National Health Care Expenditures

Custom Student Mr. Teacher ENG 1001-04 21 September 2016

National Health Care Expenditures

Health care costs are much higher in the United States than anywhere else. It does not matter if it is measured in total dollars spent, a percentage of the economy, or per capita basis. The United States has the world’s largest health care market. Health care accounts for 40% of all health expenditures and the United States obligates to just 5% of the world’s population. Considerably higher health care costs do not seem to make U. S. citizen’s appreciably healthier (Getzen & Allen, 2007). U. S. health care costs continue to rise notably faster than any other segment of the economy or the population’s incomes for more than the last 40 years.

Americans cannot endure this forever. The condition of health care economics is the United States’ gravest crisis, and this gridlock commands a solution. Finding one will not be simple or pleasant (The High Cost of Health Care, 2007). This means the government has to come up with plans that help contain costs while preparing for the future, and the population will likely continue to endure rising costs that place hardships on their household finances. In 2011 US health care spending grew 3. 9% to reach $2. trillion, marking the third consecutive year of relatively slow growth.

Health care expenditures grew 3. 9% consecutively 2009 through 2011, indicating three years of slow growth. Health care spending reaching $2. 7 trillion in 2011, also shows in a share of the Gross Domestic Product (GDP) remaining stable at 17. 9 % for the same period. Last year, 2012, finishes out with a little higher annual rate of 4. 3%. For 2012, national health expenditures grew at an estimated annual rate of 4. 3% in 2012, a bit higher than the 3. 9% experienced for each of the years 2009-2011.

While this assessment is subject to adjustments, it foreshadows a fourth consecutive year of record-low growth encompassing the previous 50 years of statistics. The showing of slow spending at the national level does not denote the same regarding spending in the personal level. Personal health care in fact accelerated in 2011. This spending level went from 3. 7% to 4. 1% because of more growth in spending for prescription drugs, physician fees, and medical provisions. Personal spending grew because of slowing Medicare and Medicaid spending and the increasing rates of private insurance.

With slow growth also reporting in the population’s incomes, new jobs, and the GDP, some are questioning if US health care will rally after this three-year decline (Hartman, Martin, Benson, & Catlin, 2013). Director of the Altarum Center for Sustainable Health Spending, Charles Roehrig, believes that the slower growth in health care spending incites by slower health care price growth, which follows the slower economy-wide inflation. Altarum’s research proposes that the recession continues to press on health care expenditures, reducing growth by a percentage point or further.

And while the figures are clamorous, health care providers ultimately may be cutting back employment in light of reimbursement coerces (Altarum Institute, 2013). An average family in the United States with typical full coverage health insurance through their employer currently spends more on yearly health care than on a year of groceries. The specialists at Milliman Inc. , examined the costs of health care for a U. S. family of four and found that the yearly cost of employer sponsored benefits through an employer-sponsored insurance organization increased 6. 2% to $22,030, compared to $20,728 the previous year (Glynn, 2013).

Government is running into a number of major difficulties in attempting to provide health care. One of these difficulties is how to efficiently earmark resources amid hospital-based services and preventative, community-based services. Government also considers what particular preventative measures to promote (Bedkober, 2012). In the long haul, government’s decision to promote healthy lifestyles may be the best choice. For example, if the population navigates toward healthier lifestyles and preventative measures, hospitals would not have the need to continuously fund for more beds.

The question is can the citizens of the United States endure the price it will cost to get to a better place that is economically sounder and healthier? Healthier people would drive health care costs down, but it definitely will take some time. During the decades it would take to get people healthier, national spending would need restructuring. It is a known fact that poor people are generally not healthy people. Currently, the high cost of health care is making more people poorer. Costs must come down in order for people having difficulties gain better access to health care.

In some instances, too much money is spent in some areas and not enough in others. One of the most profitable industries, according to Fortune magazine is the pharmaceutical industry. The pharmaceutical industry’s profitability in 2005 stands at 15. 7% of sales and stands as the fifth in most profitable U. S. industry. The costs in relation to high-technology treatment, for example in-patient treatment, leads government to believe that preventing the advent of diseases rather than simply treating it when it appear is the best financial strategy for the future.

Rather than funding to increase hospital bed numbers, government should fund preventative health measures that will lead to a healthier and more cheaply serviced population (Bedkober, 2012). With this funding, many want to know who actually pays for health care. The U. S. Government drew in more than over 2. 16 trillion dollars in revenue in 2010. The American public supplies this revenue. The same year, 2010, signifies the Federal Government becoming the largest financer of health care with 29% of spending. One actually could say that the American public is the financer of health care.

One could also say that the public uses various federal programs to distribute health care fundings. These programs are Managed Care Organization (MCO), Preferred Provider Organizations (PPOs) or point-of-service plans (POS), Medicare, and Medicaid, takes a 24% share; National Defense, including Foreign Policy, Veteran’s Administration, and Foreign Aid, is 23% of spending; pensions and disability through Social Security, take a 24% share; and Welfare takes 12% of spending. All other spending, including interest on the national debt, takes 18% of federal spending.

The chart below shows the Federal Government (29%) exceeding public households (28%) for the first time. Source: Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, National Health Expenditure Data, 2012 release. Contributors finance the nation’s health care bill by paying insurance premiums, out-of-pocket expenses, and payroll taxes, or by directing general tax revenues to health care. The federal government and households contributed nearly equally. The following chart breaks down how each contributor directs their spending.

Source: Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, National Health Expenditure Data, 2012 release. Another perspective in answering the question of who genuinely pays for health care is to look at the bottom line to see where all funding actually comes from. All funding comes from taxes. Taxes comes from the citizens of the United States. The whole U. S. population pays for funding. When a patient does not pay cash out of his or her pocket for his or her medical care, every dollar spent on medical care is paid through taxes and insurance premiums everyone.

The government and insurance companies do not “pay” for anything, the population does. The government distributes the money they receive form people’s taxes to other agency payors. This is why individual taxes rise and net wages are lower. Even when many individuals choose to opt out employee benefit deductions, called a tax advantage, individuals still pay. This tax is allocated from other places. Nothing is “free” when the bottom line starts with the population.

When receiving less money from wage taxes, more money is necessary from other taxes such as fuel taxes, property taxes, income taxes, and Social Security taxes to make up from the shortcomings. One thing is certain, there is a future. The U. S. government agencies may be on the right track, time will only tell. Health care reform is on everyone’s mind as it will affect every part of the individual’s life. Other than costly, there are other population needs that require addressing now before it is too late. The United States is in the midst of an aged population explosion.

These are people who have or will be leaving the workforce soon. Take into account that the government receives their money from individual taxes on wages. The revenue from these taxes will increase shortcomings that fund the agencies that take care of U. S. health care. This dilemma is a “catch 22. ” Any reform plan must be an attempt to fix both. This may cause strategically proposed cuts in many areas. The U. S. government must decide on what is highest in priority. Some industries that receive government funding may need to decrease their profits to help the nation.

Pharmaceutical companies are among the highest in profitability. It is this author’s opinion that dropping the company’s price of a bottle of medicine would not hurt them near as much as the current high cost of medicine hurts the population. Another area that could help reduce costs would be unnecessary grants to some research organizations. Again using the pharmaceutical industry as an example, this industry conducts much research only for its primary need – to fulfill its dominating obligation to shareholders to make a profit. The obligation to patients comes second.

There are many researches that would not hurt progress if they were dissolved. However the United States plans to reform health care will not take overnight to accomplish. Reform should have been placed into action years ago, but it is hoped that it is not too late. The government’s spending of the population’s money must go through restructuring with the constant reminder of keeping the people first priority. The people must have protection and good access to health care or nothing else will matter if the United States is to remain the greatest nation.


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  • University/College: University of Chicago

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 21 September 2016

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