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An Analysis Concerning Expenditure On Healthcare Economics Essay

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The cost of healthcare has been on increase for a considerable length of time. The total expenditure on health in US has gone beyond two trillion dollars in the past two years. The expenditure trend has been going up steadily for the past two decades. It s against this backdrop that stakeholders in the healthcare sector have attempted to craft policies which work help reduce the cost of Medicare in United States. There has been a big struggle among healthcare consumers in footing the high medical bills. For example, in the past two years, the health care expenditure in US was approximately $7,600 for every single resident. This figure represented about 16 percent of the nation’s GDP. Realistically speaking, this figure has remained to be highest within countries which are developed. In spite of the fact that Americans enjoy quite a number of fringe benefits arising from health care, the escalating healthcare costs in addition to the recent global economic meltdown which has resulted in gross deficit has greatly impeded systems which are used to finance heath care sector. This paper seeks to elaborate on current healthcare expenditure in US besides giving a forecast on the system in terms of growth prospects.

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The level of current national health care expenditures

There is a great concern over the rising cost of health care expenditure in US even at the current times. It has become a significant cause of worry for the government, business organisations and individuals. The current spending on health care expenditure stands at approximately 17per cent of the total Gross Domestic Product. The US spending on heath care stood at 2.5 trillion dollars in 2009 which has been sustained up to the present time. Additionally, the US government has been using a lot of resources on developing its health care program. This is contrary to the spending trends in other industrialised countries (Kaiser Commission on Medicaid and the Uninsured, 2008).

The national expenditure on health on hospital, and other clinical services accounts for more than fifty per cent of the total spending. Only about 10 percent is spared on the purchase of drugs.

Moreover, the expenditure on health services has not been critically examined due to the much attention devoted on the ratio between the costs of health care per single individual against the total amount available. About two-thirds of health care expenditure goes towards taking the welfare of only 10 percent of the US population while 21 percent of the total health care expenditure serves less than two percent of the population. Moreover, the remaining fifty per cent of the populace are served by only about four percent of the entire health care budget.

Both the private and public sectors play a significantly role in providing some of the sources of funds needed for health expenditure. The spending level arising from the private sector is slightly higher than that of the public with 54 percent being spent. Moreover, insurance companies which are operating within the private domain constitute about 63 percent of all the health expenditures in the private sector. Charitable contributions towards health care accounts for 13 percent. Moreover, projects which are undertaken by CMS is on the downward trend and is expected to fall even lower in the following years.

The current health care expenditure in US is significantly impacting on a wide array of major stakeholders who include business organisations and individual people. For instance, the public domain experiences the spending pinch when they have to dig deeper into their pockets. The insurance premiums are still high in addition to the cost sharing arrangement which has to be remitted at the time health care service is being offered.

Whether the spending is too much or not enough

From the analysis of the current health care spending in US, it is evident that the costs are extremely high and is a huge financial burden to the residents. The spending rates have been rising over the years thereby impacting the population negatively. A latest survey revealed that a whooping 20 percent of the US citizens are not in a position to pay for their medical bills and as a result, they struggle a lot to meet this glaring financial need.

Besides, individual families have been found to be struggling a lot in catering for their health care expenditure therefore laying a financial burden on them. In addition to the regular health care cover, patients also find themselves paying for extra charges from their pocket which is duly determined by the nature of their individual medical coverage. The extra charges were estimated to stand at 32 percent in 2006 and this figure has continued to rise up to date. The out of pocket spending adversely impacts those with low health spending. From this perspective, the nation should re-examine the health care costs which are definitely high in order to reduce medical spending which is already at its peak and posing a serious financial burden to the population.

Moreover, the health care expenditure incurred by the private sector is found to exceed that of the public. This implies that most businesses as well as individuals are not covered by the public countries (Kaiser Commission on Medicaid and the Uninsured, 2008).

. A direct interpretation of this scenario is an extra spending on health care owing to the notably higher rates which are applicable in the private sector.

Health care Adjustments

The nation should dwell more on hospital and drugs because the two areas will ensure infrastructural and medical supply against the current situation whereby the nation is spending heavily on coverage (Centers for Medicare and Medicaid Services, 2010). For a long period of time, most of the health care proceeds paid through premiums have been enjoyed by these firms at the financial detriment of patients or businesses which pay up for the coverage. In fact, the adoption of the public option through the health care reform bill is a major step ahead towards realising a more balanced and less skewed health care system

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The future economic needs of the health care system

The health care system which is currently on operation in US has been criticised by many sceptics as inefficient and that it does not favour both individuals and businesses. However, both political and socio-economic factors have continued to determine the status of the health care system (Catlin, 2010). There is always a delicate balance which the political class has attempted to maintain in addressing this missing link with little success. Therefore, the future economic needs of the US health care system will greatly depend on the necessary political good will which will see affective and pragmatic amendments done on the current health care structures and systems. Besides, the insurance industry is yet another health care concern which will have to be restructured in order to provide a more friendly investment field for businesses through reducing the coverage costs which are still high at the present time. This will precipitate growth not only in the health care system but also other sectors in the government. It is imperative to note that unless the US health care system is remoulded and given a new facelift, the public will continue to spend more leading to further fragmentation of the US citizens on the basis of their ability to foot their medical bills.

Addressing the health care needs

The cost of heath care expenditure in US has been high and continues to escalate as time goes by. The financial burden posed on individuals and business organisations cannot be emphasized. As the health care system continues to illicit more bitter reactions and discontent among the said groups, it is only necessary to address such needs. For instance, the cost of doing business and other investments is becoming really cumbersome due to the health care expenditure involved (Centers for Medicare and Medicaid Services, 2010). As a result, many investors are scared of capital spending which may not yield positive returns. Consequently, the low level investments will translate into a lower Gross Domestic Product coupled with reduced employment rates and job losses. It is therefore critically necessary to address these emerging health care needs if the US population will have to enjoy a brighter future.

How you envision these needs will be financed

A favourable future of the US health care system will largely depend on the financing methods which will work towards reducing the tentative cost of health care coverage. As mentioned earlier, there is need for alternative financing sources of the health care system beside the currently available sources of revenue. The adoption of the health care reform bill into law and its subsequent implementation will see the burden of health care funding reduce proportionately due to broadened sources realised from general revenue. Further, the insurance plan which is social in nature can be envisioned as another source of heath care funding. This will not only take care of the lower insurance rates but also encourage the public to opt for the cheaper option which is quite competitive to the public option proposed the Congress (Catlin, 2010). On the same note, as much as social insurance may be deemed as a viable source of funding, private insurers will also provide the much needed funding for the health care needs. Finally there is the out-of-pocket funds which have to be paid upon receiving health care service.


The analysis concerning expenditure on healthcare is important in setting the focus on how spending on the health care system should be regulated. The rising costs of medical cover are of great concern bearing in mind that a relatively small number of people constitute the major spending. This is a skewed health care system which requires adjustment and full restructuring. While the current national health spending has generated more questions than answers, the future needs of the system cannot be overlooked. Therefore, a health care system which fairly accommodates all stakeholders is necessary. Nevertheless, the balance between adopting a formidable health care plan and protecting selfish political interests has been hard to strike with piecemeal and less pragmatic amendments being made. All the same, it is still possible to achieve an attractive health care system which can be financed from alternative sources.

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