High And Rising Healthcare Spending in the US

Abstract 

Healthcare spending is a serious problem facing the United States of America. Today, on average, an American citizen spends $11,000 annually on healthcare which translates to about 17.7 percent of the total GDP. From the reviewed predictions, healthcare spending will grow by about 1.1 percent faster than US GDP before 2028. Undeniably, this high healthcare spending has negative implications on the American economy. First, understanding the trigger factors that lead to high healthcare spending in the US is essential. In conjunction with other stakeholders in the healthcare industry, the government must understand what practices or lack of contribute to the current problem. Second, all players must try to compare the consequences of high healthcare expenditure against the bottom line of improving healthcare outcomes. From the research conducted, it is clear that healthcare outcomes are still poor despite spending almost 18 percent of the total GDP. Based on this, all levels of government should make concerted efforts to implement the recommended solutions to ensure that healthcare expenditure is reduced, healthcare outcomes are improved, or both. 

High And Rising Healthcare Spending in the US 

Healthcare spending in the US significantly exceeds that of other developed countries, and it is expected to continue increasing. For example, in 2018, the US spent approximately $3 trillion in healthcare, averaging about $11,000 per citizen. Further, the statistics indicate that healthcare expenditure increased by 13 percent of gross domestic product (GDP) between 1960 and 2018 (Peter G. Peterson Foundation, 2020). Undeniably, high healthcare expenditures worsen the country's debt and are particularly problematic since they do not improve health outcomes. The sustained increase in healthcare spending has been a subject of debate for several years. Concerns continue to intensify as both research and subjective reports show that continued increase in healthcare spending is detrimental for public healthcare efforts and, therefore, the economy. According to Raghupathi and Raghupathi (2020), reducing healthcare costs and thus expenditure is important in the overall growth of the country's gross domestic product (GDP) because it is directly related to better human capital quality. Reducing healthcare costs means that more people will seek these services leading to a healthier and productive nation. High spending costs can negatively affect endeavors to foil public health problems such as the current COVID-19 pandemic and tobacco use. Tran et al. (2017) propose that implementing measures to improve healthcare spending in the US can release money that can be used for other purposes, such as redirecting it to education and tobacco use prevention. Healthcare spending impacts the economy in many ways. These effects also vary across the many sectors of the economy and population groups. 

Current Statistics 

Although this is not a new problem, public health spending in the US is increasing at an alarming rate which, coupled with the current fiscal challenges, creates an urgent need to contain the unprecedented growth. 2019 healthcare spending increased by over 4.6 percent to stand at approximately $3.8 trillion, which was relatively higher than the 2018 figures. The 2019 healthcare spending figure was 17.7 percent of GDP, a 0.5 percent increase from the statistics posted in 2018 (American Medical Association, 2020). The federal government sponsored the largest share of national healthcare spending (Centers for Medicare and Medicaid (CMS), 2020). The report indicates that Medicare spending increased by 6.7 percent, equal to 21 percent of the total national health spending. On the other hand, Medicaid spending grew by 2.9 percent during the same year, 16 percent of total US healthcare expenditure. Further, the CMS 2019 projection showed that healthcare spending would increase at an average yearly rate of over 5 percent between 2019 and 2028. This annual increase means that total healthcare expenditure will stand at about $6.2 trillion within the next 6-7 years (Centers for Medicare and Medicaid, 2020). Although there was a decline of 2 percent in 2020, the total healthcare spending consumed a significant percentage of the country’s GDP ( American Hospital Association, 2021 ). Further, the report indicates that the 2020 decline in healthcare expenditure was the first drop in annual health spending since 1960, when efforts to track it began. Among the healthcare sectors that registered significant decline included hospital care, dental services, and prescription drugs. 

From the 2019 projections by the CMS, one realizes the impact the increase will have on the economy. Fundamentally, the forecasts show that national healthcare spending will grow by 1.1 percent faster than the GDP in the next decade. Second, the healthcare share of the economy will increase from the current 17.7 percent to 19.7 percent by 2028. The expected trigger factors for the projected growth are an increase in price for medical commodities, Medicare spending, and a decrease in the insured population (Centers for Medicare and Medicaid, 2020). Factoring the impact of the past yearly healthcare spending, one can project that the 2028 healthcare expenditure will have even more negative impacts on healthcare outcomes and the economy. This means that the players in the healthcare sector, in conjunction with all levels of government, must identify factors that contribute to high healthcare spending. Next, the concerned parties must develop both short-and long-term solutions that will address the problem. That notwithstanding, one must recognize the complexity of high healthcare expenditure and understand that it requires a multifaceted approach. 

Causes of High Healthcare Spending 

Several factors are attributable to the high healthcare expenditure in the US. However, it is essential to note that these factors do not work in isolation, but their total contribution leads to the net increase in health care spending. Understanding these factors is critical in controlling the costs of various healthcare services and medical products. 

The American Populace is Growing More Unhealthy 

A significant portion of the US population is increasingly becoming unhealthy. According to the Center for Biotechnology Information, about 50 percent of the US population suffers from at least one chronic condition, such as heart disease, diabetes, and asthma (Holman, 2020). Further, the author notes that chronic diseases have become an epidemic majorly because of the many people suffering from them and that they consume more than 85 percent of the healthcare costs. Diseases have, over the years, gradually crossed from acute to chronic. The ever-growing health crisis is worsened by unfair access to care, inadequate care for others, and exploding costs of care. Holman (2020) notes that in the 1980s, chronic diseases prevalence increased by 40 percent to 150 percent while healthcare spending tripled. In the last two decades, chronic disease prevalence in America has grown by about eight million people every half a decade (Holman, 2020). As the prevalence of chronic diseases continues to rise and become a dominant issue in the US, one can also argue that healthcare expenditure will also escalate. In the last two decades, the prevalence of chronic diseases in America has grown by eight million every five years (Holman, 2020). Failure by the government to take action against conditions such as obesity and overweight on time has seen the number of chronic diseases increase significantly over the years. 

The high prevalence of obese and overweight people in the US is another reason for the many cases of chronic diseases. Over 40 percent of adults are overweight or obese (). Obese and overweight people have higher chances of developing chronic illnesses associated with inflated medical expenses (Centers for Disease Control and Prevention, 2021). As the American population becomes sicker and overweight, the risk of insuring the average US citizen also increases, which means that insurance premiums will increase. According to the Kaiser Family Foundation (KFF), the average yearly premiums for family coverage increase from $15,545 to $21,342 between 2015 and 2020, equal to 37 percent (Smith, 2021). If, for example, the number of obese and overweight people increases in the next six to seven years, the projection made earlier will materialize. Insurers will consider adding the cost of premium because the risk of developing chronic diseases will increase. 

Insufficient Information About Medical Care and Associated Costs 

Although there is incredible information available on reputable online platforms, there lacks a uniform way to comprehend the available treatment alternatives and the associated costs. According to Appleby (2012), through medical journals, online platforms, and the popular press are overflowing with health information and related studies, there is no broad standard for assessing individual treatment or how given treatments compare with the other alternatives. For example, a study can show that a particular treatment is ineffective or has potential harmful impacts, but it will take a long time for physicians to change their practice. Therefore, patients may always opt for expensive but inefficient treatment, which contributes to the high healthcare in the country. Further, even when healthcare facilities make prices of their service offerings available, they are often difficult to navigate and comprehend. For example, the information given by healthcare institutions is written using medical codes that laypersons cannot understand. 

Ageing Population 

The aging population is a notable demographic change affecting the US, and the trend is expected to continue in the next several years. In 2018, the people above 65 years and above were about 16 percent of the US population, and the US Census Bureau predicts that this group will grow to over 20 percent over the next ten years (Peter G. Peterson Foundation, 2020). Further, the Peter G. Peterson Foundation opines that people aged 65 years and above averagely pay more on medical care compared to other population groups in the US. The growth of this age group over the next several years will consequently lead to an increase in total healthcare spending in the country. That notwithstanding, as people get to 65 years, they become qualified for Medicare, with the sum enrollees increasing by 23 percent by 2028 to stand at 75 million beneficiaries (Peter G. Peterson Foundation, 2020). One realizes that the increase in the Medicare enrollment numbers will substantially increase Medicare costs over time. The Congressional Budget Office forecasts that Medicare expenditure will increase by 200 percent over the next three decades in relation to the size of the economy (Peter G. Peterson Foundation, 2020). Understanding the complex nature of healthcare spending on the elderly is vital in designing and implementing policies that aim at offsetting the impact of the expected huge enrollment for Medicare. 

As mentioned above, all people aged 65 years and above are eligible for Medicare insurance for hospitalization, physician visits, and prescription drugs. Fundamentally, expenses incurred in nursing homes which cost between $77,000 and 88,000 per year since 2014, are a significant issue for people in this age group. Considerably few individuals in this age bracket have long-term care insurance, which means that most expenses are settled out-of-pocket or by Medicaid for those who have exhausted their personal financial resources (De Nardi et al., 2016It is important to note that healthcare services costs are shared among different parties including the government. For instance, according to De Nardi et al. (2015), the government pays about 66.67 percent of healthcare spending by persons 65 years and above. Of this amount, Medicare contributes about 55 percent, 10 percent is paid by Medicaid while other government programs settle the rest. Further, NBER provides that Medicaid pays more for older women's healthcare services than men (12 percent versus 6 percent). A key reason for this is that women have a higher probability of staying in nursing homes than men. One acknowledges that the projections made earlier of a probable rise in the number of people aged 65 years and above will result in more medical expenses being paid by Medicare and other insurance schemes such as Medicaid is true. Another critical factor to consider about the elderly concerns healthcare expenses at the end of their life. A common argument is that people in the US often overspend on healthcare as they near the end of their lives. According to De Nardi et al. (2016), over 20 percent of medical spending is done by those in the last year of their life. This is because most people in this category are living through the last stages of their terminal illnesses, such as cancer. There is a need for complex medical procedures and expensive prescription medicines that Medicare and Medicaid pay for during these stages. 

Increasing Costs 

The increasing cost of medical services is the other notable driving factor of medical expenditure in the US. Healthcare expenditure has increased exponentially compared to other goods and services in the country. According to the Consumer Price Index (CPI), the mean price change for various commodities paid by urban buyers grew by 2.1 percent in 2020. On the other hand, the price of healthcare goods grew by 3.5 percent (Peter G. Peterson Foundation, 2020). When costs of healthcare increase, the government, through its several healthcare schemes programs such as Medicare, is forced to spend more money on healthcare. Several reasons explain the rise in healthcare costs, with surprise billing being the most dominant. 

Surprise billing is directly linked to the increasing costs of healthcare. Fundamentally, in an ideal market, consumers should be able to monitor the price and quality of diverse alternatives. Healthcare providers in the US fail to satisfy this standard, primarily through surprise billing. For example, after receiving healthcare services at an in-network hospital, an insured person will establish that a provider does not belong to their insurance network and is subsequently pricier than they had expected. This results in high prices to the patient and gives providers a leeway to charge exorbitant fees compared to what insurers could have negotiated, increasing total expenses. Healthcare providers who give their patients surprise bills often charge huge multiples of Medicare allowed amounts. For instance, the average charge for emergency medication is always over five times higher than Medicare amounts which has a higher probability of being an in-network and have the costs bargained by an insurance scheme (Nunn et al., 2020). Besides surprise billing, there are two other significant reasons why healthcare bills are high. First, the US has seen new and innovative technologies in the healthcare sector, which are associated with better but expensive procedures and costs. Last, hospitals' consolidation creates room for insufficient competition or hospital domination. Consequently, hospitals are granted a chance to hike healthcare fees. 

Demand for Professional Services 

Over the years, the demand for professional services has gone up. Most healthcare spending in the country is on healthcare facilities and expert services. The available statistics show that a fourth of expenditure is on expert services. Professional services are those provided by doctors and nonphysicians beyond a facility’s setting (Nunn et al., 2020). For example, in 2019, professional services accounted for three percent of total national healthcare expenses. During this year, expenditure on professional services was about 110.6 billion, which was a 6.5 percent increase from 2018. Spending in this category included establishing private healthcare practitioners that primarily provide services such as podiatry, chiropractic medicine, and physical therapy (Centers for Medicare and Medicaid Services, 2019). Primarily, much of spending on professional services is on consultancy and labor costs. Lowering spending on professional services would require healthcare facilities to expand their labor size and reduce unnecessary services. 

Complex US Healthcare Systems 

The US has several healthcare systems that create a complex problem of waste. Having multiple systems is associated with administrative expenses that lead to high medical expenditure in the country. For example, the country spends about eight percent of its healthcare allocation on administrative budgets (Investopedia, 2021). The American healthcare system is characterized by separate rules and regulations, financing models, enrollment days, and out-of-pocket costs for employer-based insurance covers. High administrative costs are attributable to two factors: the available providers and payers that request administrative information processing and severe reporting constraints. Concerning the arduous reporting requisites, one must note that over 1,700 quality measures are collected by the CMS alone (Tollen et al., 2016). These factors result in an abnormally high number of non-clinical employees, many of whom center on routine transactions that can be resolved by digitizing the systems. Tollen et al. (2020) further noted that past studies have shown that administrative labor is a crucial driving factor for huge healthcare expenditure in the US. For instance, the authors cite Glied et al. (2016), who established that the numbers of administrative workers affected total healthcare spending between 1997 and 2012. Nevertheless, it is essential to note that administrative cost is the price Americans pay for choice. 

The defining characteristic of American healthcare is choice. First, insurers choose markets, healthcare providers, and their own primacies for quality enhancements. Second, companies choose underwriters and levels of benefits that are beyond the required least amounts. Third, providers the location and the mode of practice, services to provide, and often what to charge. Last, patients must choose everything from insurance plans to healthcare providers to medical procedures and whether to be insured at all, with the essential qualification that many Americans have limited options in these matters (Tollen et al., 2016). Each of the above options has an associated cost in terms of administrative complexity needed to make it work, and each category is valued diversely by various players. Relatedly, the critical question concerns whether there are considerably expensive choices and add little worth to the American healthcare system. For instance, much of the administrative excesses would vanish if everybody had the same benefit plan or a variation on a standard plan. Also, it is crucial to understand if a considerable number of stakeholders such as employers and third-party administrators who manage their benefits willingly give up flexibility in how benefits are designed to save on associated costs ( Glied et al., 2016 ). Answering these questions requires an excellent understanding of predilections, values, and the financial costs of choices. Moreover, some costs, such as those related to non-standardized protocols to exchange money for patient data, have an insignificant impact on value. 

Hospitals as Profit Centers 

In the US, healthcare facilities are mainly privately owned, meaning that they are for-profit organizations. Essentially, healthcare facilities receive about a third of the amount spent on healthcare in the US. In 2019 it was estimated that approximately $1.3 trillion would be spent on hospital care. Annually, healthcare facilities boast a margin of about eight percent, which exceeds the margins in the pharmacy or insurance sectors. Further, across the US critical care facilities, the total proceeds surpassed expenses by over $64 billion in 2016 ( Gee, 2019 ). These statistics indicate that many hospitals can sustain profits by charging high prices because of their market power. Fundamentally, hospitals’ market power has grown as competition has declined and investors in healthcare have strengthened their financial muscles through mergers and acquisitions. Profitability in the healthcare industry has continuously soared in the last few decades, especially from the measures applied after the Great recession and the positive impact of the Affordable Care Act ( Gee, 2019 ). As of 2016, the overall margin across the entire healthcare sector was 7.8 percent, while the operating margin was approximately 6.7 percent ( Gee, 2019 ). To place this data in perspective, acute care facilities are more lucrative than many other sectors in the healthcare industry. For example, hospitals perform better than healthcare insurers and pharmacies. This is exacerbated by the ongoing mergers, which consequently kills competition creates a monopoly that can determine the prices charged for various healthcare services ( Gee, 2019 ). Hospital systems are becoming more influential, and individual facilities are also progressively likely to belong to a multi-provider healthcare system instead of operating autonomously. Consolidation with doctors allows healthcare systems to compete with non-hospital-based practices while also benefiting from outpatient drug discounts and the Medicare reimbursement rates paid by CMS to hospitals. 

Significance of the High Healthcare Spending in the US 

Undoubtedly, the high spending healthcare spending in America has far-reaching consequences to the country's economy. In the next few years, the projected growth in healthcare expenditure will have a damaging ripple effect across the economy, leading to the ballooning of the public sector's budget and those of businesses and households. With total healthcare spending standing at $3.3 trillion in 2016, the US is a significant outlier in terms of healthcare expenditure among the OECD countries (Blazheski & Karp, 2018). The fact that the US spends a significant share of its per capita on healthcare compared to the country's OECD counterparts implies that the problem is not just an issue of higher spending but also structural differences. However, according to Cutler (2018), the problem of high healthcare expenditure in the US is not all about GDP, but it has other vital significances. The author notes that high and rising costs are the two issues that are often ignored. Spending on healthcare is high because money is wasted. On the other hand, the rising costs are associated with high medical costs, stagnation of incomes for a considerable size of the population, and the failure of the government to increase tax dollars. The consequence of this is increased healthcare and economic disparities characterized by few Americans covered by private insurance, insufficient funds for social programs, and rationing of public healthcare programs. 

Wasteful Aspect of High Healthcare Spending 

Research has shown that a significant part of national spending on healthcare is wasted. Cutler (2018) notes that it is estimated that between 25 percent and 50 percent of healthcare spending is not linked with enhanced healthcare services. Waste in the healthcare sector happens in various forms, such as misallocated treatments appropriating money on care that has no clinical value. Other examples of waste include administrative waste and unnecessarily high costs of drugs in the US. Shrank et al. (2019) identified six domains of financial wastage that lead to high healthcare expenditure in America. These domains include pricing failure, insufficient care coordination, overtreatment, care delivery failure, fraud and abuse, and administrative complexity. Cutler (2018) notes that healthcare facilities across the country price almost all types of medicines and services more than in other countries comprising the OECD block. The private nature of the US healthcare system gives a leeway for providers to monopolize prices of medical services and drugs, resulting in increased costs. 

The extent of wasteful spending requires special attention because if over 30 percent of spending is wasted, it means that the aggregate of waste in the healthcare sector takes about six percent of the nation's GDP. Six percent of the GDP is equivalent to what is gotten from Social Security and Medicare taxes, and it is over 66 percent of the finances collected by personal income taxes (Cutler, 2018). The fact that wastage in the healthcare sector is high does not mean spending more is entirely wrong. However, wastage makes it difficult for the government to prioritize essential needs in the healthcare sector. For instance, if there is a new drug that can slow down the progression of Alzheimer's disease, it will require that even more money is allocated to the healthcare sector (Cutler, 2018). The best solution would be to reduce wastages, thus releasing funds for other equally important causes. Undeniably, overspending does not increase the value, which supports the argument that there is a need to focus on improving efficiency in how money is used. 

High Medical Spending Exacerbates Inequality 

The second impact of high medical expenditure in the country is the worsening of the severe problems associated with the ever-expanding income disparity. Combining the effects of the stagnating incomes and rising medical spending implies that more Americans will need aid in settling their healthcare bills. For example, a household at the median level of income with an invariable income has had challenges paying the nearly $10,000 increase in the price of the family medical insurance scheme from 1999 to 2017 (Cutler, 2018). That notwithstanding, as the needs for the American people increase, the government has been conducting significant cuts on the resources to the population. All levels of the US government avoid increasing taxes, with some reducing them. As a result, the total income as a GDP share has been invariable for the past few decades. The increased need to assist in conjunction with few resources to spend creates three key issues. 

First, few Americans are under private insurance schemes due to the rising healthcare costs. However, it is crucial to understand that increasing healthcare costs intensifies the value of private insurance in specific ways and is less worthful in others. Concerning the latter, not every American would want insurance more when healthcare costs increase (Cutler, 2018). An example of such a scenario is when a small and isolated population group enjoys benefits associated with high spending. When costs of predictable medical conditions such as neurological disorders increase and insurance premiums also rise, healthy citizens people will not subscribe for insurance coverage or even opt-out. A more aggravating consequence of this is on low-income Americans. The highly expensive healthcare causes the uninsured more attractive to providers. This outweighs the coverage-rising impacts, leading to fewer people being privately covered by insurance with time. 

The second issue is the rationing trends currently associated with public programs. Irrefutably, high healthcare costs lead to reduced access. Requirements by the federal government make Medicaid programs unable to cut enrollment when costs increase compared to schemes offered by private companies. However, Medicaid programs can and often limit access to care. For instance, the introduction of new hepatitis C drugs was characterized by high costs per one course of medication. As more drugs continue to enter the US market, prices have decreased, but they are also relatively huge at $30,000 per person (Cutler, 2018). Due to this, providers have resulted in rationing whereby many Medicaid schemes limit the new medications to citizens with chronic liver conditions. This happened till legal complaints forced Medicaid schemes to cover all Americans. For instance, in 2014, over 90 percent of Medicaid schemes denied access to the new drugs to individuals in advanced stages of liver failure. In 2016, over 50 percent of people with severe liver failure also could not access the new medication. Another rationing approach is sobriety requirements. Over 40 percent of states require people to be at least half a year free of drugs and alcohol before receiving healthcare services for hepatitis C, and about seven percent of patients are required to total abstention for a year. Cutler (2018) states that rationing is even worse in prison, whereby 10 percent of inmates have the disease, but only one percent of that population has received treatment. Rationing occurs not only in pronounced ways, as explained above, but also subtly. 

When the cost of medication increases and resources become constrained, the government significantly cuts the compensation rates for providers. This means that the more money is spent on specific treatments, the lower the reimbursements accorded to the providers. Consequently, not all providers will be willing to offer services to patients. Further, over 30 percent of doctors in the country do not offer services to Medicaid clients, and a significant number of others restrict the number of Medicaid patients they can treat (Cutler, 2018). One can argue that such providers follow the subtle cue from the government to decide who can receive treatment from their facilities. However, the bottom line is that the cost of treatment is high in conjunction with limited resources from the government. Ultimately, access to healthcare suffers due to the impact of insurance dynamics and the cost of medical services. 

Other Social Programs Are Crowded Out 

Notwithstanding the evident and subtle rationing, high healthcare prices result in higher overall government expenditure. Considering the challenges associated with raising money, fewer funds are available for other social services offered by the government, such as income subventions for low-income citizens. Undeniably, for America to resolve income inequality, policymakers in both private and public sectors must devise ways of freeing up resources invested in the healthcare sector. Further, Cutler (2018) argues that even program amends that is neutral between the wealthy and the underprivileged Americans can disproportionately affect the poor. Raising the admissibility age for Medicare as a countermeasure against high healthcare expenditure would significantly reduce age eligibility for low-income citizens compared to their high-earning counterparts. One agrees that such retrogressive changes or measures will disfavor a more deserving population segment while favoring the other resource endowed group. 

Reducing Healthcare Spending in the US 

Despite the massive spending on medical services in the US, healthcare outcomes are still suboptimal. Americans pay more for healthcare than any other nation globally, yet millions of citizens have inadequate access to the current primary and preventative care because they cannot afford healthcare insurance. Although programs such as the Patient Protection and Affordable Care Act (ACA) have worked to lower the uninsured population in the last decade, healthcare spending has risen exponentially (Branning & Vater, 2016). Many uninsured persons have triggered a demand for hospital services, including physician visits and prescription drugs. It is essential to note that the high healthcare spending in the US is a result of decisions made by different players, including insurers, all government levels, healthcare providers, pharmacies, and patients, among others. 

Fundamentally, the US is a capitalistic country, meaning competition is vital in accelerating innovation, which subsequently drives down costs in almost every economic sector. One could argue that this theory can be replicated in the healthcare sector to drive down annual expenditures. However, Branning and Vater(2016), applying this theory is viable. Every player in the US healthcare sector primarily aims at assisting patients and enhancing care outcomes. However, their parallel goal of earning a profit has resulted in the unintended costs of high healthcare spending, which exacerbates an already sophisticated system. In conjunction with other stakeholders in the private sector, the government must explore other avenues of reducing healthcare expenditure in the country. 

Capping Hospital Prices 

As indicated above, high hospital prices are a vital driver of rising costs in the American healthcare system. For example, high prices have and continue to increase the cost of insurance premiums, which outpace the growth in wages and other aspects such as inflation. Essentially, healthcare cost consumes about one-third of overall healthcare spending in the country. Healthcare facilities control prices that are double as high as Medicare, with some providers charging even four times as much ( Committee for Responsible Federal Budget, 2021 ). Healthcare market consolidation and providers flexing their market power to negotiate substantially high prices from commercial insurers are factors fueling the hospital prices. To combat the effect of hospital excesses, the government should focus on limiting commercial prices. For example, the government can consider capping the prices at 200 percent of the Medicare rate. Executing this recommendation over the next decade could have several impacts on healthcare spending in the country. First, total national healthcare spending will reduce through decreased commercial payment to hospitals by over $1 trillion. Second, commercial premiums could reduce by over $885 billion and cost-sharing by approximately $100 billion ( Committee for Responsible Federal Budget, 2021 ). Capping hospital prices will help increase saving in the healthcare sector. 

Leveling Medicare Expenditures Irrespective of Site of Care 

A policy to equalize Medicare expenses in the place of offer notwithstanding will help reduce healthcare expenditure. Statistics indicate that the Medicare scheme pays higher rates for healthcare services performed for outpatient clients than when the same services are conducted in doctors' offices, or even Ambulatory Surgical Centers (ASCs) will ease the expenditure strain ( Committee for Responsible Federal Budget, 2021 ). For stakeholders to lower healthcare costs for patients and the Medicare scheme, they must consider revising this policy by adopting a neutral payment reform regardless of the place of offer ( Committee for Responsible Federal Budget, 2021 ). Adopting such a policy would help dollars allocated to Medicare while also reducing the program's premiums and cost-sharing. Also, savings will be generated in other areas of the healthcare system. Changes to Medicare will also give commercial payers a strengthened negotiating advantage. Implementing this proposal in the next ten years will ease Medicare spending by over $150 billion and premiums and cost-sharing by $94 billion ( Committee for Responsible Federal Budget, 2021 ). Eventually, the site-neutral-payment policy will reduce incentives given to healthcare facilities to obtain physician services associated with higher healthcare spending. 

Public Option Model 

Research has shown that most US citizens are dissatisfied with the healthcare costs. Undeniably, as it stands, the US healthcare system is in a crisis, as evidenced by the many challenges facing it. Fundamentally, Americans with high deductible insurance schemes are less satisfied with the current healthcare system than their low-deductible counterparts ( Crowley et al., 2020 ). In this case, the government can devise a public option solution available to all citizens, which could help achieve universal healthcare coverage characterized by enhanced access and improved outcomes without disrupting the single-payer system. Under the public option mode, people under employer-based insurance can register in the proposed insurance plan to remain in their current plan. Fundamentally, the plan will be available throughout the country, ensuring seamless integration into different state practices. Aspects of this approach are found within the German healthcare insurance schemes characterized by a social insurance competition structure to provide coverage to all persons ( Crowley et al., 2020 ). Retaining private insurance schemes while also providing the public option model will inject healthy competition into areas that are not well covered by regulated private insurers while also reducing premiums. 

Single-Payer System Option 

The national and state government have adopted a piecemeal approach to expand coverage of the citizens. These solutions include Medicare for persons 65 years and below, Medicaid for the underprivileged, and ACA for individuals in the lower-and middle-income categories. Also in this category is the Children's Health Insurance Program (CHIP) for middle-income children. Despite a slow uptake of the single-payer model, it has received significant support in the last years ( Crowley et al., 2020 ). Single-payer systems must not be confused with other models' objectives of universal coverage, management efficiency, and enhanced affordability. Under a single-payer system, the government pays for healthcare services, runs hospitals, hire and sustains doctors and other medical professionals. Another caveat is that implementing a single-payer model does not inhibit the operations of private insurance providers. The country will have private insurers to offer supplementary benefits such as prescription drugs not catered in the single-payer. 

Research on the proposed single-payer system by US state governments showed that they share common elements. Examples of these include all-inclusive benefits, patient preference of provider, little cost-sharing, and payment reforms ( Crowley et al., 2020 ). Under such a system, insurance will become inexpensive, portable from state to state, and easier to administrate with little or no corporate interest. The critics of the system argue that a single-payer system provides an opportunity for the government to overreach its mandate, which will result in extended waiting time, tax upsurges, and dampening of innovation ( Crowley et al., 2020 ). Conversely, in countries such as United Kingdom, Germany, Canada, and Switzerland with an already functioning single-payer system, universal coverage is still faces similar problems to those experienced in the US ( Crowley et al., 2020 ). For example, in Canada, cost issues have inhibited the country’s ability to include prescription drugs in the rudimentary benefit plan. 

Transforming the highly differentiated US healthcare system to a government-financed one will have significant disruptions within the healthcare sector, with losers and winners. For instance, the system will reduce the administrative burden for doctors while also freeing time for direct client care. Further, uncompensated healthcare expenses due to lack of insurance covers will not be an issue anymore. That notwithstanding, these benefits will come at a cost, such as decreased physician independence and amplified demand for care ( Crowley et al., 2020 ). On the upside, both the government and the American citizenry will have a system that covers everyone, have any needed care, and at a cost that is favorable to all parties. Notably, the single-payer system will give the government leeway to redirect funds from healthcare administration to funding, research, and public healthcare, among others ( Crowley et al., 2020 ). From this, one realizes that a single-payer system will significantly reduce healthcare spending by releasing dollars that can be redirected to meaningful endeavors to improve care outcomes. Under this system, administrative wastages and complexity, insurance premiums, and overall healthcare costs will reduce significantly. 

Conclusion 

Healthcare spending in the US is extremely high, and projections indicate that the trend will continue in the future. Despite the high expenditures in this sector, the care outcomes have not improved over the years. One aspect of these expenditures is that they continue to affect its economy by consuming into its GDP. From the reviewed statistics, it is clear that the country is headed in the wrong direction, with the healthcare industry consuming roughly 18 percent of the US GDP with no improvement in healthcare outcomes. Research has shown that there are several causes of high healthcare spending in America. The government and other relevant stakeholders need to understand the dynamics influencing each cause. Undeniably, a sector consuming about 18 percent of US GDP should have positive results associated with it. The high healthcare spending in the US has far-reaching consequences besides poor healthcare outcomes. These impacts are directly related to the country's economy, meaning that failure to address the root cause of the problem will adversely affect all other sectors of the economy. However, several solutions have been recommended that can help America deal with high healthcare spending while also helping the country achieve the primary aim of the healthcare sector, better health outcomes. Future research can focus on how creating a hybrid system comprised of the stated solution can help save more dollars while also helping streamline healthcare outcomes. 

References 

American Hospital Association. (2021). Study: US. Health Spending Falls for First Time In 60 Years In 2020, With 7% Decline for Hospital Care. https://www.aha.org/news/headline/2021-02-17-study-us-health-spending-falls-first-time-60-years-2020-7-decline-hospital#:~:text=Home-,Study%3A%20U.S.%20health%20spending%20falls%20for%20first%20time%20in%2060,7%25%20decline%20for%20hospital%20care&text=Annual%20spending%20for%20health%20care,a%20preliminary%20analysis%20by%20Altarum 

American Medical Association. (2020). Trends In Health Care Spending . https://www.ama-assn.org/about/research/trends-health-care-spending 

Appleby, J. (2012). Seven Factors Driving Up Your Health Care Costs. https://khn.org/news/health-care-costs/ 

Blazheski, F., & Karp, N. (2018). Got symptoms? High US healthcare spending and its long-term impact on economic growth.  US Economic Watch , 10-20. 

Branning, G., & Vater, M. (2016). Healthcare Spending: Plenty of Blame to Go Around.  American health & drug benefits ,  9 (8), 445–447. 

Centers for Disease Control and Prevention. (2021). Obesity and Overweight. https://www.cdc.gov/nchs/fastats/obesity-overweight.htm 

Centers for Medicare and Medicaid Services. (2019). National health expenditures 2009 highlights . https://www.cms.gov/files/document/highlights.pdf 

Centers for Medicare and Medicaid. (2020) . NHE Fact Sheet . https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet 

Committee for Responsible Federal Budget. (2021). Capping Hospital Prices . https://www.crfb.org/papers/capping-hospital-prices 

Committee for Responsible Federal Budget. (2021). Equalizing Medicare Payments Regardless of Site-of-Care. https://www.crfb.org/papers/equalizing-medicare-payments-regardless-site-care 

Crowley, R., Daniel, H., Cooney, T., & Engel, L. (2020). Envisioning a Better US. Health Care System for All: Coverage and Cost of Care. Annals Of Internal Medicine ,  172 (2_Supplement), S7. https://doi.org/10.7326/m19-2415 

Cutler, D. (2018). What Is the US Health Spending Problem?  Health Affairs ,  37 (3), 493-497. https://doi.org/10.1377/hlthaff.2017.1626 

De Nardi, M., French, E., Jones, J. B., & McCauley, J. (2016). Medical spending of the US elderly.  Fiscal Studies ,  37 (3-4), 717-747. 

Gee, E. (2019). The High Price of Hospital Care. https://www.americanprogress.org/issues/healthcare/reports/2019/06/26/471464/high-price-hospital-care/ 

Glied, S., Ma, S., & Solis-Roman, C. (2016). Where the money goes: the evolving expenses of the US health care system.  Health Affairs ,  35 (7), 1197-1203. 

Holman H. R. (2020). The Relation of the Chronic Disease Epidemic to the Health Care Crisis.  ACR open Rheumatology ,  2 (3), 167–173. https://doi.org/10.1002/acr2.11114 

Investopedia. (2021). 6 Reasons Healthcare Is So Expensive in the U S https://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp 

Nunn, R., Parsons, J., & Shambaugh, J. (2020). A dozen facts about the economics of the US healthcare system. The Hamilton Project . 

Peter G. Peterson Foundation. (2020). Why Are Americans Paying More for Healthcare? https://www.pgpf.org/blog/2020/04/why-are-americans-paying-more-for-healthcare 

Raghupathi, V., & Raghupathi, W. (2020). Healthcare Expenditure and Economic Performance: Insights From the United States Data.  Frontiers in public health ,  8 , 156. https://doi.org/10.3389/fpubh.2020.00156 

Shrank, W., Rogstad, T., & Parekh, N. (2019). Waste in the US Health Care System.  JAMA ,  322 (15), 1501. https://doi.org/10.1001/jama.2019.13978 

Smith, G. (2021). Seven reasons for rising healthcare costs . https://www.peoplekeep.com/blog/seven-reasons-for-rising-health-care-costs 

Tollen, L., Keating, E., & Weil, A. (2020).  How Administrative Spending Contributes to Excess US Health Spending. Healthaffairs.org. Retrieved 7 September 2021, from https://www.healthaffairs.org/do/10.1377/hblog20200218.375060/full/ . 

Tran, L., Zimmerman, F., & Fielding, J. (2017). Public health and the economy could be served by reallocating medical expenditures to social programs.  SSM - Population Health ,  3 , 185-191. https://doi.org/10.1016/j.ssmph.2017.01.004