Spending in U.S. Healthcare July 26, 2013

¶ … SPENDING IN U.S. HEALTHCARE

July 26, 2013 ASSESSMENT: Policy topic Search Selection. Research internet key words "Health" "Health Policy" select a policy topic interest. My selection topic "Cost Spending." You policy individual assignment.

Cost and spending: U.S. healthcare

While Americans would no doubt like to think that their healthcare system is the best in the world, the data confirms only that it is the most expensive. According to Kaiser Permanente, 16% of our nation's GNP is devoted to healthcare, "the highest among the world's industrialized nations. Over the past decade, the pace of total health care spending has grown faster than inflation and the growth in national income" (Costs and spending, 2013, Kaiser Permanente). One of the most frequently cited reasons for the high costs of healthcare is the inefficiencies of the American private insurance system. While in nations such as Canada and the United Kingdom there is a 'single payer' system in which all healthcare is funded by tax revenue, in the U.S., most citizens under the age of 65 obtain healthcare through private insurers. In virtually all of the industrialized world, even in nations without nationalized care, "government either sets prices or oversees price negotiations -- the U.S. is unique in our reliance on for-profit insurance companies to pay for both essential and elective care" (Thompson 2013).

In nations with government-provided healthcare, there is only a single price for various health services -- in the United States, the market sets the price. However, given the asymmetries of information by consumers and limited choices when someone is sick due to restrictions of insurance companies, the healthcare market does not operate in an optimal free-market fashion. From a physician's perspective a "fee-for-service system that rewards volume instead of value and quantity of medical services instead of quality. And as a result, we end up doing a lot of things that cause more harm than benefit for patients" (Suarez 2012). In other words, in most situations, physicians get more money if they provide more care, not if they save money. HMOs were supposed to change this by providing incentives for not providing excessive and unnecessary tests and treatments. Regardless, the financial market rather than actual patient need is determining care, and a person with 'better' insurance who is more likely to reimburse the doctor for providing a service is more likely to get that service because of simple economic pressures (compounded by the high costs of medical school, much higher than elsewhere in the industrialized world). In contrast, in government-regulated systems, objective boards of physicians set guidelines regulating and rationing care, versus the rather arbitrary dictates of the market.