Jan 25, 2018 in Economics

Current Health Care Economic Issues

Today, the question of reforming the health care system has become increasingly urgent

This is because the system is a state’s sustainable economic growth support. This relationship shows that an efficient health system, firstly, promotes the quality of the workforce, increasing productivity labor, and secondly, reduces mortality including working age people, helps to increase labor market in the country. The effectiveness of financing depends on its main structural elements and the amount of financing, budgeting, and regulation by the state. Therefore, based on the investigated literature and articles, the aim of this study is to identify peculiarities of health care financing in such a developed country as the U.S.

The health care system that operates today in the U.S. is the most expensive in the world

Total expenditure on health care in this country is about 2 trillion dollars. The country takes the first place in the world for spending on health care: 14% of the gross national product (GNP). There is no independent Ministry of Health in this country. Department of Health, Education, and Welfare, namely the Public Health Service, within the Department administers the industry. According to the data, much of the rising costs of health care were attributed to the increasing prevalence of treated disease caused by increasing population risk factors such as obesity and innovation in the fight against chronic diseases. Although this system belongs to the market model of health care, the health care system in this country is of a combined type. A significant growth of healthcare cost in the U.S. is an essential problem. Consequently, business is largely affected since it pays the bulk of contributions to insurance funds. In the American medical press of last decades, a lot of writing is about the very high cost of inpatient care and the need for more efficient use of hospital beds.  The high cost of inpatient care makes its volume reduce. Occupation of hospital beds is 59% and continues to decline. Payment for health care is made by medical insurance company or directly by patients themselves. Health insurance is generally voluntary. It covers nearly 65% of American citizens, most of which are insured only for certain types of medical care:

  • hospital (80% of all insured);
  • surgical (75%);
  • for all types of medical care than surgical (60%);\
  • in case of loss of earnings (20%).

Almost 15% or about 40 million Americans do not use any type of health insurance and pay the full cost of medical services. The U.S. operates a number of social programs the most famous of which are "Medicaid" and "Medicare." Today, both programs covered about a third of the U.S. population. There is children health insurance program SCHIP and a special insurance program TRICARE for veterans and their families. According to Centers for Medicaid and Medicaid Services,  at the expense of additional taxation on the employees’ salaries, "Medicare" involves the partial release of 65 years old people and older from  hospital and outpatient care pay (80% of cost). "Medicare" is the only program of health insurance which provides the same rules and standard benefits throughout the country.  "Medicaid" provides50-80% of financing of the poor and people with disabilities.

David A. Squires (2012) said that the U.S. has a lower elderly population and smokers number but higher number of people suffering from obesity. One possible explanation for the high-level health care costs is the retirement age population, because reproductive generation reaches elderly age, hence there is higher demand for medical care.

A major problem is the lack of appropriate medical personnel

In the ratio of highly specialized doctors and general practitioners, dominates the first although the population’s needs require the opposite. In the U.S., nurses play a major role. Their duties are constantly expanding, especially when providing primary health care.

According to economists, there are two approaches to slow the increase in expenditure on public health: to reduce the funds of expensive medical services that provide no advantages and cut costs on expensive care items that nevertheless provide benefits, but cost much more expensive.


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