A Closer Look into Healthcare Spending Essay Example

A Closer Look into Healthcare Spending Essay Example A Closer Look into Healthcare Spending Paper A Closer Look into Healthcare Spending Paper More and more, the rising expenditure in healthcare is getting a closer long-overdue attention from both the American public and the policymakers in Washington. The glaring disparity between US spending on healthcare which stands at sixteen percent (16%) of the GDP as against other industrialized nations which only average between eight to ten percent (8 10%) of their GDP says a lot about the need for an overhaul of the existing policies and systems at work. Moreover, According to a recent report released by the Centers for Medicare and Medicaid Services or CMS, the healthcare expenditure in 2006 was estimated at $2.16 Trillion and is projected to reach over $4 Trillion per annum by 2016 [1]. If this is computed at individual spending, it would cost an average of $7,110 for the year 2006. The projected aggregated increase in spending would mean that about $12,320 per person per annum will be spent by 2016 [1]. These issues on the unabated rise of health care expenditure warrants a closer look not only into the spending itself but more on how it is being spent and the efficiency and quality by which healthcare is being delivered. Clearly, in comparison with other developed countries, the US healthcare system spends more but not necessarily delivers it more efficiently nor is the quality of care above and over what the other developed nations have as iterated in the position paper published by the Commonwealth Fund (Davis, K., et. al. Jan. 2007) . In fact, if we look closely into the CMS reports on how these monies were being spent, hospital care comprise of thirty percent of the total expenditure, twenty percent went into Physician and other clinical services, Nursing homecare at six percent, Prescription drugs at ten percent, Program administration and Net Cost at seven percent and twenty five percent went to other cost like dental services, home health, durable medical products, sundries, other personal health care, research, structures and equipment [CMS, 2005 Report]. Closely related to the topic of spending is where the monies to pay for these expenditures came from.   According to the same report from CMS, National Health Statistics Group, the biggest portion came from the Private Insurance group at 35%, Medicare came next with 17%, Medicaid and SCHIP at 16%, Out of Pocket expenses (or from individuals at 13%, Other public funds at 13% (Public meaning Worker’s Compensation program. Public Health Activity, Department of Defense, Department of Veteran’s Affairs, Indian Health Services, State and local health subsidies and school health subsidies), Other Private funds at 7% (Other private funds include industrial in-plant, privately funded construction and non-patient revenues including philanthropy from private parties. Given the above most recent data, several studies both government and private sector initiatives have submitted and made public their position on the issue.   One such position was from the Commonwealth Fund Group, whose authors include Karen Davis, Ph.D., Cathy Schoen, M.S., Stuart Guterman et. al.   In their position paper, the group also sourced their references from the CMS [5] and zeroed in on two possible areas where cost cutting measures can be made. These two areas focused on one time savings and the other on a more long term and recurring basis.   The one time savings can apparently be derived from â€Å"high levels of U.S. expenditures, inefficiency and waste†¦Ã¢â‚¬â„¢ [K. Davis, Jan. 2007]. Among these â€Å"inefficiencies† were the apparent â€Å"overuse, inappropriate, or ineffective uses of care;   payment incentives that reward the delivery of more services, without consideration to clinical value or cost-effectiveness; market power of insurers, providers, and the health industry, including pharmaceutical companies, device manufacturers, and other suppliers to set prices above competitive market levels; a low ratio of primary to specialty care physicians and services; access barriers to preventive and primary care that contribute to avoidable hospital admissions, emergency department use, and complications of chronic and acute disease; a lack of well-coordinated care that leads to unsafe. D uplicative, or conflicting care; inadequate information systems and information exchange; and High administrative costs, including the high proportion of insurance premiums used to cover overhead costs, the complexity of insurance benefit design and duplicative and uncoordinated requirements, and administrative costs for providers† (K. Davis, et. al.   Jan. 2007). The group further stated strategies could be geared towards making substantial savings that could accumulate to $1.39 Trillion (over an eight year period from 2007 to 2015) if a one-time reduction of 5% in health care expenditures can be effected.   Specific areas were recommended that could well provide the strategies that everyone from the public to the private sector is looking for. These areas are concentrated on the following: first is the provision of more access to information about health providers and cost to give more options to the paying public and promote greater competition among providers, thus increasing quality of care provision over a period of time. Second is an across the board reduction of administrative cost for insurers for them to extend the savings to their clients. Third is the re-focusing of resources into primary and preventive care instead of palliative health care. Fourth is the re-allocation of resources into information technology infrastructures and exchange of information for the greater benefit of the public. Lastly, and fifth, to put investments into strategic areas to ensure access, affordability and equity for all Americans. I tend to agree to the recommendations of the group over the other studies and recommendations that I went through.   Although for sure, these recommendations need further detailed planning and further studies to substantiate the claims and conclusions. Overall, the same sources of funds as cited by the CMS would have to shell out the same level of resources for a period of time until the recommendations outline for cost cutting and more effective means of healthcare delivery system will have been in place.   A projection or timetable of five to seven years may be more feasible for both further study and a detailed manual of operationalization can be in effect. For the meantime, however, both the government at all levels – federal, state and local should be responsive to the calls for changes and heed the transformation doctrine once it is passed by legislation and put into place.   Furthermore, a call for uniformity of enforcement at the local levels should be ensured to avoid the pitfalls of having a huge disparity of healthcare cross in different parts of the country.. References: [1] Centers for Medicare and Medical Healthcare Benefits. Various reports including   Ã‚  Ã‚   Projections for Health expenditure Projections from 2005 to 2016. From: cms.hhs.gov/NationalHealthExpendData/ [2] Snapshots: Health Care Growth (Kaiser Permanente). Retrieved on Feb. 23, 2007, From:kff.org/insurance/snapshot/chcm050206oth2.cfm [3] Medical Expenditure†¦ Retrieved on Feb. 23, 2007, From: ahrq.gov/qual/nhdr06/methods/meps.htm [4] SAMSHA reports. Retrieved on Feb. 23, 2007. From: samhsa.gov/spendingestimates/chapter1.aspx [5] The Commonwealth Fund website: Retrieved on Feb. 23, 2007, From: cmwf.org/publications/publications_show.htm?doc_id=449510