The Cost of Healthcare in the United States - Research Paper Example

There is a significant increase in healthcare cost in US as compared to any other sectors. According to Medicare and Medicaid services, the rise is evident in both private and the public sectors. Research shows that National Healthcare was anticipated to reach $3.1 trillion at the growth rate of 7.3%. Additionally, the health care cost in the year 2012 represented 17.2% of the gross domestic product (GDP). The analysis was done between 2002 and 2012. In the year 2001, the National Healthcare represented only 14.1% on the gross domestic product (GDP). This shows that there has been a rise in the cost of healthcare in United States. The increase in cost of healthcare in US is expected to continue if the policies regarding the issues are not enacted. The increasing cost is because National Healthcare is the most important aspect to the population. However, the economy in the US cannot cope with the rising cost. The past elections have always promised the voters that the cost of healthcare is to be dealt with. Health insurance was the main priority of the candidates that run for election in the year 1992. The healthcare insurance is the best option that can reduce the cost of healthcare. The election conducted recently lead to the formation of policies to reduce the increasing expenditure in healthcare. Medicare subscribers are to be provided with prescription drugs according to policies enacted after the year 2002 election. However, the cost of healthcare in US is still increasing despite the government’s effort to provide insurance coverage to the participants. Research shows that, disparity existing between the insurance covers and the disparity in the cost of medical services brought by changes in markets are some of the causes of increasing healthcare cost. Affordable care act or Obama Care was recently signed into law by the president to curb the increasing cost of healthcare. Additionally, it was enacted to increase the chances of access of health insurance cover by some American citizens that have not had access previously or those who cannot afford (Economic report of the president 161). According to Bipartisan Policy Centre (4), the cost of healthcare in United States in the year 2010 was $2.6 trillion. The cost was 18% of the Gross domestic product. The cost is high as compared to other developed countries. Developed countries such as Germany, Japan and UK spend fewer amounts on the provision of healthcare to their population. Bipartisan Policy Centre (4), Japan spends 9.5% of the gross domestic product (GDP) while Germany and UK spends 11.6% and 9.6% respectively. This shows that US spends a lot of money on the health care service in comparison to other developed countries stated above. There is high spending on the healthcare services in US as compared to other nations. However, the high spending does not mean that they provide all the services to the population. Some of the services provided are not up to standard. This calls for reduction on the healthcare services in US and provision of better services to the population. For the last 30 years, the cost of healthcare service in United States has doubled. This rising cost is the biggest problem to the economy. The consequences of increasing healthcare cost in the economy have an extensive cost to the country. This is because firms that have had an opportunity to provide insurance covers to the population do not get enough capital to invest in their firms. This means that innovation and increase in technology or technological advancement cannot be met by the companies. Additionally, such companies cannot compete with international firms because of low technology and lack of innovation brought by the rising cost in the country. The increasing healthcare cost also affects employees; this is because employers are expected to provide subsidies for healthcare benefits. This means that the anticipation of basic salary increment will not happen. This led to slow growth or increment in middle class wages (Economic report of the president 161). Rising costs on healthcare has effects on both private and public sectors that provide health benefits to the population as stated earlier. Population accessing private health insurance will have to dedicate the resources that would have been used on basic needs such as education, food and housing. Furthermore, the increasing healthcare costs mean that the government will have to increase the expenditure on the healthcare programs such as Medicare and Medicaid to meet the standards of the population. In addition, consumers of such programs will drain the budgets especially the federal and the state budget. Investment on the economy will be low because of increase in the public debt and other priorities such as healthcare services. The bar graph below shows National Healthcare Expenditure spending in US and the anticipated healthcare up to the year 2020. The analysis is based on the growth rate of 4% annually. (Munro 1). Factors that have contributed to the increasing healthcare cost in US are population, prices and the utilization rates. According to Bipartisan Policy Centre (6), the factors mentioned above will still continue to raise the cost of healthcare in the future. However, there are other causes that can escalate the factors mentioned above. Some of the causes of increasing healthcare services that pushes those factors such as population, prices and utilization rate are fees met on compensation on health care system, administrative burden on investors and consumers, aging population, increasing rate on chronic diseases, advancement in medical technology, levies on the health insurance. Additionally, other factors such poor transparency on the cost of healthcare services, competition by the insurance providers, changes in the market regarding healthcare facilities and increasing cost of medical services (Bipartisan Policy Centre 6). Analysis of some of the factors stated above give evident that cost of healthcare in US is increasing. Administrative burden as stated above is one of the factors that increases healthcare cost. According to the research, administrative burden increases because of an increasing number of paper work brought by fragments of compensation and delivery. More time and the cost are dedicated to administrative work. The cost has to be met by the provider or patient. In addition, time of the physician and the patient is wasted. For example, it has been noted that providers of cost of health file their claims with a variety of insurance covers. This means that a tedious process has to be followed to ascertain the patient`s eligibility and the claimants that they require. All this process need sophisticated resources to provide the right information so as to inform the insurers about the cost of healthcare. According to the research, administrative cost that has to be met annually by US is approximately $156 million to $183 million (Bipartisan Policy Centre 9). Population that require care especially the older or aging population increases the cost of healthcare. Research shows that the aging population will affect the federal budget in future. This is because the Medicare insurance will have to deal with the aging population for the provision of all the necessary medical needs. Federal health budgets have increase significantly for the last two decades. The aging population have contributed to approximately 52% of the total spending by the federal government. Many people believe that US has the best healthcare system in the world. This is because they have the best medical technology. However, a few know that the healthcare system of US is not good as compared to other developed nations. The fact is that US spends a lot of money on healthcare system, yet they still have unequal distribution of healthcare services, a larger uninsured population and administrative waste (Bipartisan Policy Centre 9). US healthcare system is covered by both public and private health insurance. However, private insurance plays a major role as compared to public insurance. The healthcare system of US is quite different than other countries because private insurance dominate than the public. The analysis of insurance covers on public and private insurance shows how private insurance dominate than public. In 2003, approximately 62% of Americans were insured by their employers on private insurance, 5% seek private insurance, 15% signed for public insurance cover such as Medicaid while 18% of the population remained uninsured. The chart below shows insurance cover by both public and private including the percentage of population subscribed (Chua 1). (Chua 1) Public healthcare insurance in US include Medicare and Medicaid. Medicare is an insurance cover provided by the federal government for individuals of age 65 and above. Medicare is run by the government and it is termed as a single-payer because the government administers this program. Medicare is funded by the taxpayer under the federal income tax and payroll tax. The benefits of this covers is categorised into Medicare Part A, Part B, Part C and Part D. Hospital services and physician services are covered by Medicare Part A and Part B respectively. Part D is for prescription drugs while Part C is regarded as Medicare advantage. Despite all the covers stated above provided by the program there are still some deficiencies that makes its incomplete. For example, the cover does not include vision, hearing and dental (Chua 2). Medicaid is another cover formed to insure low income earners and the disabled people. The cover is funded by the government through taxes. The benefits are far much better than Medicare. However, there is a problem on individuals in locating additional private providers as the state provides little compensation. Private health insurance is a cover mainly enrolled by many Americans. Employer sponsored insurance and private non-group are some of the main private insurance that covers most Americans. Employer sponsored insurance is taken care by the employer as part of the benefits to the employee while private no-group is provided to individuals with no jobs or those that have retired (Chua 2). The Healthcare systems are seen to be having deficiencies because many individuals do not have insurance. According to Starfield (483), approximately 40 million Americans are not covered by any insurance group. Furthermore, the cost of the healthcare system is high in US, this is another deficiency. It is also estimated that many Americans die because they access wrong medication due to errors made in the healthcare system. Based on the above view United States does not have the best healthcare system in the world. Comparison with 13 countries was done, and it was concluded that US is the second last in terms of provision of the best healthcare system. Some of the countries that were analyzed with US are Canada, France, Japan, Germany, Spain, UK, Australia, Finland, Denmark and Netherlands. United States was ranked 12 and Germany the last. The analysis was based on the fact that there is a high neonatal mortality and infant mortality, post neonatal mortality is also high in US, but it was ranked number 11 to show that there are other 3 countries behind with high post neonatal mortality. The world health organization recently analyzed US healthcare system and confirmed the deficiencies existing. The country was ranked 15 out of 25 industrialized countries. The analysis was based on child survival below the age of 5, expenditure on the healthcare system, and diversity existing among the social groups with regard to healthcare system. This poor position of the US has elicited many questions. However, implication of the healthcare system regarding the position at which the country falls has failed. The explanation behind the poor performance is quite difficult. For example, researchers have thought that the habits such as smoking and alcohol abuse in US contribute to poor healthcare system. However, according to the analysis conducted on alcohol consumption and smoking, women were ranked the fifth with only 26% of the women smoking. Male smokers in US are approximately 28% which puts US at the third position among developed countries. Alcohol consumption ranks the US as the fifth. This shows that alcohol consumption and smoking do not contribute to the poor position at which US is ranked (Starfield 483). There are some factors that have been identified as the cause of high cost of the healthcare system. Research shows that some medical spending is not productive despite the increase in cost. For example, research shows that development of treatment of heart disease has contributed highly to increase in life expectancy. This is according to the research conducted between 1984 and 1998. However, according to the recent research there seem to be a contradiction, the research shows that there is little development regarding the survival rate of patients with heart problems. Additionally, more spending on certain regions has little impacts on survival rate. Analysis on spending rates of different geographic location shows that increase in spending on Medicare on patients with heart disease has no impact. This concludes that allocation of the fund to heart attack treatment is a waste and regarded as one of the inefficiencies in the healthcare system. Duplicate care and multiple treatments is another waste that contributes to inefficiencies in the healthcare system. This is because of poor or lack of coordination among the care givers. Waste arises because physicians have to be compensated for the work done (Economic report of the President 169). Klein (1) argues that other nations such as Canada, France, Germany and UK have the best healthcare system. The author explains that the countries stated above cover their entire population unlike US that have 45 million people with no health insurance. Additionally, the author shows that they spend less on their health care as compared to US which spends a larger percentage of their GDP. However, Canada is the only country that dedicates more of its GDP on the healthcare system but it provides the best healthcare system to its population. Canadian healthcare system is better because services are provided in a short time. Analysis done in 2003 shows that the times spend by patients waiting to access services such as surgery or diagnostic is short. According to Klein (1), individuals can wait for three to four weeks to access surgery services while diagnosis takes three weeks. Emergency surgeries are attended to immediately. However, research shows that the time taken by 32% of the patients to access surgery services in US is more than a month. Those who are likely to wait for 4 months are approximately 5%. The other population cannot seek healthcare services like diagnosis because most of them do not have insurance cover. The cost of healthcare in Canada is quite low than US. Research shows that US spending rate on healthcare is approximately 345% per capita more than other neighbouring countries like Canada. There are some attributes that contributes to this higher per capita in US than other countries like Canada. In Canada, administrative cost is lower than US because Canada has adopted single –payer system which allows the government to purchase services. However, nurses and physicians are still provided job opportunities by the government (Klein 1). In France, healthcare insurance is provided by the government. All the citizens in France have insurance because they get it from the government. Additionally, citizens can still access private insurances from their employers. The government is also advising its citizens to go for private insurance, and this has seen close to 86% of them using private insurance as a supplementary. The population access private insurance from their employers with a few who can’t afford getting sates subsidized insurance. France is considered to be providing the best healthcare services to its citizens. World Health Organization ranks France as the best in the world while US is ranked number 37th. Medical services can be accessed from any hospital or services accessed from any physicians or doctor in France by French citizens. Comparison with US healthcare system shows that French citizens can access medical services more times than American citizens. According to Klein (1) French physicians can attend to French citizens at an average of 6 times annually. In US, an individual can access services from physicians at an average of 2.8 times annually. This shows that French access medical services frequently and manages to spend half of their per capita. This because their services are quite cheap as compared to US healthcare services. Conclusion Research shows that the cost of healthcare in the US has been consistently increasing over the years. However, policies have been created by the government to curb the increasing cost and avail medical insurance to Americans who do not have access to insurances. Policy such as affordable act signed in 2010 by the president help to improve the healthcare system in US. Analysis of the healthcare system in US shows that it is not good as compared to other nations. Additionally, US spend more percentage of their GDP on the healthcare system than countries like France, Great Britain or Germany. Work cited “Economic report of the president”. United States government printing office Washington, 2013. Print. Bipartisan Policy Center (BPC). What Is Driving U.S. Health Care Spending?America’s Unsustainable Health Care Cost Growth, 2012. Economic Policy Program. Chua, Kao-Ping. Overview of the U.S. Health Care System, 2006. Print. Klein, Ezra. The Health of Nations, How Europe, Canada, and our own VA do health care better. 2007. Web. 27 March 2014. Munro, Dan. 2012 - The Year In Healthcare Charts. 2012. Web. 27 March 2014. Starfield, Barbara. “Is US Health Really the Best in the World?” American Medical Association 284.4 (2000): 483-485. Print. Read More