Healthcare Reform

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Healthcare Reform Calls for Enormous Payment Restructure for Health Care Providers and Facilities

Healthcare reform has been a topic of great interest and a highly debated public issue for the past several years. Opinions are split on the reasons behind growing health care costs and methods to bring healthcare spending back in line. However, a consensus has formed surrounding the conviction that drastic changes must be implemented within our healthcare system. Some of these changes include a complete restructure of the payment system for health care providers, health care facilities and insurance companies in effort to control the rising costs of health care within the United States. The rising costs of health care within the United States have long been a concern among economists. According to the Organisation for Economic Cooperation and Development (OECD), a forum in which the economic data of multiple countries is analyzed and compared, total United States spending on health care between 2000 and 2009 increased an average of 4.3% per year. While this growth rate has been reduced to 2.7% between 2009 and 2010, health care spending in the United States still equates to 17.6% of the gross national product (GDP). This is significantly higher than the OECD 2010 health care percent of GDP average of 9.5% (OECD Health Data 2012). These statistics demonstrate that health-related spending compared to other industrial countries and within the United States in outpacing spending on other goods and services. Rising health care costs are making health care less affordable for individuals, families, and businesses. These higher costs have a significant effect on government budgets at both the federal and state levels as well. Victor Fuchs, an emeritus professor of economics and health research and policy at Stanford University asserts, “approximately 50 percent of all the health care spending is now government spending. At the state and local level it is crowding out education, crowding out maintenance and repair of bridges and roads. At the federal level we have a huge deficit financed by borrowing from abroad. We are financing a huge deficit in Medicare and Medicaid by selling bonds, mostly to China.”(Kolata) In terms of actual dollars, the United States health spending has nearly doubled in the past ten years. Rising from a reported $1.3 trillion dollars in 1999 to $2.5 trillion dollars in 2009, growing $96 billion dollars from 2008 to 2009 alone (Auerbach, and Kellermann 1630-1636). The United States cannot sustain the continued growth rate of health spending. “In 2007, the nonpartisan Congressional Budget Office projected that if health care spending in the United States stays on its current course, it will constitute half of the nation’s GDP by 2082” (Health Affairs, Auerbach & Kellermann). Fortunately small changes in the annual per capital growth rates can produce considerable long-term effects. By reducing annual growth in per capita spending 1.1%, a cumulative savings of $1.42 trillion is projected for Medicare (Fisher, Bynum, and Skinner 849-855). Similarly, the United States health per capita, which is calculated by dividing the total health care expenditures by the total insured population, totaled $8,233 USD in 2010. This means the US health per capita is $4,965 USD higher than the OECD average of $3,268 USD or roughly two-and-a-half times more (OECD Health Data 2012). The graphs below show the trending on both US health per capita and health as a percentage of the GDP for the past thirty years compared to similar industrialized countries.

In 1980, the United States appeared to be in line with comparative nations but in the subsequent years we have deviated from the group and are clearly surpassing our peers in health care expense. If the United States was once in line with comparative industrial nations what variables have led to the extreme gaps that can be seen today? What are...
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