The requisite increased spending on health car

Unquestionably, advances in the healthcare industry have “yielded substantial gains in life expectancy and quality of life. Longer and healthier lives are valued highly, and estimates suggest that the economic gains from improved health outcomes exceed the requisite increased spending on health care” (Davis et al, 2007, p. 13). However, despite these gains, the resulting consequence of increased costs and decreased quality has caused the US and its citizens to suffer unexpectedly.

However, looking at the US’ neighboring industrialized countries such as Canada, Switzerland etc. , hope isn’t lost yet. These countries in comparison to the US demonstrate how healthcare coverage can be made available to everyone without the hefty price tag or sacrifice of quality. International healthcare analysts attribute this to the controlled healthcare systems these countries – such as Canada – employ.

A system built under the concept of universal access and coverage. As a result, it has become this author’s opinion that the US healthcare system, though once a hallmark of healthcare excellence, is currently one of the least effective healthcare systems among developed countries and moving current practice towards Universal Healthcare standards may just be the solution to the problematic situation. III. Review of Related Literature The US Healthcare System – History

In an article written by Timothy Noah (2007), the writer discusses a book authored by Jonathan Cohn titled Sick: The Untold Story of America’s Health Care Crisis—And the People Who Paid the Price the latter provides a history of the American healthcare situation. As the former summarizes, what is considered modern medicine began in the 1920s – the period in which doctors and hospitals gained enough knowledge to reliably help treat diseases. Though a golden era for medicine, the result was an environment where individuals could not afford treatment due to increased charges generated by the new knowledge and technology.

The situation worsened once the Great Depression set in and treatment became nearly unattainable. As an adaptation to the situation, administrators from the Baylor Hospital in Dallas designed a system that eventually became the blueprint of the organization Blue Cross. The Blue Cross is an organization that functions as a non-profit health insurance provider who primarily serves local community organizations (such as the Elks) by offering reasonably low premiums in exchange for tax breaks (cited in Noah, 2007).

In the beginning, the Blues charged the same premium regardless of sex, age or pre-existing conditions due to its quasi-philanthropic nature and partly because – as an organization created by hospitals – of interest in signing up potential patients. The success of the Blue Cross rippled outwards and commercial insurers – who initially considered the field of medicine as an unpromising market – took notice and entered the fray. By the 1940s, businesses competed for labor through the offer of health insurance thus accelerating the process by which the workplace became the primary supplier of health insurance.

To hammer in the final nail on the coffin of what is now considered an ill-advised set-up, the government jumped onto the bandwagon by offering companies income tax exemptions through expenses associated with healthcare (Noah, 2007). The system Blue Cross generated became so successful that “when Harry Truman proposed a national health-care scheme, opponents were able to defeat it by arguing that the nonprofit sector had the problem well in hand” (Noah, 2007). However the stability that the Blues offered was short-lived as it fell victim to its own success.

When private insurers entered the market, premiums were “re-jiggered” via the calculation of relative risk and resulted in the avoidance of potentially risky clients. To survive the new trend, the Blue Cross followed suit which made the group essentially indistinguishable from other health insurers. To further complicate matters, large companies which tend to employ significantly younger workforces, began to self-insure. As a result, the above factors combined to create a situation where people who needed healthcare had increased difficulty getting, or affording, health insurance (Noah, 2007).

By the 1970s and 1980s, health insurance costs rose once more as a result of improved medical technologies and increased inefficiencies of the system. This led to the proliferation of health maintenance organizations (HMOs) and managed care organizations (MCOs). Initially non-profit, HMOs soon – like the Blues – became victims of their own success and were eventually replaced by for-profit HMOs. This change once again resulted in the aggressive denial of treatments (Noah, 2007).

However, by the 1990s, MCOs managed to keep costs temporarily in check. Eventually costs began to rise again creating the current situation. Today, employers outright reduce or eliminate healthcare benefits for employees. Hospitals continue to consolidate in an effort to push back insurers and as a consequence have become less accommodating of low-income patients. The industry is now convoluted and suffers self-imposed bureaucracies resulting in a great deal of miscommunication and incoordination. The US Healthcare System – Overview and Trends

The US healthcare system is a multi-payer system that employs both public and private insurers as a means of providing citizens healthcare coverage. However, the unique element that differentiates the US from other developed industrial countries is that the US healthcare system is characterized by the dominance of its private insurers over its public providers. In fact, a review of figures from a study done in 2003 show that 62% of health insurance coverage was employer-sponsored (private) while only 15% came from public sources such as the government’s Medicaid and Medicare program (Chua, 2006, p. 1).

For the most part it is heralded as one of the best systems in the world due to its offer of free access to the latest in technology, medical advancements and the best medicine can offer. However, the US healthcare system is also the subject of much discussion mostly due to recent political and fiscal developments which have brought the U. S. healthcare system into a different light. Politicians and health insurance companies could no longer “blithely proclaim that the U. S. had the best healthcare system in the world…as its major shortcomings become more visible” (Bureau of Labor Education, 2001, p.

1) in the light of the present economic problem. At present, the US is ranked number one as the most expensive healthcare system in the world. Spending, based on per capita expenditure, total expenditure and GDP percentage, amounts to $4,178 per person in 1998 alone – a figure that is more than twice the median of $1,783 for OECD (Organization for Economic Cooperation and Development) countries. This value is representative of several contributing factors such as rising costs of medical technology and prescription drugs as well as administrative costs which have gone higher as payer systems became more complex.

In fact it is estimated that around 19. 3-24. 1% of dollars spent for healthcare are spent on administrative costs. These values change depending on the institution and goes as high as 34% for for-profit hospitals, 24. 5 for private non-profit hospitals and 22. 9% for public hospitals (Bureau of Labor Education, 2001, p. 2). In the document prepared by Davis et al (2007) for the Bipartisan Congressional Health Policy Conference, private spending rose at an annual rate of 8. 6% compared to 8. 9% of public programs in the past 25 years.

However, the disparity is explained as a result of two factors: 1) an aging population increased Medicare enrollment and 2) cut backs on health benefits for low-income workers by private employers have forced the latter to enroll in Medicaid and State Children’s Health Insurance Program. In fact when numbers are adjusted for number of people covered and range of benefits; it is revealed that Medicaid and Medicare costs have risen at a much slower rate compared to private insurance costs (p. 15). For a diagram of how US healthcare is financed, see Appendix A.

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