Healthcare Reform and Economic Implications

Healthcare Reform and Economic Implications

The Importance of Controlling Costs in Healthcare

Controlling costs is one of the most important issues in American healthcare. Currently, approximately 50 million Americans cannot afford health insurance because of its cost, and that cost is largely a function of the ever-increasing price of healthcare services themselves (Reid, 2009). The government is also burdened by the exorbitant cost of healthcare, substantially because of the obligation to issue reimbursement for such a large volume of services furnished to healthcare program beneficiaries such as in connection with Medicare and Medicaid. It is projected that without significant reform, healthcare costs will reach 40% of GDP very shortly (Kennedy, 2006; Reid, 2009).

Identifying the Sources of the Problem

Since their inception, Medicare and Medicaid have been a tremendous source of necessary economic assistance to millions of Americans, particularly the elderly and the poor. However, by sheer virtue of their size and the number of beneficiaries and healthcare services involved, both programs have been notoriously plagued by inherent inefficiency and fraudulent actions of individuals intent on talking advantage of those systemic inefficiencies for personal gain (Kennedy, 2006; Reid, 2009). More specifically, the programs lose billions of dollars annually because of payment reimbursement for ineligible individuals, or for unnecessary or redundant services, and because of outright fraud perpetrated by sophisticated fraudulent ventures created for the sole purpose of extracting money from those programs for services never actually furnished to any patient (Kennedy, 2006; Reid, 2009).

Furthermore, a tremendous amount of public money is wasted by federal and state healthcare reimbursement programs as the result of preventable disease caused by poor adherence to standard medical protocol and other forms of negligence in the healthcare community. For example, prior to 2007, there were approximately 1 million confirmed cases of hospital-acquired ("nosocomial") infections in American hospitals and other healthcare institutions (clinics, nursing homes, etc.), resulting in the premature and preventable deaths of nearly 100,000 patients who would otherwise have survived the illnesses or surgeries for which they originally received treatment in those institutions (Reid, 2009).

Approaches to Reducing Healthcare Costs