Healthcare Spending The United States Health Care System is probably the worst organized system. It expends double than other developed countries on health care system but face worse outcomes. The Government is running healthcare programs but still lagging behind the rest of industrial world. The healthcare expenditures are rising year by year with no significant outcomes.

Current National Health Expenditures

The national health care expenditures of United States have increased at an alarming rate since the past decade and it is still growing at a rate of 10% every year. According to the recent statistics, U.S. expend more than any industrial country on healthcare systems that is about $2 trillion or $8,000 per person but still unable to provide quality health care. These expenditures accounts 17% share in Gross Domestic Product (GDP) and it is expected to reach at 21% by 2020.

According to the report of Organization for Economic Corporation and Development (OECD), U.S. expend two and half times more than the average healthcare expenditures of OECD. Among the developed countries Australia, New Zealand, UK, Sweden, Netherlands, Denmark, Switzerland, Norway, Germany, Canada, Japan and France, U.S. spends the most on health care system Even then stands in the row of Mexico and Turkey that are unable to provide Universal Health Care Coverage.

United States is paying the high cost for controlling asthma fatalities among the people aging 5 to 39 and diabetes but still ranked at a lowest position in prevention. Though, United States stands at the top in treating heart attacks, strokes and breast cancer.

Despite the large allocation of GDP to health care, Americans doesn't have an easy access to physicians as compared to other developed countries where there are even quite less number of doctors. Since, there are high prices for hospital and prescription drugs. When an American patient is discharged from the hospital, he/she is billed $18,000 on average whereas in other countries it is quite less like in Canada; it is about $13,000 and $10,000 in Sweden. According to the recent report, Americans pay one third more on medicines than Germans and Canadians and double than Australian and British. Moreover, there is a worst rate of physician consultation and less number of hospital beds. (Mozes, 2012)

United States has already allocated too much amount of GDP for the healthcare systems and it is expected to rise even more in the recent years. U.S. really need to cut down the costs and focus on actual reasons of worse ranking in universal healthcare coverage.

Cutting on Healthcare Investments

The increasing expenditures are taking the country towards critical financial problems and lowering its competency level. According to the RAND study published in June 2009, it was found that U.S. organizations investing more on healthcare show slow annual growth as compared to the ones investing less.

The organizations have to increase the pay rates of their employees as by adding the medical facilities. Moreover, the tax rates further increase the costs and burdens the organizations as well as individuals. These factors are also weakening the economy. However, Government is reforming the healthcare system to lower the costs and ensure easy access. For this purpose, President Barack Obama also signed a healthcare reform law on March 23, 2010. The new reforms addressed by the Congress are expected to bring positive changes and reduce the costs of healthcare by $138 billion by 2019. However, don't know where it will drive the economy of the country.

According to Karen Davis, the president of Commonwealth fund, "The Affordable Care Act...

needs to follow the new methods of organizing, paying and delivery."
In United States, high amounts spent on healthcare go wasted and so is the reason why U.S. is unable to achieve as effective results as other countries that even spend lesser. Therefore, U.S. first need to identify and lower the cost on those factors.

Kelly (2009) identified 6 major reasons of high cost of healthcare waste in U.S. Unwarranted Use cost $250 to $325 billion, Fraud and Abuse cost $125-175 billion, Administrative inefficiencies cost $100-150, Provider Inefficiency and errors cost $75-100, lack of care coordination and preventable conditions cost $25-50. Focusing on these aspects can substantially reduce the healthcare expenses since they increase costs by 20% in total expenditures. As according to the experts, companies must pay more attention on above aspects and reducing poor health than on direct costs providing health care. (Berwick & Hackbarth, 2012)

Today technology is playing the most important role in reduction of costs in any field; moreover, improves the system effectiveness. Similarly, technology has made significant improvements in healthcare industry at several countries. However, United States lags behind competitor countries in spending over information technology. Rideout, the medical doctor and head of Internet Business Solutions states that U.S. healthcare industry spends seven times lesser on information techology than any other industry and the banking sector spends 20 times more on Information technology.

It is high time that the U.S. healthcare industry should employ use of information technology to the system. More investments should be made on shifting the system to electronic medical records. Most of the critics are not in favor of electronic system because of insecurity of patients private information but digitization of patient records solves the problem. Moreover, it reduces the paper cost and chances of errors in prescription. It has also made easier to transfer the data from one hospital to other with no chance of losing the data. Thus, cutting the major portion of the healthcare expenditures and also ensuring effective care. (Johnson, 2012)

Healthcare Programs

There are two main health insurance programs operating in United States that is Medicaid and Medicare. They were formally enacted in amendments of 1965. The Medicare and Medicaid programs provide health care services to different groups of people but both are managed by Centers of Medicare and Medicaid Services which is the division of U.S. Department of Health and Human Services.

Medicaid is a social welfare program that provides facilities to more than 40 million people and share 2.4% of GDP that accounts $330 billion cost. This program is especially for the people with low income levels and limited resources. It provides number of services including inpatient and outpatient hospital services, prenatal care, physician services, vaccines for children and so on. Medicaid is financed by the state and has a share in expenditures from the Federal Government.

Medicare is the social insurance program facilitating above 44 million enrollees and share 3.2% of GDP that accounts $432 billion. Medicare provides hospital and medical care services to the elder and disabled citizens. Medicare is further divided in to four parts that hospital insurance, supplementary medical insurance, Medicare Advantage Plans and Prescription Drug Plan. The services that are not offered by Medicare are provided by MediGap. Medicare is funded by means of taxes that are collected through Federal Insurance Contributions Act and Self-Employment Contributions Act. Employee and employer, both are required to pay total of 2.9% tax on wage. This amount is then used by the Government to pay off doctors, private insurance companies and hospitals. In addition to the tax amount, Medicare is funded by copays, coinsurance, deductibles and premiums. (Medical News Today, 2008)

The United States Government healthcare expenditures are increasing at an alarming rate since few years. The Medicare expenses started increasing since 1981 and private health insurance since 1977 but the Medicaid expenses declined after 1965 program.

Future of U.S. Healthcare Expenditures

United States is taking important measures to cut down the costs on healthcare systems and ensure the universal healthcare coverage. Now, United States is switching its healthcare system from traditional to new organized system.

Huge systems are merging and building in to hospitals and hiring more doctors. The Medicare and Medicaid programs are also reformed and designing Insurance-like setups that would help people getting direct access; thus,…