8. It can be affirmed that the cost disease theory proposed by Baumol has explained cost crisis quite well. His theory depicts that the real problem that affects the health care system is not the increase in cost but the rapid pace at which it increasing. The fact that the author considered the cost rise as a serious disease can be justified from the fact that it affects the people like a severe disease does. He has also proposed that the cost disease exists in every nation of the world which can also be said to be true. Hence, the aspects from which Baumol proposed the cost disease theory is something that can be agreed upon and can be visible universally throughout the world. Recommendations It can be observed from the analysis of the paper that the issue of increasing expenditure is affecting the health care industry of the country. The cost of the health care system of the country is rising at a severe pace and as compared to other countries the margin of cost of US is also quite high. In this regard, certain valuable inputs would be recommended in order to reduce the health care cost of the United States of America. The first facet that can be effective in reducing the cost of health would be to remove the profit increasing motive of the doctors and hospital associates. It has been learnt from earlier discussion that doctors are instructing patients for costly test with regard to minor cases like stress. This should not be continued from part of the doctors and hospitals. It has also been noted that a large amount of money is taken by private insurance company regarding health care insurance. In order to decrease the cost of health care industry, there should be methods of health care that have minimal role of private insurance companies. Additionally, in the United States instruments used in surgeries are discarded after being used once. However, with the hi-tech and reliable modern method of sterilization, these surgical instruments can be used multiple times. This can facilitate to derive useful results in terms of reducing the expenditure of the health care industry. The inputs recommended are basic but the implementation of these could result in savings of millions of Dollars9. Conclusion From the overall analysis of the paper, it can be summarized that rapid increase in the cost of health care of the United States is a concerning issue and a matter of significant consideration as the health care system of the country is regarded as one of the best in the world. It has been observed that the health care expenditure of the company has seen a rapid rise in the last 40-50 years. Also, in comparison to similar wealthier countries, the health care cost of the US is much higher. There were several reasons depicted for these rise in price which are amid the major parts of the cost increase. Furthermore, the cost disease theory of Baumol explains the reason for the increase in cost of private services like hospitals and colleges. Overall, it can be concluded that rise in cost is required to be controlled by the government so that the country can maintain its reputation in terms of possessing one of best health care systems in the world. Table of Contents Introduction 1 Thesis Statement 1 Data and Explanations 1 Health Care Cost and Expenditure in the United States 1 Comparison of Health Care Expenditure of the United States with Other Countries 2 Rise in Health Care Expenditure of the United States 4 Issues of Health Care System of the United States 5 Theory of Cost Disease 5 5 Recommendations 6 Conclusion 7 Works Cited 9 Works Cited AHRQ. The High Concentration of U.S. Health Care Expenditures, 2006. Web. 20 Apr. 2013. Baumol, William J. The Cost Disease. USA: Yale University Press, 2012. Print. CMS. National Health Expenditures; Aggregate and Per Capita Amounts, Annual Percent Change and Percent Distribution: Selected Calendar Years 1960-2011, 2011. Web. 20 Apr. 2013. Greenwald, Howard P. Health Care in the United States: Organization, Management, and Policy. US: John Wiley & Sons, 2010. Print. Hixon, Todd. Why Are U.S. Health Care Costs So High? Forbes, 2012. Web. 20 Apr. 2013. Kaiser. U.S. Health Care Costs, n.d. Web. 20 Apr. 2013. Kaiser Family Foundation. Health Care Spending in the United States and Selected OECD Countries, 2011. Web. 20 Apr. 2013. Peterson, Kim. 7 massive problems with our health care system. MSN, 2013. Web. 20 Apr. 2013. Park, James Leonard. Nine Ways to Reduce Health-Care Costs. University of Minnesota, 2013. Web. 20 Apr. 2013. The Commonwealth Fund. Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality, 2012. Web. 20 Apr. 2013. Read More