Health care industry overview and key characteristics

Health Care Industry

The State of the Health Care System

Healthcare in the United States

Health care in the United States is provided by several types of privately and publicly funded health insurance plans that provide healthcare services. The last U.S. Census Bureau reported that approximately 60% of the population was covered by employment-based health insurance, 25% was covered by government based insurance, while 15% had no health insurance at all (Uretsky).

spends more of its gross domestic product on health care than any other developed nation. The U.S. is spending approximately 17% of its GDP on health care, compared with 8% for Japan, 9.7% for Canada, and 8.4% for the United Kingdom.

By several measures, health care spending continues to rise at a rapid rate, forcing businesses and families to cut back on operations and household expenses.

In 2008, the total national health expenditures rose approximately 6.9% -- two times the rate of inflation. Total spending was $2.4 trillion in 2007, or $7,900 per person. The U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 trillion in 2017, or 20% of GDP (Health Insurance Cost).

Uninsured Americans

Of the U.S. estimated population of 300 million people, nearly 50 million people below the age of 65 have no health insurance. Of uninsured Americans 25% of them are eligible for public programs but they have not applied for them. Approximately 30% of the uninsured population fall into the lower income -- poverty level -- and 45% fall within the moderate to higher income categories but still can't afford the premiums. Around 10 million of the uninsured are non-citizens.

Of the population, 25 million are under insured, and 72 million people report having trouble paying their medical bills. Failure to pay medical bills is the most common cause of personal bankruptcy and forces one million people into insolvency each year.

Of the population who can afford health insurance premiums, the increase in health care costs has exceeded income growth by 400% over the past six years. Nine million people have lost their health insurance just since 2004.

Government's Role in Health Care

The government is not completely absent from the health care market and provides care for around 45 million people within Medicare, Medicaid and military health programs at an estimated cost of $970 billion or 46% of health care expenditure. Medicaid is a needs-based social welfare or social protection program with eligibility determined by income and financial resources. Medicare offers health insurance for people age 65 or older, people under age 65 with certain disabilities or diseases, and includes a prescription drug benefit program. Proponents claim that these programs have low administrative costs, in the region of 2%, though these figures are disputed, may be higher on a capitation basis, and take no account of fraudulent claims that Medicare does not detect (Journal Compilation).

Health Care Rankings

Evidence that the U.S. health care system is inadequate is suggested by international rankings. Analysis of comparisons with Australia, Canada, Germany, New Zealand, and the United Kingdom expose that the U.S. ranks either last or next to last in the scope of quality, access, efficiency, and equity.

Another study of industrialized countries suggests that the U.S. has the highest death rate accountable to health care. The infant death rate in the U.S. is 41st out of 221 countries -- behind all Western Europe.

Even though the overall life expectancy in the U.S. has increased to the age of 78, the relative ranking has fallen in relation to the rest of the world, with the U.S. now 38th out of 195 countries, behind most of Western Europe.

These rankings may reflect the combination of a shortage of public health education, lack of daily exercise, poor nutrition, and the uninsured not seeking medical help.

The results seem inevitable: the vast amount of money being spent on health care in the U.S. is plainly not buying better health care for the population. In a privatized insurance system where individual resources determine availability to obtain health care, then access to care will be prejudiced by income difference.

Positive Outcomes with Earlier Detection

There is some positive news. Cancer survival rates are considerably higher in the U.S. than the UK, presumably a result of a health care system which offers earlier detection through bypassing primary care, increased identification of cancers through increased screening, opportunistic identification, and a high affinity for technological innovation. The cost effectiveness of the testing or treatment that is undertaken is not known, so such responsiveness with testing may come with a higher health care cost (Journal Compilation).

Time for Action on Reining in Health Care Costs

Experts agree that our health care system is laden with inefficiencies, extreme administrative cost, inflated prices, lacking management, and improper care, waste and fraud. These inadequacies significantly boost the cost of medical care and health insurance for employers and workers and affect the state of the family's security.

Policymakers and government officials agree that health care costs must be controlled. But they disagree on the best ways to address rapidly escalating health spending and health insurance premiums. Some favor price controls and imposing strict budgets on health care spending. Others believe free market competition is the best way to solve the problems. Public health advocates believe that if all Americans adopted healthy lifestyles, health care costs would decrease as people required less medical care (Health Insurance Cost).