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Health Care Spending Paper Essay

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Health care costs for individuals in the United States have increased and will continue to increase. The number of people needing care and insurance is one of the major factors in health care spending. Another factor is the amount needed to be spent on new equipment and technology which will always continue to change. The U.S. health care spending accounts for 16% of the gross domestic product (GDP), which is the highest compared to other countries. Although the American populations have benefited from the investments made in health care, it still puts strains on the systems used to finance health care, such as private and public insurance programs.

Many people are still without insurance and those who do have insurance have seen their out-of-pocket expenses grow from their deductibles and copayments (Kaiser Family Foundation, n.d.).

Health Expenditures

The national health expenditures currently have reached $2.1 trillion. According to Forman (2008), “This translated into $7,026 per person and 16% of the Gross Domestic Product (GDP)” (para.

3). Both of these records are the highest among the nations. The hospital spending accounts for 31% of the national health care expenditure, which continues to grow. Due to a 0.2% Medicare fee schedule update for physicians in 2006, the physician expenditure is at an generally low rate at 5.9%. Prescription drug spending has increased to 19% due to the implementation of Medicare Part D. Administrative cost have also grown over the years and is currently at 8.8% in the health care spending expenditure. The growth of this is due to the amount of Medicare beneficiaries who have enrolled in the Medicare Advantage plans. Medicaid spending has for the first time ever, decreased in the amount spent on health care, partly due to Medicare Part D (Forman, 2008).

Spending too much?

The level of health care spending is too high and continues to grow. It will continue to grow and exceed the overall GDP, which does not leave open opportunities for spending in other areas. Health care spending has not been manageable for some time now, resulting in a higher number of people uninsured and a greater number of consumers and employers struggling to afford insurance. The increased use of the Medicare Advantage plan has increased the importance of managed care and also puts the remaining fee-for-service system at risk (Forman, 2008). Health care in the U.S. is also much higher priced for the services than other countries. According to Kelley (2010), the public’s lack of market power – the ability to drive price based on supply and demand, as with most other products and service – is the cause of high prices in physician services, hospital services, and prescription drugs (p. 21).

To Add or Cut Spending

According to Kelley (2009), “Estimates suggest that as much as $700 billion a year in healthcare costs do not improve health outcomes. They occur because we pay more for care rather than better care” (p. 2). We are often provided with service that do us no good or services that we really do not need. Too much is spent on unnecessary hospitalizations, unneeded tests, over-priced drugs, and more expensive equipment that works just as well as the last and cheaper equipment (Kelley, 2009, p. 2). Compared to other countries, the U.S. health care costs are too high; more is spent per capita and the GDP percentage is the highest. Health care costs also can be reduced by eliminating the amount of medical errors, fraud and abuse, and payments for services with no evidence that they contribute better health outcomes (Kelley, 2009, p. 4).

According to Kelley (2009), “The Federal Bureau of Investigation (FBI) estimates that fraudulent billings to public and private healthcare programs are 3-10 percent of total health spending, or $75-$250 billion in fiscal year 2009” (p. 17). Kelley (2009), states that a substantial amount of care provided adds no or little value to the diagnosis of a patient’s condition or effective treatment of a diagnosed condition (p. 12). This means that the use of diagnostic test, high-price procedures, and irrelevant use of antibiotics can be decreased. The result of this could save millions of dollars in health care expenses for hospitals, patients, and insurance companies. Health care costs also can be cut by administrative costs. According to kaiseredu.org (2011), “At least 7% of health care expenditures are estimated to go toward for the administrative costs of government health care programs and the net cost of private insurance.”

Health Care Finance

The public’s health care needs are paid for by public and private health insurance companies, which in the year of 2010 cost about $2.6 trillion. This is ten times over the $256 billion spent in health care expenditures in 1980 (Kaiser Family Foundation, n.d.). Health care needs for citizens age 65 and older are covered through Medicare with no direct out-of-pocket expenses. Not all drug costs and medical services are covered under Medicare; some require additional coverage from private insurers (Torrey, 2010, para. 1).

Private health insurance is available to employees through their employer. Americans under the age of 65 who cannot afford health insurance have a chance to be covered under state-run programs, such as SCHIP for children. There are millions of people still uninsured and many who are underinsured (Torrey, 2010, para. 2). According to Torrey (2010), “With the passage of the healthcare reform in March 2010, the number of uninsured Americans is changing so that by 2014, 32 million more Americans will have coverage” (para. 6).

Economic Health Care Needs

The future economic health care needs are expanding health care coverage and addressing the rising costs. The percentage of Americans with health insurance declined in 2009 (American College of Physicians, 2011). According to the American College of Physicians (2011), “The number of uninsured persons reached an all-time high, with almost 51 million people having no health insurance coverage and 59 million being without health insurance at least part of the year” (p. 2). Many people have also signed up for Medicaid and many more need to sign up with the time of the Baby Boomers. If the health care system does not come up with a solution to the finances of health care and health insurance it will not be provided. If the costs of health insurance are also not taken into account, many will lose their insurance because they can no longer afford it.

I believe the needs of the health care system will be met through government financing and other programs, which may result in higher taxes. In 2014 the Affordable Care Act (ACA) will become available to nearly all Americans and will address the challenges of rising costs, inadequate capacity, and coverage. According to the American College of Physicians (2011), “ACA will address the shortage of primary care physicians by reforming payment systems and by the funding of primary care training programs” (p. 1). The health care system needs to realize how their money is being spent and wasted. The costs of medical supplies and some prescription drugs are outrageous.

Starting with little changes, such as the price of aspirin in a hospital can result in lower health care costs. The important need of Americans and providing affordable health insurance is a major issue. This results in the high health expenditures that are seen today. Americans should not have to worry about whether or not they will be able to afford health care in the next few years, let alone have insurance. Americans without insurance will need to have access to some type of care or insurance. Health insurance companies and employers need to come up with a solution or find ways to help out the people of the U.S. If health care prices do not decrease soon, they may never decrease.

American College of Physicians. (2011). Health Care Coverage, Capacity and Cost: What Does the Future Hold?. Retrieved from http://www.acponline.org/advocacy/events/state_of_healthcare/snhcbrief2011.pdf Forman, H.P. (2008). National Health Care Expenditure Update: A New Threat or an Opportunity?. Retrieved from http://www.ajronline.org/content/190/3/557.full kaiseredu.org. (2011). US Health Care Costs. Retrieved from kaiseredu.org: http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx Kelley, R. (2009). Where Can $700 Billion in Waste be Cut Annually from the U.S. Healthcare System?. Retrieved from http://www.factsforhealthcare.com/whitepaper/HealthcareWaste.pdf Torrey, T. (2010). Healthcare Reform – How Should Healthcare be Paid For?. Retrieved from http://patients.about.com/od/healthcarereform/a/reform-payment.htm

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