Custom «Health Care Spending » Essay Paper Sample

Health Care Spending

A greater percentage of US national budgets are spent on the provision of health care.  The U.S spends about $2 trillion yearly on healthcare services. This is more than any industrialized state in the world and is attributed to disparity in spending by the citizens. Nearly half of the population spends nothing or little on health care. About 5 percent of the entire population in the United States spends around half of the total amount. The distribution and examination of the spending in health care in U.S gives an insight on where change in policy can bring greatest savings. Moreover, measures are needed to make healthcare more accessible and less expensive.

The upgrading of Medicaid and Medicare that is run by the government is needed. The health care spending in U.S estimation is done by the National Health Expenditure Accounts (NHEA). The measure by NHEA in the annual U.S expenditure for public health activities, health care goods and services, the net cost of insurance, government administration, and investment associated to health care is dated back to 1960. These data are available in terms of the sponsors, service offered, and the source of funding.

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The U.S health care spending increased in 2010 by about 3.9 percent in comparison to the growth that was recorded in 2009. The growth then was 3.8 percent. In addition, the total health expenditures were around $2.6 trillion. When calculated per person, the value is $8,402 or 17.9 percent of the national Gross Domestic Product (Leiyu, 2011). This is higher than any developed country. The projection by 2016 is that spending on health care will rise to $4.2 trillion. The increase in health care spending has continued even when it is adjusted for inflation.

The healthcare costs of employers’ increased to 7.3 in 2009 when compared to the 4.8 percent increase of the U.S health spending in the same year. This is because the small businesses are less likely to offer health insurance as a benefit compared to the large employers. Health care is the most expensive benefit in U.S that is provided by an employer. The figure stands at 2 percent. The figure spent in health care by U.S is nearly $650 billion in excess. The outpatient care is what contributes to these in excesses. It is the fastest and largest growing part of U.S health system. Two thirds of the $436 billion spent on this sector is above expectation.

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The spending on private health care insurance has grown at a slower rate. At the same time, the spending on Medicaid has also declined. This is the cover for people with low income. The Medicare drug benefit that was introduced for people with disabilities and the older Americans caused changes that were felt in the health sector. The retail spending on prescription drugs also shot up. This is because the prescriptions were filled by Medicare beneficiaries mostly. This is by those who lacked the drug coverage initially. The drug spending further increased because of the improved use of high cost biotechnology products and use of existing drugs for new purposes.

The spending on doctors, nursing homes, and hospitals has grown slowly. However, the administrative costs have continued to increase significantly. This has been almost more than twice as fast. This is because the private insurance companies play a greater role in Medicare. They have higher administrative costs compared to the traditional free for service Medicare programs (Leiyu, 2010).

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The Medicare spending has increased over the years, compared to the Medicaid that is jointly financed by the states and federal government, which has continued to decline. In addition, the new drug benefit has contributed to increase in drug spending, and the shit to those who pay. The public programs, thus, has accounted for a more percentage in the retail drug spending. The Medicare share of drug spending as also increased compared to the previous years. The Medicaid spending decline can be attributed to shift to Medicare by over six million people. This decline can also be attributed to the restrictions by some states for eligibility for Medicaid. In addition, the reduction, or freezing of payments to the providers of health care has led to this decline.

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The private insurers are the ones that manage the drug benefit for Medicare. They, thus, negotiate for discounts from the pharmaceutical companies. However, these discounts are smaller as compared to those that are given by Medicaid. The growth of drug spending can be grater, but, there is the emergence of drug discounts programs by leading retailers like Wal- Mart, and use of generic drugs. The generics have increased in prescriptions over the years.

The government programs are spending a larger share of the health costs. This is when compared to the private businesses and households who spend a smaller share in the health care costs. The retail drug spending accounts for about 10 percent of the health care spending in U.S. This happens even though; attention is given to the pharmaceuticals. The spending for doctors services has grown over the years.  By 2006, it grew by 5.9 percent, which was about $447.6 billion. This is a lower rate and shows the constraints that have been forced by private insurers, and Medicare. In addition, the spending on nursing homes has also grown at a slower pace.

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The expenditure in health care in the U.S is about twice as much per capita in other countries such as Canada, Japan, German, Australia, and the United Kingdom. Dating back in 1960, the health spending in U.S was 5.2 percent, of the gross domestic product. Currently the spending accounts for 16 percent of the total GDP. However, the annual rate increase in the health care spending has been fairly steady since 2003. It has been between 6.9 and 6.5 percent. This is a fairly optimistic trend. The economic cycle on health spending can influence the expenses in this sector. Moreover, the expansion of provider capacities and increasing obesity incidences can make the spending on health care change. The spending on health care is growing more than the double of the economy growth.

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The rising health care costs have raised the health insurance premiums. The premiums are at the same time growing faster than, the inflation rate and workers earnings. This has given the employers pressure. Especially, those who provide coverage for those under 65 have changed ways. They have reduced the comprehensiveness of coverage, as some have dropped the coverage entirely (Niles, 2010). The rising premiums make it hard for those without employer coverage, to purchase insurance policies. This has in turn led to the rise of those who are uninsured.

The increased cost of health care has put pressure in federal governments and states that funded health care programs. This has made them compete for dollars with other significant spending priorities. The rising health cost has strained the family budget as well as that of the government.

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The insurers have shifted the greater share of health costs to employers. This has made many individuals be burdened by the higher spending from their own pockets. The increase in health spending is not that pathetic. This is because, as countries become wealthier, their spending more on health care is required. The additional spending helps in improving the quality of life and decreasing morality.

The health care expenditure can be a burden to some, but, they supply income to others.  The health care facilities and hospitals are becoming the economic engine for the country. The supplier revenue and wages they get are returned to the federal and state coffers.  This is in the form of individual and corporate taxes. The rise in spending has been increasing tremendously. At two and half percent, this is faster compared to the GDP. The Medicaid Services and Centre for Medicare project this to rise to about 20 percent of GDP by the year 2050.

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The advancement in medicine and technology has increased the life span of Americans. This, however, has not come without a cost. The increase in health care spending s is due to the new procedures. The dissemination and development of medical services and new technology can be attributed to the rise in health care spending. This is according to a report by the Congressional Budget Office report. The advancement in technology reduces the spending in many different fields of health care. However, these advancements lead to changes in practice that increase the spending. Moreover, the increased utilization and consumer demands lead to addition of costs.

The increase to health care expenditure can also be attributed to the aging population, increase in labor costs, and unhealthy lifestyles. In addition, the lack of technology, growing prevalence of high cost diseases, resistance to consumers to managed care restrictions, defensive medicine, and administrative costs, increases the spending in health care.












The dissemination and development of medical services and new technology can be attributed to the rise in health care spending. This is according to a report by the Congressional Budget Office report. The advancement in medicine and technology has increased the life span of Americans. This, however, has not come without a cost. The increase in health care spending s is due to the new procedures. 

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