The purpose of this paper is to review and discuss the current level of national healthcare expenditures and to determine if we as Americans are spending too much on healthcare. The author of this paper will provide examples and solutions where we as a nation should add or cut from the healthcare expenditures. This paper will also detail how the general public’s healthcare needs are being paid for, the biggest economic healthcare challenge, why the challenge should be addressed, and how this challenge to be financed.
The current level of national healthcare expenditures
The National health expenditures is defined as any funds spent on and for healthcare services. Healthcare funding consists of individual, public, and private sectors as well as funding for research and the construction of healthcare facilities (Delaware Health, n.d). Currently the national healthcare expenditure is at an all time high. In 2011 the national health expenditure was estimated to be around $2.8 trillion dollars (Heffler, Smith, Won, Clemens, Keehan and Zezza).
According to a report released by CMS the national health expenditure is expected to increase on average of 6.1% from the year 2009 to 2019 (CMS, 2011). During this same projection period spending on Medicare is expected to raise an average of 6.9%, and Medicaid 7.9% per year. In 2009 spending on hospital related services in the United States were estimated at $761 billion dollars and will average an increase of 6.1% over the next decade (CMS, 2011). Spending on physician cost and clinical services will grow by 5.4% while prescription drug cost will grow 6.3% during the projected period (CMS, 2011).
Is spending too much or not enough?
Healthcare spending in the United States is at a record high and continuing to grow. National healthcare spending in the U.S. is rising faster than inflation and national income rates. National healthcare spending climbed higher than $2.3 trillion dollars in 2008, an average of $7,681 per person (Kaiser, 2010). According to Marilyn Weber Serafini author of What To Look For In New Spending Numbers? Healthcare spending in 2009 accounted for 17.3% of the Gross Domestic Product (2010). While the numbers reflecting healthcare spending may be on the rise the question of rather or not we are spending too much on healthcare remains to be unseen; but it is possible that contributing factors such as caring for the aging population and advanced technology may be the root source of all the spending.
Where we the nation should add or cut from the health care expenditure
On March 23, 2010 President Barack Obama signed into law the Patient Protection and Affordable Care Act. This law was passed in part to aid in the reduction of the federal deficit (Obama Care, 2011). However many believe that the plan will do exactly the opposite and can be cut. Opposition of the health care law states that the plan will cause more government spending, an increase in Medicare taxes, penalize employers for not providing affordable insurance, and increase Medicare premiums of high-income beneficiaries (Obama Care, 2011).
It is the belief of the author of this paper that we as a nation should add more technology in an effort to help reduce national healthcare expenditures by implementing systems that are more interoperable, improve the billing process, eliminate, and reduce medication errors. Technology systems can help encourage lawmaker’s vision to create better access to healthcare services, improve upon best practices, and change the quality and delivery of healthcare. To further elaborate upon the author’s view point, the author would like to mention a report issued by United Health Group who is in support of technology as a means to reduce healthcare spending.
The report titled Health Care Containment: How technology can cut red tape states that the implantation of technology systems can save the healthcare system millions by changing administrative and operational policies. According to the report “administrative programs can have important positive impacts on reducing wasteful medical costs” (United Health Group, 2009). The report goes on to detail actions that they feel should be added to generate savings; actions such as mandate stricter data and transaction standards, automated payment accuracies across the board, the elimination of unnecessary paperwork, and “a single credentialing and quality measurement process”(United Health Group, 2009). The report estimates that the government could save a total of $332 billion dollars in national health expenditure over a projected period of 10 years (United Health Group, 2009).
How the general public’s healthcare needs are being paid
The general public’s healthcare needs are paid for by two major sources; private and public insurances. Private insurance is health insurance that is typically offered by employers and purchased by individuals to pay for their healthcare needs. This type of insurance can also pay for services not typically paid for by Medicare and Medicaid such as dental and vision services (Kaiser Health, 2010).
Public insurance is health insurance paid for by the government and is issued to individuals that are age appropriate, disabled, or that meets the income requirements. Medicare and Medicaid are examples of public health insurance. In 2007 individuals insured by private health spend 35 percent of the total health expenditure; while those insurance under public health insurance or government insurance spend 47 percent of the national health expenditures. Of that 47 percent 19 percent was spent by the Medicare program, and 15 percent was spent by the Medicaid program (Getzen and Allen, 2007).
The biggest economic challenge for the health care system in the upcoming decades
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.
Why this “challenge” has to be addressed
The problem of rising healthcare costs is to be addressed because of its nation-wide significance. Predictions given by economic analyst suggest that funding for Medicare will run out of money and will not be operate-able by the year 2024 if government remains the major payer for healthcare and the costs of Medicare continue to rise. Government will not be able to continue financing the healthcare system on its own (Gersh, 2011).
How will this challenge be financed?
Continued increases in healthcare spending can negatively impact all sectors of the economy (Sood, Ghosh, and Escarse 2007). Budgets are currently limited, so an increase in healthcare funding could mean a reduction in funding to other areas such as education, and businesses, or may cause the government to increase restrictions or raise taxes (Sood, Ghosh, and Escarse 2007). The Healthcare system is not so much in need of new sources of financing; it is more in need of reformation and costs reduction schemes. Reasonable usage of medical resources and limitation of healthcare spending is an alternative to this economic challenge the United States will face in the next several decades.
Conclusion
The cost of healthcare is on the rise and will continue to rise throughout the next decade. While spending on healthcare may or may not be too much there are certain factors that are contributing to the increase in spending such as caring for the aging population and advanced technology. While new laws such as the Patient Protection Affordable Care Act are in place to help reduce spending, new methods are needed to further decrease the national healthcare expenditures. Currently the two major sources of private funding, Medicare and Medicaid are in jeopardy of running out by the year 2024 unless major efforts to curb spending are implemented. Healthcare spending is a very real economic challenge and will require major reform; millions of Americans risk losing their current healthcare coverage while others simply risk the ability to have a piece of mind that the healthcare system will be around when they need it.