U.S. Health Care Delivery System

U.S. Health Care Delivery System

Statistics and information regarding the U.S. health care system are ubiquitous and tell a distressing story about its present condition but also its future trajectory. The current health care system is a runaway train of rising costs, increasing premiums for the insured, and lack of access for the uninsured. In 2009, 2.5 trillion, or $8,086 per person was spent on health care services, and accounted for 17.6% of Gross Domestic Product (United States Department of Health and Human Services. 2009). The 2009 figures are the continuation of a long running trend of health expenditures which "have consistently grown faster than the economy overall since the 1960s, rising about 2.4 percentage points faster than GDP since 1970 (Kaiser Family Foundation. March 2009). The future spending trajectory also will follow this upward dynamic as "Centers for Medicare and Medicaid Services project that by 2018, health care spending will be over $4.3 trillion or $13,100 per resident, and account for 20.3% of GDP" (Kaiser Family Foundation. March 2009). Understandably cost is not the only aspect of health care service delivery however, access and quality flow from, and are determined by the cost aspect, and as such the discussion on the drivers affecting health care delivery system will focus on expenditures. Controlling the cost of health care and "bending the cost curve downward" in future years is critical to the U.S. economy as a whole.

When discussing the drivers of health care cost it is necessary to frame the dialogue in the context of the immutable laws of supply and demand. On the demand side there are two main cost drivers; the impending onslaught of baby boomers entering the Medicare and Medicaid rolls, and the recent passage of the Health Care Affordability and Protection act of 2010 which will expand coverage to 32 million uninsured Americans (Healthcare.gov. N.D.). On the supply side the primary significant driver is the expected health care professional shortage which will exacerbate the already existing shortages. Each of these issues both supply and demand deserve greater explication.

At 78 million strong, the oldest of the Boomers -- born between 1946 and

1964 -- are already making unsustainable demands on federal entitlement programs -- Medicare and Medicaid. In its Long-Term Outlook for Medicare, Medicaid and Total Health Care Spending, the Congressional Budget Office (CBO) reports that spending for those programs will account for 3% each of gross domestic product (GDP) in 2009. By 2035, in the absence of change, spending for Medicare alone (which is more likely to be impacted by aging Boomers) will have more than doubled to 8%, and by 2080 it will have grown to 15%. (Gigante, S. February 22, 2010).

These numbers suggest a population which will demand a high level of services over their retirement lives, and as such place enormous pressure on premiums and fees. The result of this excess demand will be a rejoinder by physicians, hospitals, and other service providers to increase prices. The issue will be how Medicare and Medicaid policy makers will treat these price increases. If history serves as a guide, Medicare cuts will not occur to control these price increases. Recently in November 2010, Congress again failed to act to control Medicare reimbursement costs. "Repeating what has become an ominous political ritual, U.S. lawmakers voted at the last minute Monday to delay a scheduled average 25% cut in physicians' Medicare reimbursements" (Gerencher, K. November 29, 2010). The continued inaction to control prices on a payer system which will cover an additional 78 million individuals will result in the inexorable price increases which have plagued the health care system.

In addition to senior citizens adding to the demand roles, the Patient Protection and Affordability Act of 2010 allows for some 32 million of currently uninsured Americans to purchase health insurance coverage through state exchanges utilizing government subsidies (Healthcare.gov. N.D.). As 32 million more individuals utilize health services, the providers will invariably increase prices to take advantage. From a numbers perspective the overwhelming demand surge on health care services will continue to exert an enormous upward pressure on pricing.

Equally disturbing on the pricing front is the obverse in the demand equation, the overall supply of health services available for consumption by the public.