Cost of Health Care in the USA - Term Paper Example

Cost of Health Care in USA and number: submitted: Executive summary This proposal seeks to addresswhy the cost of health care in the U.S. is rapidly increasing and make recommendations towards achieving sustainability in cost. Every American, rich or poor, is barely struggling to pay for health care services with the current high costs. The rate at which the cost of health care at their disposal is rising is way beyond their income growth rates. Research shows that a person in USA, would spend twice as much as a person in any another country in the world to access the same medical care. Currently, the country devotes about or more than one sixth of it economy, 17% of GDP, to cater for health care expenses (Kaplan & Poter, 2011). This figure is day in day out increasing tremendously. Technically, this is a punishment to the people living in USA and the nation at large. If no action is taken, these will mean that most working families will have to choice between health care and basic needs. Businesses will gradually no longer compete globally dues to enormous expenses in wages and retiree covers. In addition, the government will be forced to allocate fewer funds to other important areas such as education and infrastructure to meet health care expenditures. The major causes of the inclined cost include the aging of populations, development of new treatments, new costly prescription drugs, incentives, unhealthy lifestyles, and third-party payors, such as, insurance companies and governments. Although the patient is the financier of the health care system, he or she barely has a say on the cost of services they need. Generally, the current fee-for-service system pays the hospitals and service providers for services rather than quality of services which has led to provision of more services and procedures raising its cost. Moving from fee-for-services to bundle payment when accessing health care is a proposal strongly recommended in this pay. In addition, more recommendation include coming up with a comprehensive service unit, eliminating unnecessary procedures, Building a comprehensive information technology platform, Allocating services at locations where their valued highest and measuring outcome against cost. Statement of the problem With the current health care situation in the USA, cost of accessing health care services is projected to increase by 70 percent or more in a period of ten years (Kaplan & Poter, 2011). This will continue to increase where by most of personal income will be consumed by health care. To those already retired, employed, and the young population, this means a considerably vast decline in standard of living. In the next 30 years or less, the aging population will have significantly increased. Additionally, health care costs rapid growth, cuts across the economy not only due to aging population, but from same factors as those affecting the overall health care growth. For instance, whether it is the new medical technologies or the ineffective delivery systems, all these factors are equally elevating the cost of accessing Medicare and Medicaid to unpleasant levels. In this regard, the burden of costly health care in USA will continue to intensify unless and until the current fee-for-service health care system is altered in ways that lead not only to provision of services but also to better quality care; Bundle Payment. History of the rising health care costs The U.S. model of health care system was initiated and implemented as the central planning system for every aspect in health care; however, it has grown into the most expensive health care system in the world. For instance, a person that pays for cost of health care on their own would save 10% for the same care under the U.S. health system (Kaplan & Poter, 2011). This began during the great depression in 1930s when most hospitals embraced prepaid health care service and almost all the patients in U.S. had very little or no responsibility whatever on the decision regarding their health care spending. The government allowed use of Blue Cross plans on no profit bases reducing premiums incurred with private insurance company by 2%. However, this troubled most physicians on basis that Blue Cross plans would affect their practice left hospitals to establish their own firms. By 1946, prepaid service concept had rooted and was hence forth known as Blue Shield. The concept ensured hospitals paid its staff and cover all its operations. The concept was further strengthened in 1954 after passing of employer deduction towards health insurance payments further reducing the cost of heath care. In 1965 the congress approved the Medicare and Medicaid programs that lead to introduction of pay-as-you-go approach to all American over 65 (Kaplan & Poter, 2011). Paradoxically, no big change to the upward trend in the cost of health care services thereafter. The government also introduced numerous regulations but instead of the suppressing the cost, the procedures of coming up with those regulation consumed approximately 340 billion dollars about 20% of all health care spending. In 2002, the government introduced a health saving account with an aim of benefiting consumer that spends less on their health. However, this reduction does not reduce the monthly prepaid mount to be paid. Other factors that greatly contributed to the rapid increase in health care cost include over imaging, poor costing systems, overtreatment, over pricing, and poor cost measurement International Context In comparison to other nations such as France, Germany and Japan, U.S. spends twice as much to provide the same health care to an individual. In the year 2007, the United States fedral government spent approximately $7,290 per person while in Canada was about $3,900, $3,600 in France, Netherlands, and Germany, and finally Japan $2,600 (Kaplan & Poter, 2011). This should not be the case considering a country like Canada suffers the same health care problems as America. On the other hand, countries such as Switzerland sufferer similar costs in health care as U.S. Switzerland could be considered second from U.S. spending two-thirds of amount registered by the United States. Stakeholders The major stakeholders, as well as, the major contributors of good and bad in the health care are; employers, trades unions, ministries of health and labour, company insurance funds, and employees (Kaplan & Poter, 2011). Insurance Company- Health insurance funds companies collect the monthly premiums and pay cost on health care for those covered. Insurance company as a third party contributes to the rise in cost in health care by increasing the premiums individuals are expected to pay. As a third party they are more concerned with the procedures performed and less on the outcomes achieved. Employers- employers as stakeholders are responsible for their employees’ health and safety mostly by paying taxes. That said, when the taxes are high, for instance with demanding U.S. economy, they tend to pay small wages and employ less personnel hence unemployment. The Ministries of Health and Labour- both ministries are responsible for health and disease protection in the society though research, providing vaccines, and educating. Intensive and unnecessary research or education companies will translate as an expense affecting the overall cost of health care. Trade Unions- they provide support to members during the time of sickness. Trade unions push for better and safe working standards as well as medical standards whereby achieving them is an expense. Employees- employees as stakeholders also contribution to the rising cost on health care by leading poor lifestyle that bringsmore illness hence more expenses. Policy The Patient Protection and Affordable Care Act (Affordable Care Act or ACA) was approved in 2010. It constitutes of reforms that use insurance as the principal means of paying for health care. ACA approach ensures that people with comprehensive medical cover pay most of their medical expenses. It also gives incentives toward hospital cost reduction and modernization (Kaplan & Poter, 2011). For instance, PPACA rewards hospitals with electronic medical recording devices, treat patient in the homes, offer preventive services, and low readmission rates. Recommendations Addressing the issue of rising cost in health care and services can be done both in short term or long term basis. Short Term Recommendations 1. Integrating services provided with great reference to the condition of patients into one comprehensive unit. A unit, in this case, refers to both medical and nonmedical personnel that would work hand in hand, not only, to treat the disease but also the conditions, and impediments that come along with the disease (Kaplan & Poter, 2011). For instance, a team handling a patient suffering from cancer needs to engage the patient and his or her family in counseling while treatment is in progress and thereafter. 2. Eliminating unnecessary procedures – come up with less expensive approaches and materials of even better outcomes. For instance, instead of conducting multiple texts, a case can be approach by comparing the condition at hand with past similar cases narrowing down the tests needed. 3. Implementing parameters that measure outcome against cost per patient- this is a principle in management that track progress and performance of a service provider over time and comparing him or her to others with the aim of creating a competitive environment. Long Term Recommendations 1. Move from fee-for- service to bundle payment –bundle payment is much preferable since it aligns payment with a specific service provided hence encouraging efficiency. A patient only pays for a bundle on a specific service for a specific time (Kaplan & Poter, 2011). Currently, most dominant models of payment cover all patient needs, although less expensive they lack specification value. Moreover, a bundle payment ascertain outcome whereby the patient must qualify; eligibility only, before treatment. The bundle further guarantees results from the fact that the service provider could be held responsible in case of a more expensive event happening. 2. Allocating services at locations where it valued highest –allocation depending with the complexity, service, and skills needed. Less complex resources and repetitive services should be located in low cost amenities and priced accordingly. More complex resources should be allocated in high cost facilities and teaching hospitals. This cuts on operational cost and creates room for even more complex resources. 3. Building a comprehensive information technology platform- the right platform of health care IT system, reimburse the available medical approaches for better outcomes. For example, a sound IT system can enable a team of medical professionals in different places work together (Kaplan & Poter, 2011). The importance of an IT system it that it can coordinate all services across the fields may be outpatient practice, therapy or a test. Finally, it has easy access to data concerning a patient without being restricted by a department or a location. Conclusion The current trend with the cost of American health care should be a wakeup call to the world at large, as more as, it is to Americans. Spending one sixth of an economy on health care with a significant amount going to waste is a clear indication that the system in place is not working. The prepaid model of paying for health care in U.S. has, is, and will continue to be a burden to American citizens unless and until action is taken. Implementing the proposed recommendations could be the beginning of a less brutal health care provision arrangement for American people. Reference Kaplan S. Robert and Poter E. Michael. (2011). The Big Idea: How To Solve The Cost Crisis In Health Care. 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