Health Care Spending

United States is the largest and most diverse society on the globe. It spends almost 2 trillion dollars every year on health care, which is one in every seven dollars in the economy. U.S is one of the very few nations where all its citizens do not have medical coverage. Although it spends heavily on per capita on health care, and it has the most advanced medical technology system in the world, still it is not the healthiest nation on earth. The system performs so poorly that it leaves 50 million without health coverage and millions more inadequately covered (Garson, 2010).

There are three issues when it comes to the health care cost rising. The first is the rising cost in prescription drugs. The second area of rising cost is the increased technologies when it comes to the medical industry. The third problem

“An ounce of prevention is worth a pound of cure.” This saying goes to show that investing in preventative care is the only way to effectively reform health care plans in America. It is no secret that there are many issues facing health care; however, the most important issue seems to be the lack of funding for preventative care. Redistributing health care related funds into areas like public health and preventative medicine can increase the overall quality of life for patients. If health care reform revolves around preventative medicine, then America’s standard of health will rise. A healthier society will lessen the demand for expensive life-saving surgeries, thus decreasing the overall cost of health care. The overall solution for this issue would be to set a realistic health care budget that correlates to the United States’ current standard of health, thus majority of the budget focuses on preventative medicine.

The health care system has had a negative impact on both insured families and uninsured families. Many believe that health care reforms are unnecessary and hence should not be applied. Reducing health care costs will not necessarily benefit the economy. After spending decades trying to reduce health care costs, some commentators and policymakers now argue that health care costs should be increased to stimulate the economy. At the crux of the argument are the notions that increasing spending on health care will create jobs that can be filled by those losing jobs in other areas of the economy and that implementing long-proposed reforms will reduce health care costs. Nay-Sayers argue that health care reforms will only prevent economic growth, and that increasing health care costs in order to reduce them is an inconsistent belief. These two arguments are fundamentally at odds with each other. Advocates claim simultaneously that it would stimulate economic growth to spend more money on these reforms, and that the reforms would reduce total health care costs.

When contemplating health care policy changes, several economic issues in health care must be considered. These include the financial issues affecting the health sector and have an impact on health policies. Policy makers face unending challenges due to the health sector revenues that are always rising. Another challenge is decreased funding and failure of the health insurance services.

This paper will include: the current health care expenditures whether spending is too much or not enough, where the nation should add or cut, how the public’s health care needs are paid and provide a forecast for: the future economic needs, why these needs must be addressed, how I envision these needs will be financed and conclusion.

25% or more of one’s income going toward health care is too much for today’s economy this

“The amount people pay for health insurance increased 30 percent from 2001 to 2005, while income for the same period of time only increased 3 percent.” (Source: Robert Wood Johnson Foundation). The rising cost of healthcare is a huge problem in America today. In this paper I will analyze the different issues and causes for the increase in cost.

The main economic challenge for the healthcare system in the United State will be the rising expenses associated with Medicare and Medicaid. The Governments share of healthcare spending is predicted to rise to 31 percent by the year 2020 (Keehan, Sisko, Truffer, Poisal, Cuckler, Madison, Lizonitz, and Smith, 2011). This may jeopardize the economic stability and financial security of the nation.

3n. Why has out of pocket spending been trending up over the last 20 years? Kelton opines that there has been such a forceful movement away from employer based insurance that the employer based system will collapse. (Kelton & CFEPS, 2007, para. 38) For the employers that

Rising medical costs are a worldwide problem, but nowhere are they higher than in the U.S. Although Americans with good health insurance coverage may get the best medical treatment in the world, the health of the average American, as measured by life expectancy and infant mortality, is below the average of other major industrial countries. Inefficiency, fraud and the expense of malpractice suits are often blamed for high U.S. costs, but the major reason is overinvestment in technology and personnel.Health care costs are far higher in the United States than in any other advanced nation, whether measured in total dollars spent, as a percentage of the economy, or on a per capita basis. And health costs here have been rising significantly faster

Healthcare spending growth rate trends show astounding estimates. Since 1960, spending has risen from $27 billion ($143 per capita, 5.1% pf GDP) to amazing $1,678.9 billion ($5,670 per capita, 15.3% of GDP, 2003 data) (HHS, 2005). Recent research estimated that by 2013, healthcare spending will be as high as 18.4% of the Growth Domestic Product. It is important to note that the gradual move from hospital to ambulatory setting has resulted in much higher spending on outpatient hospital services and prescription drugs. The spending growth for these two trends is much higher than the overall healthcare cost growth, which, in fact, increases faster than such important economic indicators as GDP growth, inflation growth, and population growth rates.

While some argue that a switch to universal healthcare will cost up to $1.5trillion,4 there are other factors at play that influence the economy. Most Americans have health insurance through their employer which causes a huge financial strain on that employer, which is in turn reflected in product and service prices. If the price of goods and services goes up, that could end up hurting the United States’ global competitiveness. Citizens are unwilling to leave their current employer and possibly start their own business for fear of not being able to afford health insurance on their own.5 Some of those would-be entrepreneurs could create the next big product that becomes a critical part of the national economy. On average, the typical family of four in America pays over $20,000 annually on health insurance,7 money that could be pushed back into the economy. This is all in addition to the societal costs caused by the lack of universal health care such as fewer years in the workforce, caused by poor health, and higher cost to public programs like Medicare and the criminal justice system.5 If someone is uninsured until they reach the appropriate age to enroll in Medicare, they could have pre-existing, otherwise preventable conditions that will end up costing more money than it would have to treat them in the first place. In 2005, economist Dr. Kenneth Thorpe published a report in which he calculated the overall

The U.S. Department of Health and Human Services (HHS) stated that "The health of the individual is almost inseparable from the health of the larger community and that the health of every community in every state and territory determines the overall health status of the nation." It has now become clear that our economy in terms of healthcare insurance is not healthy; the healthcare system in the United States spends 1 cent of every healthcare dollar in the prevention of diseases and 99 cents on the cure. Our healthcare system is the most expensive and yet arguably among the least cost effective in the developed world. Despite the highest per person health care spending among the Organization for Economic Cooperation

The healthcare system plays a key role in the economic stability of our country, as every year trillions are spent in attempt to combat disease and health issues that plaque humanity. As it makes up a significant amount of the expenditures in the economy, so the costs associated with health care of those in pain from illness and injury, including lost productivity, increased need of assistance in living and also the cost of death in some cases, is important to the economic stability and over all standard of living in our country. The key to economic prosperity is balancing the need for care with the costs of illness to keep as many people healthy and well without breaking the bank of collective society. The costs of healthcare have been increasingly problematic in recent years with so many issues surrounding the current system. With the “total health care spending in the United States expected to reach $4.8 trillion in 2021, up from $2.6 trillion in 2010 and $75 billion in 1970, meaning that health care spending will account for nearly 20 percent of gross domestic product (GDP), or one-fifth of the U.S. economy, by 2021” (Aetna). With this in mind it is apparent that as we look at the trillion-dollar industry of the medical community it seems that it needs to be a major focus of our nation as a whole and with the many issues come many creative solutions. First let us analyze the reasons behind the current cost and the major problems facing this industry and than discus what