Health Care Spending Paper
Health Care Spending
Health care spending in America is at an all-time high. The baby boomer generation is reaching retirement age and its dependence on health care is greater than ever before. This burgeoning demand for health care services has put a huge strain on the infrastructure of the health care system that was originally designed to accommodate far less Americans than it currently supports. Many financial experts predict a drastic increase in health care spending in the years ahead.
According to Wayne (2012), "Federal, state and local governments are projected to spend $2.4 trillion on health care in 2021, half of all U.S. ...view middle of the document...
8.8% growth in prescription drug spending, in part from narrowing the Medicare Part D "doughnut hole"
8.5% growth in physician services” (para. 4).
These numbers are a possibility of the future of spending in health care. However, none of the analysts can be completely sure until it arrives. There are many contradictory hypotheses about what impact the reform will have on spending in America.
The Gross Domestic Product (GDP) in America is greatly affected by national health care spending. According to National Bureau of Economic Research (n.d.), "Health care spending in the U.S. now accounts for 17.6 percent of GDP, a figure that could grow to 26 percent by 2035 if current trends continue. Public expenditures on health care, including Medicare, Medicaid, and other insurance and direct care programs, account for nearly half of all health care spending. If health care costs continue to rise, taxes will need to be raised to fund these programs. Indeed, the recent health reform law raised Medicare taxes on high-income workers to keep that program solvent for an additional decade or so” (para. 1). This hypothesis brings to light a scenario regarding health care reform which troubles many Americans; the fact free health care translates into skyrocketing taxation. The big mystery with the Affordable Health Care Act seems to be where will the money come from? How will the health care industry absorb millions of new patients and continue to operate in a profitable and competitive environment? Politicians from both parties seem to think they have it all figured out. However, many analysts state their theories cautiously, adding that no one really knows what exactly will transpire in 2014, when the program goes into effect. Currently, health care spending seems to be leveling off at a sufficient percentage of GDP. But is this just the calm before the storm? In 2014, America will find out.
With current medical service and coverage costs way out of control; lawmakers, employers, and patients are all looking for an immediate solution to the crisis. Medical expenses are growing at a way faster rate than the economy can keep up with. The less money people make, the less they can afford to spend for out-of-pocket expenses. One such study claims to have a solid solution, as long as it can survive the bipartisan political gauntlet. According to Morgan (2013), "The United States could save $2 trillion in healthcare spending over the next decade, if the U.S. government used its influence in the public and private sectors to nudge soaring costs into line with economic growth, a study released on Thursday said. Compiled by the nonpartisan Commonwealth Fund, the study recommends holding the $2.8 trillion U.S. healthcare system to an annual spending target by having Medicare, Medicaid, other government programs and private insurers encourage providers to accelerate adoption of more cost-effective care” (para.2). Putting a cap on federal and state...