The Cost of Healthcare in the United States

Abstract 

The United States records the highest healthcare spending in the entire world. With over 17.9% of the gross domestic product (GDP) going to healthcare, it is expected that the US should be a global leader in healthcare provision. However, the reality is that this is further from the truth. The healthcare system of the U.S. does not reflect the amount of money spent on it. Several reasons have been postulated to explain the high budgetary needs in the healthcare industry. Among the notable ones include administrative costs, drug costs, and the physician's emphasis on defensive medicine. Despite all these, the quality of healthcare in the nation continues to deteriorate with widespread inefficiencies. The focus of the research will center why the quality, efficiency, and accessibility of the care services remain a problem in the U.S. despite the hefty budget allocation it receives from the federal government. The research study took the shape of a systematic review where six research studies were assessed and their information synchronized and analyzed in a bid to get the answer. From the review, the conclusion was that healthcare reform is needed for four main reasons. First, the costs of healthcare have been skyrocketing unnecessarily. Secondly, reforms in healthcare will improve the overall quality of care delivery. Reforms will cover approximately 25% of Americans without insurance. Lastly, healthcare reforms would prevent healthcare frauds, thereby limiting its economic costs. 

Keywords: Gross domestic product, Medicare, Affordable Care Act, Medicaid, Disparities. 

Introduction 

The United States spends much higher on healthcare compared to other high-income countries. However, the problem is that the country does not achieve better healthcare outcomes that reflect its hefty budgets. According to research conducted in 2016, the U.S. spent up to 17.8% of its GDP on healthcare. On the contrary, all the other high-income countries had an average expenditure of 11.5% of their GDP. It is also fundamental to note that the per capita expenditure continues to record high figures. Several reasons have been mentioned to explain the exorbitant budgets directed to the healthcare industry. High administrative expenses, drug costs, and the practice of defensive medicine, among others have all been implicated. The healthcare cost is also a significant problem that could act as a barrier to attainment of services. It is in this regards that serious changes need to be made to enhance sustainability and the quality of services given. While the United States records the highest budget spending in the health care sector in the world, the quality, efficiency, and accessibility of the care services remain a problem thus the need to have some reforms to improve the industry. 

Reasons for High Healthcare Costs in the U.S. 

Many questions have been asked regarding the high healthcare spending of the U.S. compared to other countries. Papanicolas et al., (2018) in their research say, "In 2016, the United States spent nearly twice as ten high-income countries on medical care and performed less well on many population health outcomes." The rising costs of healthcare have been a cause of concern in the last few years. In total, the U.S. uses about $2.9 trillion every year on healthcare, which translates to about $9,255 per individual (Mathur et al., 2015). The situation has been described as corporate greed, given that U.S. healthcare performs poorly among the 11 best-industrialized nations. The first primary reason implicated in the rising healthcare cost includes administrative costs. The administrative expenses required to run the U.S. healthcare sector are astronomical. Findings have shown that approximately a quarter of the healthcare cost boils down to administrative costs, which are also far higher than any other country in the same league as the U.S. 

The second reason to explain the high cost of healthcare is the costs of the drugs. In most developed countries, the government plays a crucial role in the negotiation of drug prices with the manufacturers. However, after the creation of the Medicare Part D by Congress, Medicare was barred from negotiating drug prices. The two bodies that pay the least, as far as drugs are concerned, include the Veteran's Administration and the Medicaid due to their impetus in negotiation. Other than the drug costs, the practice of defensive medicine remains another significant aspect that contributes to the high cost of healthcare. Many doctors and physicians are fearful of the legal ramifications that come with negligence. As a result, they end up ordering for multiple tests and diagnoses unnecessarily. Epstein (2019) said, "A 2010 Gallup survey estimated that $650 billion annually could be attributed to defensive medicine." The tests are not only wasteful but also redundant and inappropriate. Other than the litigation fears, evidence has shown that the over-prescription can also be due to the urge to make profits. 

According to the Congressional Budget Office (CBO), the advances in the field of medical technology have had a significant impact on the rising costs of healthcare. Although advancement in technology is a welcomed endeavor, it is crucial to assess its impact on the overall costs. In explaining the effects of technological advancement in the expenses, Mack blames the premature adoption of these aspects. He says, "Eagerness for innovation, however, seems to have created a culture where medical technologies are adopted prematurely, and new medical technology is employed for additional uses beyond the original intent" (Mack, 2016). The lack of insurance has also played a crucial role in the upward progression of the costs. Although the Affordable Care Act (ACA) has significantly improved the number of people insured, as an industrialized nation, the number of uninsured people remains high. As such, this makes healthcare inaccessible to many people who need it. 

Why Quality of Healthcare in the U.S. Remains Low 

As per the Global Healthcare Access and Quality Index, the U.S. ranks 29 th out of 195 countries as regards the quality. This is even though it spends the highest amount of money globally. Cook, (2018) says, "The U.S. has spent more on healthcare than any high-income country, yet Americans have poor health outcomes and a worsening life expectancy when compared with other countries, according to a report from the Commonwealth Fund." It is therefore essential to research on some of the reasons that could be dragging the healthcare quality behind despite the hefty amounts of money pumped into the system. First, the U.S. has a low rate of insurance coverage. With the advent of the ACA, the insurance rate rose to 90%. However, this is still low, because most of the high-income countries are, on course, to attain 100% coverage (Health Care Spending in the United States and Other High-Income Countries). Without proper insurance coverage, the hospitals cannot guarantee certain services to the patients, thus leading to increased morbidity, hospital readmission rates, and mortality. It is the lack of insurance that causes disparities in healthcare outcomes. 

The mixed levels of population health have also led to lowered quality. It is crucial to appreciate the fact that Americans smoke less compared to other high-income countries. However, the prevalence of lifestyle diseases such as obesity and diabetes, among others continue to complicate healthcare. The infant mortality rate continues to be higher than the rest of the high-income countries. Currently, life expectancy in the U.S. is at 78.8 years. This rate is about three years less compared to the expectancy in other high-income countries. The high cost of treatment, especially for those without insurance complicates the matter further. The cost of drugs in the U.S. remains at an all-time high, factors that contribute to the poor healthcare outcomes (Health Care Spending in the United States and Other High-Income Countries). With this in mind, specific steps needed to be taken to stop this trend. The continued high expenditure directed to healthcare is not sustainability. Most fundamentally, they do not reflect the much-needed quality of care. 

Reforms Needed To Be Taken 

Due to the high costs and low quality, the healthcare reforms need to be initiated. Without the desired changes, the rising healthcare costs will threaten to consume the entire federal budget. Four main reasons will explain the necessity behind the reforms. The first reason includes the increasing healthcare cost, which has already been discussed at length. Secondly, it is estimated that the improvements will be directly responsible for the improved qualities. Most Americans today are surprised to find out that they have one of the worst healthcare systems in the developed world. Chronic diseases alone contribute up to 70% of all the deaths that occur in the country. As the population continues to age rapidly, the prevalence of the disease will also increase. It is estimated that diabetes and cancer will increase by 50% in 2023 (Amadeo, 2019). Other diseases that are expected to grow without proper medical attention include heart problems and hypertension. Thirdly, the reforms should center on health insurance coverage. Research shows that over 100,000 Americans have died every year due to a lack of insurance (Amadeo, 2019). Some of the most expensive care areas include emergency room visits and chemotherapy for cancer patients, which need to be covered adequately. 

The healthcare industry is also clouded with various forms of fraud which have directly impacted the heightening costs and the deteriorating quality. Estimates show that up to $200 billion is lost to fraud every year (Amadeo, 2019). It is therefore essential to seal the loopholes that enable fraudsters to flourish and turn the healthcare industry into a money-making machine. One of the ways is to ensure that the reimbursements are correctly done and that physicians avoid unnecessary diagnoses to make more profit for their hospitals. The success of the reforms will also depend on how well the healthcare system improves existing policies. For instance, Obama (2016) said that "The Affordable Care Act is the most important health care legislation enacted in the United States since the creation of Medicare and Medicaid in 1965." However, the healthcare policy has since received a fair share of criticism, especially from the current Republican government. It, therefore, shows that specific steps need to be made streamline it further. The insurance policy should not only focus on covering more people but also covering more services, including emergency room visits and costly medical procedures such as chemotherapy. 

Reforms should also center enhancing diversity in the healthcare system. America remains one of the countries with the most diverse people based on their racial backgrounds, ethnicity, and immigrant-status, among others. Despite the increasing cost of healthcare, the disparity remains a significant challenge that needs to be wiped out. Healthcare disparity is a situation where members of a particular social or economic group record disproportionate outcomes. Some of the people most affected by disparity include racial minorities and immigrants. Therefore, the focus should be placed on enhancing policies that mitigate disparity, such as recruiting health professionals from a wide variety of backgrounds. More importantly, it requires training health professionals on culture sensitivity to ensure that they better meet the needs of the people. Another area which reforms should illuminate regards the public and community health. More health professionals should be deployed to the community setting to work in these regions. Their primary role will encompass, enhancing primary and preventive health. 

Conclusion 

While the United States records the highest budget spending in the health care sector in the world, the quality, efficiency, and accessibility of the care services remain a problem thus the need to have some reforms to improve the industry. The U.S. spends the highest amount of money in its healthcare system than any other developed country. However, this has failed to reflect on the quality of care that it gives to the people. Several reasons have been implicated in the rising cost of healthcare in the U.S. They include high administrative costs, expensive medication, expensive treatment, and the practice of defensive medicine. Despite all these, the quality has deteriorated due to ineffective policies and insurance covers that have failed to offer the most plausible solutions. It is in this regard that specific changes need to take place in a bid to salvage the industry and guarantee efficiency and effectiveness. It will begin by lowering the costs of healthcare in the country. Once this is achieved, the federal government should ensure that all its citizens are insured. The reforms should target the shortage of healthcare professionals, including doctors and nurses. It should also address disparities and public health needs. 

References 

Amadeo, K. (2019). Why Reform Health Care: Why We Need Health Reform. The Balance https://www.thebalance.com/why-reform-health-care-3305749 

Cook, H., (2018). Among 11 countries, U.S. ranks last for health outcomes, equity, and quality. Clinical Leadership & Infection Control https://www.beckershospitalreview.com/quality/among-11-countries-us-ranks-last-for-health-outcomes-equity-and-quality.html 

Epstein, L., (2019). 6 Reasons Healthcare Is So Expensive in the U.S. Investopedia https://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp 

Health Care Spending in the United States and Other High-Income Countries https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_in_the_literature_2018_mar_papanicolas_hlt_care_spending_us_other_countries_jama_03_13_2018_itl.pdf 

Mathur, P., Srivastava, S., & Mehta, J. L. (2015). High Cost of Healthcare in the United States-A Manifestation of Corporate Greed. J Forensic Med, 1(1), 1000103. 

Obama, B., (2016). The United States health care reform: progress to date and next steps. Jama, 316(5), 525-532. 

Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.