Case Study: National Healthcare Spending In The United States

National Healthcare Spending In the United States
Jarrod Hinkle
HCS/440
November 24, 2014
John Branner

Introduction. U.S’s Healthcare spending has continued to increase over the last one decade with more than $2.5 trillions being spent each year (Young, 2013). On average, the U.S spends twice as more on healthcare per capita and 50% more as a share of GDP. This is the highest costs spent on healthcare among all industrialized nations globally. Despite the huge spending, healthcare analysts argue that the U.S citizens do not experience the benefits of longer life. In addition, U.S still experiences high infant mortality, lack of universal access and does not offer quality care similar to most industrialized nations. In 2013, the
U.S spent $ 2.9 trillion on healthcare and the amount is expected to be increased by 3.8% in 2014 (Young, 2013). It is anticipated that, quick economic recovery, aging population and Obama’s health care Act will add more American citizens to the health insurance rolls. This amount will approximately be 18% of U.S’s economy (Young, 2013). This paper seeks to examine U.S’s national healthcare spending. The research will look into a number of factors including the level of current healthcare expenditures to determine whether the spending is enough or not and areas where more budgeting/cut is needed. Furthermore, the paper will look into how the U.S healthcare needs are financed. Lastly, the research will forecast the U.S healthcare system by looking into future economic needs of the system, why they should be addressed and how they should be financed.
Current national health care expenditures levels.
With the implementation of Affordable Healthcare Act (Obama Healthcare), U.S budget on healthcare is expected to increase. The government plan to spend approximately $ 3 trillion in healthcare by 2014, an amount that equals almost 18% of U.S’s economy. Given the huge cost of healthcare in U.S, it will be important to examine the current level of expenditures. This can be achieved by analyzing the pattern of the U.S healthcare distribution in order to know who gets what percentage and how much out of the total allocated nation healthcare budget. One decade ago (2004), U.S spent $ 1.9 trillion (16% GDP) on healthcare. This translated to per capita healthcare of about $ 6,260. One decade later (2014), these figures have increased. Current levels of U.S spending on healthcare are relatively distributed unevenly across individuals, population segments, sectors/payers and specific diseases. For instance, only 5% of the U.S total population accounts for 49% of total healthcare spending. In fact, 44% of U.S healthcare budgets is spent on 15 most serious/expensive conditions while multiple chronic illnesses cost seven times more than patient with one chronic condition. These patterns of spending changes over time and they affect the different payers including private insurers, employers, Medicaid and Medicare (Stanton, 2006).
Half of the American citizens spend nothing or little on healthcare but 5% of the population spends half of the total healthcare budget allocation. Therefore, the amount to be spent by 5% of the population aloneis approximated to be $1.4 trillion. In addition, sizeable levels of U.S healthcare costs are spent on the elderly (65 years and above). One decade ago (2004), the healthcare expenses spent by the elderly averaged $ 11, 089 per year while it averaged $ 3,352 for the working people (ages 19-64 years). In 2014 (one decade later), the average amount of healthcare expenses spent on the elderly have increased in U.S due to increased aging population and increased chronic illnesses by the elderly. Examples of chronic diseases that contribute to higher healthcare costs in U.S include diabetes, asthma, hypertension, heart diseases and mood disorders. Spending to cure these diseases has surged from $ 62.3 billion in 1996 to $1.5 trillion in 2012 (Stanton, 2006). In U.S, sizeable amount of its healthcare budgets are also spent in funding public programs such as Medicare and Medicaid.
The costs of U.S public healthcare programs have increased in the last few years because of increased chronic conditions that are treated at very expensive fees. Consequently, healthcare costs for Medicare beneficiaries have surged with an individual spending more than $24,000 (Stanton, 2006).
The U.S healthcare budgetary levels are also allocated according to geographical variation. This constitutes of more than 306 referral hospitals that are sometimes referred to as regional health care markets. In regions categorized as “high spending areas”, patients receive 60% more in healthcare costs (Stanton, 2006).
Whether the spending is too much or not
enough With a healthcare budget of more than $ 2.9 trillion for the FY 2014, some analysts says that U.S’s healthcare has little to show despite huge budget allocations for healthcare (Young, 2014). In fact, a study conducted by Common Wealth Study in 2011, “Health at a Glance” revealed that U.S does not reap long life benefits including lower infant mortality, quality care and universal access despite being the only country that allocates the highest healthcare budgets among all industrialized nations. Analysts in this school of thought contest that one third of U.S’s healthcare costs is spent on “wasteful spending.” These include unnecessary hospitalizations, unproven treatments, redundant tests and excessive end-of-life care (Medical Mutual, n.d.). Apparently, U.S huge spending on healthcare does not translate to better health outcomes for the citizens; therefore, huge money for healthcare does not necessarily mean better healthcare outcomes. The U.S spends more money on healthcare than needed. In fact, the money is more than enough. Better outcomes in a healthcare system depend on how efficient the money resources are being used. (Medical Mutual, n.d.).
Where the nation should add or cut, and why? U.S healthcare monies spent on “wasteful spending” should be cut and directed to areas where it is needed.
The Obama care (Affordable Healthcare Act) will ultimately increase the healthcare cost in U.S because its prospects to bring more than 25 million uncovered American citizens into the insurance brackets. Latesttrend shows gradual economic recovery since 2009, therefore, it is high time that the U.S government redirects its “wasteful spending” healthcare costs to the most important areas of its healthcare system (Medical Mutual, n.d.). Areas where the government should consider redirecting healthcare funds include programs that support health insurance covers for all American citizens. If health insurance covers can be available to all U.S’s citizens, then all peoples, especially the poor will get an opportunity to access affordable healthcare services. In addition, funds should also be re-directed to enhancing and creating more public healthcare facilities to enable the poor access healthcare services (Medical Mutual,
n.d.).
How the U.S’s public’s health care needs are paid for? Various payers finance the U.S healthcare system. It is a combination of private and public effort. Through taxes, U.S’s citizens funds for the largest percentage of the money that is budgeted for healthcare costs. Government taxes are then re-directed to federal programs such as Medicare and Medicaid that are accessible to citizens aged 65 and above years.Through public hospitals, the U.S government provides healthcare at subsidized fees, which are affordable to all. However, such programs only covers the basic healthcare needs at no cost, therefore, individuals are required to buy insurance health covers from private firms.Employers, through private health insurance, provide health services to employees as a benefit. For most people under 65 years, this is the most common type of healthcare payment where they contribute payments in form of premiums. The following table shows the 2014 contribution forecast by the government and the private sector (Young, 2013).
FINANCER/PAYER
CONTRIBUTION (%)
EXPENDITURE AMT
Federal and Local Government
60%
$ 1.74
Private Sector
40%
$ 1.16
TOTAL
100%
$ 2.9 Trillion

Us healthcare system forecast. For many years, the U.S healthcare system has cateredfor the needs of those who can afford the relatively expensive insurance premiums and healthcare services in the country. For that reason, the Obama government commenced an initiative dubbed “Affordable Healthcare Act” in an attempt to cater for more than 25 millions Americans who were not insured due to high insurance costs. Such initiatives are good because they will make healthcare to be accessible and affordable to many American citizens. For this to be achieved, the U.S healthcare system will need to address certain future economic needs. First, allocating more money to cater for programs that support affordable medicare will be paramount. This will allow the poor to easily access medical services at reasonable costs. Secondly, the government must push for laws that will ensureminimum wages increment for low-income earners to boost their per capita income, therefore, enabling them access medical services (Young, 2013).
Conclusion.
Statistical analysis in this paper has revealed that theU.S budgets for the healthcare are one of the most expensive in all industrialized nations. However, many benefits have not been reaped because infant mortality, rate of chronic illness, affordable healthcare and quality healthcare have not been gained. With the “Affordable Healthcare Act” prospected to be fully implemented in 2014, most American citizens will afford healthcare services (Young, 2013). However, the government allocation to healthcare budget is expected to increase by more than 6%. In light of this information, allocating huge budgets for healthcare is critical but, if the money is spent on wasteful expenditures, then little will be gained from the system. Evidence shows that U.S spends one third of its healthcare budgets on wasteful spending. Perhaps this is one reason why much has not been gained despite the huge allocations. The government should re-direct the monies allocated in health care sectors, which are less important to areas that will make healthcare to be more affordable and accessible to the ordinary citizens (Young, 2013).

References:
Young,J. (2013). Health Care Spending Continues To Rise Slowly Ahead Of
Obamacare Expansion: Report. Retrieved on 11th August, 2014. From http://www.huffingtonpost.com/2013/09/18/health-care-spending_n_3948568.html
Medical Mutual. (n.d). U.S Healthcare Costs-What Drives Healthcare costs in U.S. Retrieved on 11thAugust, 2014. From ://www.medmutual.com/~/media/Files/Miscellaneous%20MedMutualcom%20PDFs/U%20S%20%20Healthcare%20Costs%20Report_rvsd%20092413.ashx
Stanton. M. W. (2006). The High Concentration of U.S. Health Care Expenditures. Retrieved August 11th, 2014 from http://www.ahrq.gov/research/findings/factsheets/costs/expriach/index.html