...The Impact of Rapidly Rising Medical Cost In Partial Fulfillment of the Requirements of: Managerial Economics Summer 1, 2013 Trends in Medical Costs There is no denying that medical costs have not only risen in the past and continue to do so in the present, but this rise is faster than that of other expenses. [1] In this sense the relative costs of medical care have been rising. ‘Health care spending has risen about 2.4% points faster than GDP since 1970 according to the Kaiser Family Foundation. [2] The causes of this rise can be traced to many policy reasons that include-increasing role of third party insurers which pay the bills, and the increasing role and scope of government intervention in policy and finances of health care. [3] Experts point out that the main problem is that the final user does not pay the cost anymore and this distorts the market and pricing mechanism of health care. Also, the demographic status of USA is such that the older people are rising in numbers, and they need more care-which raises medical care for the economy. Thus, a combination of wrong policies, and demographic factors, along with the current recession conditions have lead to a galloping of medical care bills for the entire economy. The share of medical care costs in GDP is rising consistently. Indifference Curve Analysis The effects of rising medical care costs are widespread and need a general equilibrium, economy wide modelling. In brief we can...
Words: 1156 - Pages: 5
...Technology in Rising Health Care Costs. What should or shouldn’t be done. Neha Para, MPH Student 5453-001 US Health Care System University of Oklahoma Health Sciences Center December 8, 2010 Abstract Health care costs are a longstanding concern to policymakers. For years, health care spending has been rising faster than the rate of economic growth, raising the question of what factors are responsible for rising health care costs. This paper explores published articles that report results from research conducted on technological innovations in health care and its relation to rising health care costs. The cost increases have a significant effect on households, businesses, and government programs. Health care experts indicates the development and diffusion of medical technology as primary factors in explaining the persistent difference between health spending and overall economic growth, with some arguing that new medical technology may account for about one-half or more of real long-term spending growth. Rising health care expenditures lead to the question of whether we are getting value for the money we spend. On an average, increases in medical spending as a result of advances in medical care have provided reasonable value. An alternative viewpoint holds that although new technologies represent medical advances, they are prone to overuse and thereby excess cost. Most of the suggestions to slow the growth in new medical technology in the U.S. focus on cost-effectiveness...
Words: 5135 - Pages: 21
...Funding the Rising Cost of Healthcare Kershena Thomas Health Services Organization May 18, 2014 Crystal Russell, Instructor Funding the Rising Cost of Healthcare The United States’ total health care cost is expected to rise to about $4.8 trillion in 2021. That increase will be up from $75 billion from the 1970s. Health care spending will be responsible for approximately 20 percent of gross domestic product (GDP), simply stated it will equate to approximately one-fifth of the U.S. economy (Galewitz, 2010). Nearly 51 percent of the country’s spending goes towards the cost of medical services provided by physicians and hospitals, while prescription drugs account for about 10 percent. Private hospitals only receive approximately 3.75 percent of the nation’s overall health care spending. Some consumers as well as employers face hardships trying to afford health insurance premiums; therefore, many employers are unable to afford to offer healthcare to their employees. This is especially common in companies that employ less than 10 employees. With the constant rise in healthcare cost, about 49 million Americans were uninsured in 2012, while those who were insured faced an increase of 7.2 percent causing costs to exceed $20,000 for families. A comprehensive analysis of the impact of health care reform and a synopsis of where healthcare would be without reform was conducted by The Council of Economic Advisers (CEA). The analysis also included a report that identified...
Words: 1713 - Pages: 7
...Health Care Spending University of Phoenix One of the major issues in health care has become heath care spending. For those who pay insurance, notice that their insurance premiums have gone up. The reason for that being is to help prepare for future expenses down the road. Since the health care has reformed, more people that are low to middle income have qualified for Medicaid in which others are taxed to help fund. This has caused the spending to increase for the United States. According to National Health Expenditures of 2013, “health care spending increased 3.6 percent to reach $2.9 trillion”. The spending that comes from the different health care facilities are all factored in the overall spending. Hospitals, Dentist, Home Health Care¸ Nursing Homes and even prescription medication are factors, the price of prescription medication is costly. Some people that take specialty medication and the others use name brand medication that cost more than the generic brand. These certain medications drive the expenses up and the spending deficit continually rises. Considering that Medicare and Medicaid will continue to grow as the old become older and the middle class become low and the low become lower. The reason I say this is because eventually more nursing homes will be needed and the need for home health care will be increased. The cost of medication, hospital stays and even going to the dentist for a teeth cleaning will even cost more. The cost of private insurance will...
Words: 689 - Pages: 3
...spent on health care related issues in the United States each year which is more than any other industrialized nation; the majority of the expense is related to treating and managing chronic diseases such as various types of cancers. The impact of the declining economy can be attributed to the significant rise in health care cost which has affected work productivity and reduced the quality of health care services (Wiseman, 2011). The paper will discuss the two major economic principles; Marginal analysis and opportunity cost that commonly used to underlie and evaluated the current health system of today. Marginal Analysis Marginal analysis in health care is defined as the examination of additional benefits or costs that arises from additional consumption of goods, in today’s health care industry more money is being spent on health related services because of the increase of supply and demand; to simplify the definition cost rise when the consumption of goods increase, it is the principle of economics that shifts or changes the mix of resources used in health care spending (Mitton & Donaldson, 2004). Marginal analysis in health care is the better option to use when prioritizing services or goods, prioritizing goods based on the total needs will lead to inefficient use of resources. Resource allocations in health organizations are generally conducted on the basis political patterns which can often lead to misuse of already limited resources and as the health care budget continues...
Words: 1111 - Pages: 5
...growth in health care spending and increasing the value of care have largely focused on insurance-based solutions. Consumer-driven health care represents the most recent example of this approach. However, much of the growth in health care spending over the past twenty years is linked to modifiable population risk factors such as obesity and stress. Rising disease prevalence and new medical treatments account for nearly two-thirds of the rise in spending. To be effective, reforms should focus on health promotion, public health interventions, and the cost-effective use of medical care. Disease prevention/health promotion approaches are key to slowing the rise in health care spending (Thorpe, Kenneth 2014). Over the past five years the cost of health insurance has risen 54 percent. This persistent rise has recently been attributed to the low out-of-pocket costs paid by consumers. Being oblivious to not knowing the full costs associated with health care, consumers demand more and “overuse” it (moral hazard). The growth in spending has also been linked to the rising use of prescription drugs and new medical innovations and treatments. Many others believe the rise can be traced to the lack of competition in the health care marketplace and have proposed new approaches for health plans to compete on price and outcomes. Economists thinking about rising health care spending note that there are only two approaches for slowing its growth: reduce spending on high-cost medical care that produces...
Words: 1133 - Pages: 5
...Health Care Spending Recently the Health Care spending has risen from 2010 to 2011, there is not much hope for the future of health care, and funds that will be or should be available. Health care spending is to continue to rise over the next few years which will make it harder for Americans to get the proper health care they need. Nationally in 2012 the United States spent an estimated $2.8 trillion; however, the health care industries growth has stayed low. Federal actuary analysis has shown that in 2011 there was $2.7 trillion spent nationally; the averages per person consisted of $8,680 spent on health care. These figures show a 3.9% of growth rates in both 2010 and 2011. Not exactly what individuals want to see concerning their health and getting the proper medical care they need (NCSL. 2013). Expenses are paid out to multiple different areas, the major areas consisting of physician and clinical services, Medicare spending, private health insurance, retail prescription drugs, and out-of-pocket spending; it was these areas that percentages rose. Major areas that slowed down in the spending rate were Medicaid and Hospital spending (NCSL. 2013). The graphs below show the area percentages in which accelerated and what slowed. Health care spending has recently proven to be too much, thinking about that $2.7 trillion spent nationally in 2011, is a big part of why the United States is in debt, and cannot pull itself out. With 2014 quickly upon Americans...
Words: 1243 - Pages: 5
...Problem Rising health care costs is a major concern for many nations, societies, and individuals. However, health care costs are far higher in the United States than any other developed country. Over the past 3 decades, health care spending in the United States have increased ten times, from $236 billion in 1980 to an estimated $2.4 trillion in 2010 (Kim, Tanner, Foster, & Kim, 2014) . More than one-sixth of the United States economy is spent on health care. Health care costs have been rising continuously faster than the overall economy and personal incomes for decades. Even though the U.S spends more on health care than any other country in the world, it is still ranked the lowest amongst the developed countries around the world. The goal...
Words: 911 - Pages: 4
...Health Care Spending HCS440 Economics the Financing of Health Care University of Phoenix Jonathan Kilroy Talesha Magby Healthcare Spending Over the past couple of years health care spending has been going up higher and snuggles to keep health care cost low. Insurance companies have gone up more when medical expenses started arriving. When Obama have insurance call Obama care, this requires that everyone to have insurance either through his or her job, Medicare, or Obama care. With health care insurance most American still does not have insurance; however the government over the next year would require him or her to have insurance or his or her taxes would be taking. This research paper will explain the level expenditures in health care, health care spending add or cut of health care and public need for paid in health care. According to the reading, “rising costs led Medicare and insurance companies to tighten reimbursing practices, Getzen. T. E. & Allen B ((2007)). Insurance is rising because health care is so expensive then over the past couple of years. However, healthcare expenditures continue to develop quickly within the next few years. This mean with the health care rising there would...
Words: 1367 - Pages: 6
...Health Care This paper is an overview of the present healthcare system in United States as well as a presentation of a new, future healthcare system that differs substantially from what we have today. For many years, politicians and insurance companies proclaimed that US had the best healthcare system in the world, but as its major shortcomings become more visible, Americans are finding it harder to accept this assertion. There is growing recognition that the growing problems of rising costs and lack of access constitute a real crisis. The total spending on health care in 2007 was $2.3 Trillion or $7,600 per person. As shown in figure 1 this represents over 16% of gross domestic product and is expected to increase at similar levels for the next decade reaching $4.2 trillion or 20% of GDP in 2016 (Poisal, 2007). Health care spending is 4.3 times the amount spent on national defense (CHCF, 2005). Employers are also struggling with record health care costs-which have climbed at several times the rate of inflation and wages for the past decade. The annual cost of an average family health plan rose to $12,680 this year, more than double the $5,791 it cost in 1999, according to the Kaiser survey . Workers' annual contributions to those premiums have also more than doubled, to $3,354 in 2008 from $1,543 in 1999 (Claxton et al., 2008). The rise in health insurance gravely endangers U.S competitiveness. For example, General Motors spends about $1600 per car on health care- there...
Words: 867 - Pages: 4
...Significant Health Care Event University of Phoenix HCS/531 Martha Owen 1/28/13 Significant Health Care Event Health care has been influenced by numerous significant events throughout history. These events have helped change and shape health care in efforts to improve it, and to fit in with the current needs of the population. Some of the influences include society, culture, finance, religion, politics, technology, health trends, the environment, and population (Shi & Singh, 2012, p. 9). This paper will discuss a significant event that has changed or affected health care today, explain how the historical evolution of health care was impacted, and assess the significant event based on personal values and beliefs. Significant Event’s Relation to Health Care Excessive litigation is one of the significant events affecting health care today. Litigation has become so popular that it has become specialized. Advertisements for litigations against health care facilities and professionals are placed on television, radios, Internet, and other information outlets, at frequent intervals. It is not unexpected to see or hear several of them throughout the day. Law firms have become specialized in trying health care related cases and focus on specific conditions. The result is that health care facilities close because of the financial burden of payments resulting from litigations, the amount paid for malpractice insurance rises, insurance premiums rise, and costs of health care increases...
Words: 971 - Pages: 4
...Lauren Greenberg HCS/440 January 17, 2013 Eric Oestmann, PhD, PT Health Care Spending In 2010, health care spending, or health expenditures in the United States neared $2.6 trillion. That is more than ten times the $256 billion that was spent in 1980. In recent years, the growth rate of spending on health care has decreased in relation to the growth rate during the late 1990s and early 2000s. However, it is still predicted to increase more rapidly than the national income over the foreseeable future. Addressing this pressing concern has been, and continues to be a major policy priority. Mainly because the United States has been experiencing a significant recession for much of the past decade. This economic recession has resulted in higher unemployment rates and lower income rates for much of the American population. These tough economic conditions have helped to focus even more attention on health spending and affordability in this country. From 2012 to 2012, employer-sponsored health coverage for family premiums has increased by 97 percent. This has been the cause of increasing financial burdens on both employers and employees. In the public sector, Medicare covers the elderly and people with disabilities, and Medicaid provides coverage to low-income families. Enrollment for these programs has grown tremendously in both Medicare, with the aging of the baby boomers, and in Medicaid due to the recession. This means that the total amount of government spending...
Words: 1246 - Pages: 5
...Comparison Reimbursement Programs and the Movement of Finances in the United States Health Care System by Ronald J. Sanders MBA520, MBOL2, Health Care Organization Instructor: Dr. Sandra Washington Saint Leo University Distance Learning March 17, 2013 Abstract Effective payment program strategies are a major part of administering health care. Reimbursement programs are a part of the United States (U.S) health care system. They represent a financial tool for providing cash flow to service physicians and hospitals. Many times, the ability to provide quality health care depends on the payment for the services given by physicians and hospitals. This paper presents a view of payment reimbursement systems within the health care industry. A comparative overview and description of payment reimbursement will be given in order to understand the flow of finances in the health care industry. The focus will be on the capitation and fee-for-service reimbursement systems. Readers will then be able to conclude that the appropriate reimbursement method is dependent upon the amount of risk a party is able to assume. Comparison of Reimbursement Programs and the Movement of Finances in the United States Health Care System Physicians that are part of the managed care system have several methods in which to be compensated or be reimbursed for services. Two popular methods are Capitation and Fee-for-Service. Physicians have confronted several challenges...
Words: 1558 - Pages: 7
...Health Care Spending Marsha Whiteside October 1, 2012 HCS/440 Caryn Callahan Health Care spending is on the rise and is going to continue to rise year after year. The United States spends more on health care than any other country and with the loss of many jobs and low income families the spending is going to continue to rise. The United States spends nearly $2 trillion annually and spends two-and-half times more than the Organization for Economic Cooperation and Development (OECD) average (Johnson, 2012). There are many factors that contribute to the health care spending which include: technology, prescription drugs, rise of chronic diseases, and administrative cost. Not all people are in agreement with the health care spending in the United States and feel if there was some changes made, the spending would be lower and the United States could focus on other issues. The level of current nation health care expenditures is on the rise and is causing hardship on families as well as businesses. The United States spent seventeen percent of its gross domestic product (GDP) on health care which is higher than any other nation (Johnson, 2012). Fifty one percent of the health care expenditures in 2010 were made up of hospital care and physician/clinical services. The other forty nine percent includes: home health care, other professional services, nursing home care, Rx drugs, government administration, net cost of health insurance, investment, and other health and personal...
Words: 1312 - Pages: 6
...Health Care Spending HCS 440 Health Care Spending Health care spending in the United States is a key contributor to the country's economy. The health care industry provides employment as well as providing services that bring healthier lifestyles, better productivity, and a longer life. Health care also brings the development of new drugs and new medical technology that also helps keep the economy employed. However, although the health care and health care spending does tend to help the economy slightly it is beginning to hinder our economy. "In all industrialized countries, with the exception of the United States, health care affordability is ensured through universal insurance based or tax- finances systems" (Squires, 2012, p. 1). Even though the United States spends more in health care than other countries it does not mean the United States has better quality of care than the other countries. Health care spending is depleting this country and the quality of care is not improving. The United States needs to change the way it spends money on health care before it is too late. Current National Health Care Expenditures In 1980 the health care expenditure was at $256 billion, in 2010 the expenditure went up more than 10 times to $2.6 trillion. The spending, however, has slowed in the last few years. The health care expenditure was growing rapidly from the late 1900s to the early 2000s but has slowed slightly. However, it is still expected that the health care...
Words: 1699 - Pages: 7
