USA health care expenditures are counted as a percentage per person of national income and made up 17,9% of the total value of output goods and services produced in economy (Sexton, 2012). This figure increased on 4% comparing to 2002. These expenditures are explained by the technological improvements implemented into patient care business by private sector that filled the vacuum created by the Government oriented reform (Sueltz & Young, 2010). Modern technologies fuel health care spending and generate demand for more intense costly services, because the third-party payers make people less likely to undertake preventive measures against illness and more likely to engage into risky behavior (Santerre & Neun, 2009). Thus, health care insurers put into position of greater importance then the patients and since physicians prefer to practice with insured and paying patients, the pressure of the cost payments has increased on employers and workers (Hillstad & Berkowitz, 2004). Of the most relevance is the fact that the full amount of insurance must be paid before the health insurance covers the provided services for the patient (Sueltz & Young, 2010). Thus, 47% of the population in USA is still left uninsured simply because they cannot afford the cost of it, since more and more costs risk are shifted to consumer away from insurers and providers.
The research describes the aspects: a) How to reduce control of the third-party payers over the medial costs? b) How to make health care payment accessible and sufficient? c) How to make outcomes of the treatment effective in terms of the number of the employed physicians, patients treated and hospitals discharged?
Correlation Between Health Care Expenditures and Unemployment
Among industrialized countries USA has the highest rate of the health care spending, which reached $2,6 trillion in 2010 (Sexton, 2012). 61% of health care services and product purchased by hospitals, physicians and clinical services and prescription drugs, while Medicare and Medicaid purchased $ 925,1 billion worth (Niles, 2011). Public and private expenditures included 13% and 8 % respectively, while leaving the greater number for the insurance expenditures of 32% (Sexton, 2012). Abovementioned figures contributed to GDP growth of 17,9% , making the figure of the spending per person reach up to $8,160 (Niles, 2011). Moreover, for the past 25 years health spending has grown slowly under Medicare than under private insurance.
Since the utilization of the medical care involves trade-offs, resources allocated to the production of health services cannot be used in the production of other goods and services and Americans face health care being delivered in grocery, drug stores and physician visits through web (Hillstad & Berkowitz, 2004). There is a notion that better services are paid more, grounded on the fact that inflation rate do not account for improvements in the quality of the health care services (Sexton, 2012). Increasing rate of unemployment is a cause of the companies resorting to more outsourcing to avoid hiring domestic employers who have greater benefit package. However, health care benefits include reduced mortality rate, which is translated into trillions of dollars in benefits every year, healthy labor force and benefits to third parties from vaccinations (Sexton, 2012).
What factors are the major contributors to the health expenditures growth?
In the health care expenditures increase the following three causes play a major role: a) when the price for goods grows, increases the cost of the medical services and the price of the latter stays increased even when the general prices adjust; b) life expectancy increases health care expenses; c) technology improvements, which replace real physicians care (Sueltz &Young, 2010). Moreover, the cost growth was influenced by rise in chronic diseases, which comprised 75% and greater availability of the expensive modern technologies and health care providers kept imposing them to make self-profit out their utilization (Doughlas & Hough, 2008). On the abovementioned conditions payments are derived from: a) out-of-pocket from patients for the service rendered; the figure comprises 12 % of the heath care expenditures (Sexton, 2012); b) health insurance plans that provide deductibles according to the fixed payment or variable payment systems; the figure reached 34 % of the cost of the heath care expenditures (Sexton, 2012); c) public/government funding, such as Medicare and Medicaid, which add up to 52 % of the total US health care expenditures (Sexton, 2012); d) health service accounts (Niles, 2011). All these conditions make health care insurance coverage reach only to 84% with application of voluntary premiums or general taxes as well as multi-payer system for financing (Santerre & Neun, 2009). With relatively limited physician choice third party payers provide reimbursement for fixed payments for hospitals and free-for service physicians (Santerre & Neun, 2009).
Why third-party payers make physicians’ professions cheaper?
Third party payers serve as intermediaries between the costumer and the health care producer and monitor behavior of the health care providers, thus controlling medical costs (Santerre & Neun, 2009). Since providers invest into technology development and perform more tests per patient at higher charges, medical care becomes a service for those, who wish to purchase it, living 45 million uninsured Americans in the attention of decision makers (Santerre & Neun, 2009). It should be mentioned that fixed payment system is based on the stable payment regardless of the income; variable payment is free-for-service price paid for each unit of the medical service, making patients lack visits to physician (Santerre & Neun, 2009). When the level of out-pocket-expenses reaches maximum insurance company should pay 100% of the expenses (Niles, 2011). This became one of the factors when patients do not take preventive measures but prefer risky behavior. And the factor that physicians rely on the third-party payers and accept only insured and paying patients make position of the uninsured people more inevitable.
What can be done to reduce the amount of the health care expenditures?
The following approaches should be suggested to meet future economic needs of the health care: a) refocus medical delivery system to be centered on patients, which allows patients to visit specific physicians according to provided plan of limited choice; b) provide greater governments oversight of health insurer premiums and practices to identify deviation from the quality and efficiency standard; c) increase competition and price transparency in the sale of insurance policies, thus making providers to bear of the financing through capitation and withholds (OECD, 2010). If to make health care spending needs more effective the comparison of the measured inputs and outputs should be estimated: number of the physicians in practice to the level of the patients treated and increasing of the quality and length of life should equal the health care spending in financial terms (OECD, 2010).
Who should participate in the copayment of the medical services?
In terms of deductibles payment and health care benefits the following approaches should be suggested: a) exchange low-end coverage for deductibles with lesser copayments; b) provide prescription drug and care coverage with increasing the overall value; c) impose tax on Medicare copayments; d) percentage increase should be related to the tax income (Shaviro, 2004). Although, we must admit that fiscal gap and advanced insurance design will not improve the quality of the Medicare, but there is a belief that taxpayers will not get unfair advantages in some other area.
In addition, we should not underestimate the benefits of the modern technologies. However, only those technologies that result in cost-efficiency advantages for better care for patients, reduce health care cost and improve ability to manage better lifestyle should be implemented. Health care spending needs to become more effective to mitigate pressure on the public finances stemming for demands and the aging of the population.