Healthcare Issue in the US - Essay Example

Running head: HEALTH CARE IN THE U. S. of the Health care has a huge impact on theeconomy since increases on health spending are reported every year outpacing the spending on other goods and services thereby resulting to a remarkable slice in the economy. Health costs have gradually increased over the years and affect the people’s way of life, government institutions and businesses. The effects of this is notable in all sectors as the government has to be on the forefront in curbing these problems by increasing the share of budget spent on health care and this causes them to increase the level of taxes. This places businesses who offer insurance coverage for their workers at a disadvantage as they spend more on health care. This also affects the households paying for their own coverage and has an impact on their spending on other goods and services. This paper gives a summary of the information on health care costs and the impact it has on society and the economy. The spending on health care has changed over the years and according to reports an average of $6,500 is spent on an individual annually. It is found that sixteen percent of the economy of the gross domestic product (GDP) which represents the total economic activity is devoted to health care. These findings are shocking and the major concern is the rapid increase over the years. Health spending grows faster than all other sectors in the economy for example education, transportation, education, transportation and agriculture that grow at the same rate as the economy. Health spending has been observed to exceed the economic growth over the years and the trends show significant differences between health care and all other sectors in the economy as explained by Shi and Singh (2009).These findings are staggering calling for major reforms in the health care sector since the impact on the economy is very significant. The country spends more on health care than all other developing countries and according to findings by the Organization for Economic Co-operation and Development. It was found that it spent 13 percent more than next highest spending country and this translates to 90 percent higher than their global competitors. Despite the relatively high spending, it does not maintain substantially better health care as compared to other developed countries. This may be because the wealthy countries can afford to spend more on health care and this is found to be a major correlation between health care and spending. Health studies show that the difference in health spending may be due to investment in medical technology which accounts for more than half of the total growth according to Baker (2003). Increase in health care costs has made it increasingly difficult for families and businesses to purchase the health insurance coverage. Insurance premium increases consistently outpacing inflation and the increase in the earnings. The effects may be direct through increased worker contribution for premiums or minimized benefits or indirect when the employers do not increase wages to offset the increases in premiums. Field (2007) states that households a pay more for their health care and this affects spending of their income since they have to keep up with the increasing costs. There were serious political discussions about the need to reform the American health care systems. This was due to pressure on by all the parties the parties that bear the burden of the costs including the government and employers. Health care was based on the HMO model that led to the emergence of the system referred to as medical care according to Clancy and Franks (1997). This was to minimize health costs by linking providers and all other parties into defined networks that trade price for access to patients regulated by insurers and other risk bearers. Managed health care was practiced widely and led to tremendous consolidation among all the parties in the health care sector. The system has an impact on health care and had both negative and positive changes on different parties in the sector. The employers were favored by the system as managed care was considered to be a response to the insurance industry to the demand to end significant rises in the premiums as explained by Gary and Morgan (2002). This was only a temporary solution as they only reduced in some cases though employers are able to negotiate for flexibility in the premiums. Health costs are seen to be on the rise due to the fact that insurers are the long-run bearers of the health losses, increase in pharmaceutical costs, wage inflation and new technology. The ability of large employers to cater for increased health care costs and demand for increased benefits for their employees is determined by the economy and the labor market. The government is a major player in the health sector since it pays for the health care and regulates all the policies. This has led to a negative impact on the patients since they are clearly dissatisfied with managed care however; member satisfaction generally appears to be acceptable as explained by Kongsvedt (2003).This has led to legislative changes, employer demands for enhanced programs and legal challenges on health decisions made. The government faces problems in financing heath care and the managed care could reduce the costs involved. This concept was accepted and implemented in the commercial markets. The results have not been positive since companies with a profit motive rushed in accepting the population’s global risks. The companies had to provide improved benefits to discourage patients from the traditional system and they made less profits resulting to dumping of the patients to the former system. There was increased competition among insurance companies as new companies joined in the trade to take advantage of the booming business. Insurers found themselves in a situation where the prices were too low and they could not regulate the prices of the premiums. The health providers did not benefit as their income was transferred to the investors. Trends in the health care sector are unpredictable and this is caused by the high medical costs incurred by all the responsible parties. The statistics show shocking information calling for immediate reforms in the sector. There has been attempt to change the trends however they have not been effective in all the areas. The managed care was introduced and the impact was not as much since the policy had some negative effects on all the parties though it brought about a changes. The government should devise better and more effective policies to keep the current trends under control since there is need to give other sectors in the economy equal importance. References Baker, L. C. (2003). Managed care spillover effects. Annual review of public health. Clancy, C. M. and Franks, P. (1997).Utilization of Specialty and Primary Care: the impact of HMO insurance and patient-related factors. Journal of family practice.  Field, R. I. (2007). Health care regulation in America: complexity, confrontation, and compromise. Oxford University Press US. Gary, F. M. and Morgan, M. M. (2002). The effects of managed care on medical referrals and the quality of specialty care. Journal of industrial economics, Vol. 50, pp. 457-73. Kongstvedt, P. R. (2003). Essentials of managed health care, Volume 1. (4th ed.) Jones and Bartlett Learning. Shi, L. and Singh, D. A. (2009). Essentials of the U.S. health care system. (2nd ed.). Jones and Bartlett Learning. Read More