Research Paper Undergraduate 1,279 words

Healthcare systems and policy overview

Last reviewed: December 19, 2007 ~7 min read

Health Care

United States' national healthcare expenditures cover for the following services: dental services (provided in offices of dentists and clinics of dentists and operated by a doctor of dental medicine, a doctor of dental surgery, or a doctor of dental science), durable medical equipment (covers retail sales of items like: contact lenses, eyeglasses, other ophthalmic products, surgical and orthopedic products, hearing aids, wheelchairs, medical equipment rentals), home health care (covers medical home health care provided by public and private non-facility-based home health agencies, sales or rentals of medical equipment billed through these agencies), hospital care (covers all types of services provided by public and private hospitals, including: room and board, ancillary charges, resident physicians services, inpatient pharmacy, hospital-based nursing home and home health care), nursing home care (covers services provided by public and private freestanding nursing home facilities, including: nursing and rehabilitative services for an extended period of time), other personal health care (covers industrial in-plant medical care provided by private sector employers for employees at the work place, government expenditures for care not specified by service. These work places include: schools, military field stations, community centers), other professional services (provided in establishments operated by health practitioners, like: private-duty nurses, chiropractors, podiatrists, optometrists, and physical, occupational, and speech therapists), out-of-pocket payments (including direct spending by consumers for all health care goods and services, like: coinsurance, deductibles, and others), physician and clinical services (covers services provided in establishments like: offices and clinics of doctors of medicine, doctors of osteopathy, medical laboratories, and miscellaneous health and allied services), prescription drugs and non-durable medical products (retail sales of prescription drugs, non-prescription drugs, and medical sundries), and private health insurance (CMS, 2007).

United States' healthcare expenditures in 2005 reached $2 trillion total, and $6,697 per person. Healthcare expenditures increased 6.9% from 2004, accounting for the third consecutive year of deceleration. In the previous years, percentage increase values were the following: 7.2% in 2004, 8.1% in 2003, and 9.1% in 2002. These total healthcare expenditures growth that seems to be following a descending direction are due to lower growth in prescription drugs expenditures (CMS, 2007).

Also, healthcare expenditures account for 16% of GDP, after a 0.1% increase. This increase is due to the 6.3 economic growth rate. This is a significant value for the country's economic development.

Healthcare expenditures of federal, state, and local government increased 7.7%, compared to the 7.8% increase reported for the previous year. Medicare services accounted for 38% of public spending, after a consistent 9.3% growth. Public healthcare expenditures have reported significant growth during the past few years, due to the impacts of Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act, the Medicare Prescription Drug, Improvement and Modernization Act.

In 2005, healthcare expenditures structure was the following: 55% private payers, and 45% public payers. Private payers expenditures increased 6.3%. This growth value is lower than the value for the previous year that reached 6.8%. This evolution was due to slower growth in private health insurance premiums. One of the healthcare expenditures categories that significantly increased in 2005 is consisted of out-of-pocket spending. This category increased 5.8%, compared to 2004, when the increase was of 5%. However, private health insurance increased faster than out-of-pocket spending, determining this category's share in private spending to follow a descending direction.

Medicare expenditures increased 9.3%, reaching $342 billion. The increase for the previous year was of 10.3%. This situation was mainly due to slower growth in hospital care spending, physician and clinical services, and nursing home and home health care. The highest increase was reported in the prescription drug spending that accounted for 1.2% of total spending.

Expenditures reported by Medicaid increased 7.2%, reaching $313.1 billion. The increase for the previous year was of 7.5%. Currently, these expenditures account for 16% of national health spending. This situation was also due to slower growth in prescription drugs. Other categories that reported slower growth include: physician and clinical services, home health care, and other professional services.

Regarding prescription drug spending, the value increased 5.8%. For the previous year, the increase was of 8.6%. The reason for this category's evolution is Medicare drug spending significant deceleration, along with generic drugs increased use. Use of brand name drugs was slowed down by a proliferation of tiered-copayment benefit plans. Also, the number of new drugs introduced on the market was lower than previous years. However, out-of-pocket spending for drugs has increased higher than private health insurance spending has.

Hospital spending is probably the most important category of national health care expenditures, as it represents almost one third of total health care spending, and 31% of national health expenditures. Hospital spending has increased 7.9% in 2005, the same value reported for the previous year. Hospital spending by private payers increased 7.6%, while hospital spending by public payers increased 8.1%.

The physician and clinical services category decelerated from 7.4% increase in 2004 to 7% increase in 2005. In addition to this, public spending growth decelerated from 9.1% in 2004 to 8.1% in 2005. This situation was determined by Medicaid spending deceleration regarding physician and clinical services mentioned above, and also Medicare deceleration in the same category of expenditures.

One of the categories that increased in 2005 is represented by nursing home. The increase was of 6%. Approximately 44% of skilled nursing facilities funding is covered by Medicaid, whose spending for nursing home services increased 3.9%.

However, the fastest growing category is represented by home health spending that increased 11%. Home health services public spending that accounts for approximately 75% of such spending increased 12.4%. Medicare that pays for approximately 37.7% of home health care service increased 10.7% (CMS, 2007).

Health care spending is expected to remain at a constant value of 16% of GDP. However, by 2016, health care spending is expected to reach $4.1 trillion and 19.6% of GDP (CMS, 2007). The following table presents health care expenditures for the United States for the following years:

Health Care Expenditures Projections