National Health Care Spending Paper

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National Health Care Spending Paper

Irene Harris

HCS 440 – Economics: The Financing of Health Care
University of Phoenix Online
Instructor: Geoffrey J. Suszkowski, Ph.D., LFHIMSS
October 25, 2010


The subject of healthcare in the United States can be a contentious one, and it is also an area where peoples' perceptions don't always align with the facts given by policymakers. What makes healthcare spending so scandalous is the amount of money the United States pours into healthcare each year. Over $8,000 per-patient per-year costs, amount that has more than double any of the other nation. Yet 15 to 25% of the American population has no healthcare coverage due to a lack of any form of universal health care. Despite all this money spent, efficiency in the United States system is well below that of its peers. The position of this paper is in support for healthcare expenditures in that it is necessary for the American population. Current level of national healthcare expenditures

Healthcare expenditures have risen rapidly in the last decade, imposing increasing stress on families, businesses, and public budgets. Health spending is rising faster than the economy as a whole and faster than workers' earnings. The United States spends 19% it’s of gross domestic product (GDP) on health care, compared with 10 to 12% in most major industrialized nations. The Centers for Medicare and Medicaid Services (CMS) projects that growth in healthcare spending will continue to outpace GDP over the next 10 years (Davis, Schoen, & Guterman, 2007). Spending: Too much or not enough?

The United States has by far the most expensive health care system in the world, based on health expenditures per capita (per person), and on total expenditures as a percentage of gross domestic product (GDP). As shown in Table 1, the United States has spent $8034 per capita on healthcare thus far in 2010. The United States health spending as a percentage of GDP to date is 17.3%. The reasons are obvious the high cost of health care in the United States can be attributed to a number factors, ranging from the rising cost of medical technology and prescription drugs to the high administrative costs resulting from the complex multiple payer systems in the United States. It is apparent that the United States is spending an abundant amount on healthcare (Bureau of Labor Education, University of Maine, 2001). As a nation, should expenditures be added or cut? Why?

With health care expenditures expected to continue to rise rapidly over the next decade, outpacing income and imposing stress on families, businesses, and public budgets will be evident. Evidence indicates that the United States should be able to achieve savings and better value for this investment by creating more efficient and effective health care and insurance systems. But that remains to be seen. In order to achieve potential savings, slow spending growth and improving health system spending, the United States must increase the effectiveness of markets with better information and greater competition; reduce the high insurance administrative overhead and achieve more competitive prices; provide incentives to promote efficient and effective care; promote patient-centered primary care; and invest strategically to improve access, affordability, and equity (Davis, Schoen, & Guterman, 2007). How health care needs are paid for and the percentage of total spending represented by

government and private insurers

In 2010, National Health Expenditures growth is expected to decelerate to 3.9 percent while GDP is anticipated to rebound to 4.0 percent growth. Much of the projected slowdown in National Health Expenditures growth is attributable to a deceleration in Medicare spending growth (1.5 percent in 2010, from 8.1 percent in 2009) that is driven by a 21.3-percent reduction in Medicare physician payment rates called for under current law’s...
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