Healthcare Spending And GDP and Factors leading to high costs of healthcare

Healthcare Spending And GDP

Contents

TOC o “1-3” h z u HYPERLINK l “_Toc380752513” Introduction PAGEREF _Toc380752513 h 1

HYPERLINK l “_Toc380752514” Factors leading to high costs of healthcare PAGEREF _Toc380752514 h 1

HYPERLINK l “_Toc380752515” Solution to the healthcare expenditure problem PAGEREF _Toc380752515 h 2

HYPERLINK l “_Toc380752516” Conclusion PAGEREF _Toc380752516 h 3

IntroductionEveryone knows that the cost of health care is a very serious problem and none of the people have no power over the issue. In many countries people are expected to pay for their own health care. Therefore the ability of people to pay for their health care or the affordability of the healthcare has become a policy issue in many countries and especially an issue of urgency when it comes to a particular household problem when it comes to essential services like education, health and water. The issue of healthcare spending has been a topic for debate over the past few years. Today, there is a lot of concern on healthcare issues one of them being the healthcare spending. The cost of healthcare has been going up and it is still projected to rise. Presently it is about a fifth of the economic activity of the U.S. this paper will look at the causes of high healthcare costs and tools that can be used to address economic challenges in the heath care industry. It will finally determine the most effective solution.

Factors leading to high costs of healthcare There are many factors that contribute to the rising costs of healthcare. This include first the fact that many people in America lack health insurance at any costs and they cannot even manage to afford what is termed as the most basic health coverage. There has been a rise of people who are not insured due to the fact that the per capita healthcare spending has gone up. It can also be attributed to the fact that many people have lost their jobs and the fact that the economy is poor. Rise in healthcare spending can also be attributed to the use of improved technology, vaccine improvement, antibiotics, introduction of disease care as well as advances in surgery. There have also been improved medical devices like CT scanners, MRI, ultrasounds and defibrillators that can be implanted. At the same time there are developments in pharmaceuticals and administration costs have also contributed to the rise in costs of healthcare. Mostly the heath care costs are due to medical technology which is approximately over 200 billion per year (Wayne, 2012).

The Americans lifestyles also impact the health care industry in a big way almost sixty percent of the population is overweight and childhood obesity is rampant. Other factors that have an impact on the healthcare spending are; poor diets, high blood pressure, smoking, lack of exercise, drugs and drinking. It is the people themselves who have pushed the costs of health care up. The high healthcare spending ahs effects not only to families but also to businesses and public budgets. Expenditure on healthcare is seen to rise at a rate that is fast even faster than the state of the economy entirely and the wages of the working people.

In 2011 spending on medications, hospital visits as well as other medical care went up with an estimated percentage of 3.9 this consumed about 17.9% of the GDP. This is more than three times the deficit. Much of the money is considered to be spent appropriately which is keeping people alive and healthy but of course this is a very big problem. If only the health care spending can be reduced to a certain level then the deficit will be offset and free by almost half-trillion dollars in a year which can be used to invest in other areas of the economy particularly economic growth.

Solution to the healthcare expenditure problemOne of the critical solutions to the runaway cost of healthcare is cutting down on spending in the high-cost medical care that produces no benefits to the society in general (Thorpe k., 2005). There is also need for competitive bidding for the healthcare commodities, in that the government should not have see prices for these commodities. The bidding trend should be expanded nationwide by the Medicare, this way there will be a market based pricing on items like medical devises and laboratory, hence getting a more affordable prices. There should also be a negotiated payment mode; this will give the providers and the payers the platform to negotiate payment rates that would be deemed binding for all the providers and payers within a given state. In essence, the negotiated pay will be one that fits within the global spending target favorable to both the state and the public (Center for American Progress, 2013). Providers should negotiate payment rates that would be binding for all payers and providers in a state. The privately negotiated rates would have to fit within a global spending target for both public and private payers in the state.

ConclusionThese increases in the expenditure will continue outpacing the projections of economic growth. It is projected that by 2020 healthcare spending will be about $4.64 trillion which is a representation of close to 20% of the GDP. This therefore means that health care spending commands a great percentage of the overall GDP.GDP will therefore continue to go up as long as the spending in healthcare goes up or continues to rise. If the trends that have been seen for the previous years go on then health care spending will eat up the GDP in the lifetime of the future generation. Health care spending will use up the federal government budget, the main source of the financing of the healthcare and yet is the root cause of the debt problem in the U.S. With health care spending eating too much into the GDP will mean that there will be no room for spending on security, defense or any other roles by the government (Hixon, 2012).therefore it is important to ensure that the healthcare system is well guarded so as to prevent any further increase in health care spending.

References

Center for American Progress, (2013). Cutting Health Care Costs. Retrieved March 28, 2013 from http://www.americanprogress.org/issues/healthcare/news/2012/08/02/11970/cutting-health-care-costs/

Wayne, A. (2012). -Care appending to reach 20% of U.S Economy by 202 BloombergBusinessweek.Health 1.Retrieved march 28,2013 from HYPERLINK “http://www.businessweek.com/news/2012-06-13/health-care-spending-to-reach-20-percent-of-u-dot-s-dot-economy-by-2021″http://www.businessweek.com/news/2012-06-13/health-care-spending-to-reach-20-percent-of-u-dot-s-dot-economy-by-2021

Hixon,T.(2012).The U.S Does Not Have A Debt problem….It has a Health Care Cost problem.retrieved march 28,2013 from HYPERLINK “http://www.forbes.com/sites/toddhixon/2012/02/09/the-u-s-does-not-have-a-debt-problem-it-has-a-health-care-cost-problem/”http://www.forbes.com/sites/toddhixon/2012/02/09/the-u-s-does-not-have-a-debt-problem-it-has-a-health-care-cost-problem/

Thorpe k., (2005). The Rise In Health Care Spending And What To Do About It. Retrieved March 28, 2013 from http://www.medscape.com/viewarticle/516112