Over the past ten years, health care cost have risen faster than salaries. The problem is not because of lack of spending from the government, but the exact opposite. Actually, one-sixth of the U.S. economy is allocated to health care spending and the number continues to grow each year. Despite the excessive funding, the United States still fail to deliver quality and affordable care. Data from a reliable study in 2009 shows that out of $2.5 Trillion in Healthcare spending, $765 Billion were wasted. This extravagant spending is due to the unnecessary and inefficiently delivered services, excessive administrative costs, missed prevention opportunities and fraud.
How are Americans Affected by Rising Health care Cost?
Rising healthcare costs punish the Americans on various aspects. For low income families and seniors, soaring medical cost would mean less money for basic needs such as food, housing and utilities. For business owners and employers, they are unlikely to hire new employees due to expensive premiums. For the government, rising healthcare cost leads to higher Medicare and Medicaid cost, and reduced allocations for other important priorities such as Education, Public Safety and Infrastructure.
Fast growth of health care expenditures also have significant changes to the economy in general. Among these changes are listed bellow:
- Higher Taxes – Public Health care is financed by taxes. Thus, increased health care cost leads to increase in taxes.
- Less Employment – Labor cost increases as health care cost rise. This means employers cross cut or reduce employee headcount.
- Decrease in Living Standards – From 2000 to 2009, more than 90 percent of U.S. increased wealth has been allocated for healthcare. This leads to low job creation and decreased in hours of work, less coverage and shifting a large proportion of medical cost to employees. This has greatly affected the American standard of living.
What can the United States Governement Do?
There has been a long debate on addressing health care cost. Differing parties argue that the government should focus on reducing the level of spending. Whereas, others contend to pay attention to the rate of growth as a long-term solution. Though there is no simple formula to lower rising health care cost, many areas where common ground can still be found.
The American Health Insurance Plan has suggested some strategies to reduce health care cost:
* Tackling Barriers to Transparency – With increased transparency, consumers and purchasers have a better understanding behind growth of healthcare cost and impact in the community and helps them make better health care choices.
* Facilitating Benefit Modernization – This step is made addressing barriers in the local communities and implement cost containment strategies to ensure safe and quality care.
* Advancing Bold, Structural Reforms – They state that “action needs to be grounded where health care is delivered today, at the state and local levels.A state-federal shared saving, or gain-sharing initiative could be implemented that would allow states to keep portion of any health care cost savings they generate.”