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Sep 27, 2018 in Healthcare
Health Spending in the U.S. and the Cost of Healthcare
According to the Institute of Medicine of the National Academy of Sciences of the United States, America is Americans got it under various governmental programs. Certain governmental projects help to provide medical assistance for the disabled, the elderly, children, veterans, low-income people, and give emergency assistance to all residents regardless of their ability to pay for it. More than 45% of the costs in the health system of the country go to the financing of these government programs. Therefore, the U.S. government is the largest insurer of the nation (Rising Health Care Costs, n.d.).
The main flaw in the American system of medical care is that many people, especially entrepreneurs and owners of small businesses, do not have access to a large group insurance. However, it is known that the greater is the number of participants, the cheaper will be the insurance. That is why the question of the reforms in the Health sphere appears rapidly through these days.
The system of health care in the USA is the most expensive in comparison with other systems in the world. The country spends much more money on healthcare programs and projects than any other country on the globe. This issue is shown in both absolute terms and relation to gross domestic product (GDP) per capita. The rate of the United States consumes on health care are shown in the latest reports, and it is about 17% of GDP (Centers for Medicare and Medicaid Services, 2011). However, there is an expectation that there will be an increase of the share of GDP allocated to health care in the United States by 2017. The experts are sure, that it will increase the level of 19.5% (Centers for Medicare and Medicaid Services, 2011). Governmental programs are helping the health insurance industry to grow up and this process is active for more than 30 years. This issue is undermining the financial stability of the country as a whole rapidly. According to official statistics, every year Americans spend on medicine about 2.7 trillion dollars. More than a half of this sum are the spending on personal care of average Americans. It must be noted, that they are using their personal money (Centers for Medicare and Medicaid Services, 2011).
The main problem of the medical system of the USA is the high level of the expenses. It is one of the most expensive systems in the world, in comparison with other countries. One visit to the doctor with the cold costs approximately $150. The appendicitis surgery is worth $20000, when the operation on the heart costs more than $100 thousand. Staying in the hospital for recovery after surgery or serious illness costs about $5 thousand for each day (Rising Health Care Costs, n.d.).
It is impossible to save money on the health issues. With the rising costs of the various medical treatments, the residents of the country have less money for the other needs. Some of the citizens are giving up saving for the holidays; others have to take public transport instead of the car and so on. Many Americans have to cut expenses on the entertainment. That means there is a need in the reformation of the health care system of the United States as a whole.
The Causes of High Health Spending
Mature and elderly Americans spend much more money on the health care than working class or citizens with children. Moreover, the patients with the chronic diseases face serious problems. The expense for the hospital stays is rising, and the cost for therapeutic and diagnostic procedures is growing every year. Despite the fact that the governmental programs, such as Medicare, are helping the patients with serious diseases, it is never enough.
In the medical practice in the USA, sometimes the doctor pays attention only to one human organ that causes problems and inconveniences for the patient. However, he do not look at the body like at the complete and unique system. Each expert says only what is relevant to the body or the part of the human body, which is the object of his narrow professional qualifications. That is why the cost of the medical examinations in the United States surpasses all conceivable levels and is exaggerated greatly. The high cost of medical tests is a great temptation for those who do not shun the possibility of using them to beat out money from insurers and fund the pocket. Because of the massive use of tests, American medicine is increasingly becoming a feeder for rogues and schemers. In turn, the lack of effective control of the real need and the amount of medical examination instruments makes it profitable, but unscrupulous business.
People without health insurance are experiencing difficulties in obtaining timely medical care. That is another problem of the healthcare in the USA. For non-urgent cases, individuals have to pay an unreasonably high price for the visit or use the community clinics, which provide medical assistance on a sliding scale. Now about 1,250 such clinics in the country provide services in 8,000 locations. To meet a physician in this kind of institutions takes two hours of waiting (Centers for Medicare and Medicaid Services, 2011).
Those people, who have health insurance, also face additional payment, for example, they need to pay for the service in the event of a severe illness. Since 2014, the maximum that a person has to pay for the insurance is $ 6350 for a person and $ 12,700 for a family per year. As a result, serious illnesses and accidents, especially if they last for a long time and cause disability, often lead to financial shocks of the patient and his family (Rising Health Care Costs, n.d.).
The high cost of medicine and the rapid growth of spending on health care cause a lot of discontent in society. Adopted in 2010, the Act on Access to education tries to stop the rising cost of medical care, but still it is unknown whether it will be able to achieve the goal.
Innovation is another cause of high spending for the health care in the USA. It is known worldwide that America has the best medical centers with no analogs on the planet. However, production of medical products, such as medicines and equipment, engages private companies. America spends enormous sums on medical research mainly due to non-state sources. Laboratories mainly carry out research to develop new drugs, techniques, devices that can be subsequently recorded and presented in the pharmaceutical market. Government and universities prefer basic research. Public research institutions such as the National Institutes of Health (NIH) and the National Institute of Mental Health carry out many of these studies.
The Budget Committee of the U.S. Congress made an investigation of expenses. It concluded that the increase in health care costs is related directly to changes in program of healthcare that have occurred due to the growth of income, changes in insurance coverage and price increases. Spending on hospitals and doctors' salaries makes up a large part of the total cost of medicine, while the cost of prescription drugs gives only 10%.
Spending on health care are the issues of relevance not only in the United States. It is a global problem. The 50% of growth in expenditures is due to the improvement of technologies, and 20% states an aging population of the world. However, in the next few years the share of the costs associated with aging will grow. According to the Organization for Economic Co-operation and Development (OECD), over the past 50 years, health care costs on average outpaced GDP will show growth by 2 percentage points (Centers for Medicare and Medicaid Services, 2011).
The differences in policy and local conditions cause different situations in the countries of the world. In the United Kingdom (UK) health care costs account for about 8% of GDP, which is less than half in the United States. Nevertheless, this figure is increasing and is already beginning to disturb the British authorities. The population is aging, and the birth rate is 1.7 per woman, while to restore natural population decline it should be 2.1. The immigration helps to solve the problem; the population of the UK is projected to rise: from 63 million in 2012 to 71.2 million by 2050. On the contrary, the population of Japan will decrease from 127 million in 2012 to 107.2 million in 2050. Russia's population over the same period may be reduced from the current 143 million to 99 million. In China, the fertility rate fell to 1.82, the cost of health care is quite high, and the population is aging. That means by 2050 China will have 334 million elderly people (The Facts about Rising Health Care Costs, n.d.).
Despite the fact, that the medical care in the USA is one of the best in the world, still it costs too much. Without insurance, it is impossible to stay in hospital and get proper medication if you have not enough money. In addition, the doctors have to provide one with the help needed, but the bill will be very high. The bankruptcy of an individual in America is on very high rate, because it is the only possible way to escape from the enormous bills provided by hospitals.
There are several ways to reduce health care costs, including improved health care system, reducing the cost of medicines and payments to doctors. All these measures will certainly need the implementation, but there is more radical and potentially more effective policy, which is still being discussed. This option goes beyond the traditional areas of policy - economics, law and political science. Bio gerontology comes first for the science. Extension of the period of life, not burdened with age-related diseases (diabetes, cardiovascular disease, cancer, Alzheimer's and others), will lead to a more significant reduction in health care costs than all other measures together. It will save trillions of dollars in the coming years, and millions of healthy, vigorous people will be willing to work. That will give a new impetus to the economy. This option is not as difficult to implement.
The program of the extension of healthy life will have meaning if an effective means of active longevity will be developed by the end of this decade. However, in the next ten years, the results can help to change the health care reform law, in particular with regard to coverage and reduce the funds available for some programs. In general, this will help reduce the budget deficit (The Facts about Rising Health Care Costs, n.d.).
In the framework of the "service fee" project, each person individually at his expense, as well as for any other services should perform the pay for medical services. The insurance model provides the separation of financial risks, in which each individual or his employer has to pay a set monthly fee. This mechanism allows separating the funds, and it is often necessary, when there is a need to pay for a full range of medical services. Nevertheless, sometimes one has to pay a certain amount for the services, which is called a franchise or pay extra money for some part of each procedure.
The system of health care should face the range of reforms. That means all citizens must have health insurance. However, its costs should vary according to the level of the income of an individual. The insurance rate must be clear and risk-free. Moreover, the government should start the propaganda of the healthy way of life. The profession of a doctor is not very popular now in the USA, and this is another problem to be solved. Americans should understand the value of the medical workers and their impact on the health of the nation. The main thing for doctors in America is «Medicine is a business of saving lives», where business is the keyword. However, the doctor has to see in a patient a valuable resource of the country, and then the number of problems will be positively reduced (Troy & Wilson, 2014).
International Study Institute of Medicine states that there is more limited access to primary health care in America. There is a shortage of general practitioners: physicians, specialists in internal medicine and pediatricians. The current shortage is about 16 thousand of such specialists. According to the calculations of the American Medical Association, in ten years there will be a need in more than 200 thousand specialists (Troy & Wilson, 2014).
In the last few years in the USA, there was a significant slowdown in the growth of health care costs, as well as for medicines per capita in comparison with previous years. In addition, there is the recorded increase in the number of patient visits to doctors. The proportion in biologics in the structure of expenditure on health had also increased. The large amount of the costs on biological investigation is still accounting for small molecule drugs.
After 70 years of market relations in health care (non-regulated voluntary health insurance for the majority of the population, with fixed prices for medical services, as well as freedom of choice SMO patient, physician, and medical organizations), the U.S. health care faced insurmountable problems: failure, uncontrolled growth of costly health, reducing the availability of medical care.
In this regard, the Government of the United States developed, hosted by the Parliament and started the implementation of the reform package. It insists on moving to a solidarity system of compulsory medical insurance of the population (sold through private QS) and the establishment of the market return. That means the state should regulate all the private insurance companies and health care services. The State also has to establish a basic "package" of government guarantees provided at the expense of compulsory health insurance. Implementation of reforms in the pilot regions has led to positive results in solving the existing problems.
The largely slower growth of health spending, especially on medicines, in the United States in recent years have contributed to such factors as the implementation of the Law on access to health care. Through these measures, preventive drugs have become more accessible to patients, as well as expiration of patent protection number of the original drugs, which led to a decrease in their sales volume.
The U.S. has been taking steps to improve the health care system and health in general. Given the close relationship of the system of financing and organization of health services, it is new financing mechanisms lead to changes in the health care system. At the same time, it is a critical factor towards improving the health of the nation. Still, there is an important fact to be remembered by everyone. There is an inviolable right of every person for health care, which should be protected by the state.
- Centers for Medicare and Medicaid Services (2011). National Health Expenditures Projections 2011-2021.
- Rising Health Care Costs (n.d.).
- The Facts about Rising Health Care Costs (n.d.).
- Troy, T. D., & Wilson, D. M. (2014). Government vs. employment-sponsored programs. American Health Policy Institute.
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