In the recent past, health care spending has risen to an average of $4,600 per person. As a percentage of the GDP, it grew by over 10 percent in 2000 with a mean growth rate of 7.3 percent annually. The US government is set to spend a substantial amount of the GDP on health care shortly (Orszag & Ellis, 2007). Determining the cost of health care is imperative since it determines the type and extent of care that health providers can give to their patients as well as the amount used to remunerate them. Also, the cost of healthcare is responsible for determining the amount that other individuals use for other activities such as buying goods and paying for services. However, forecasting on healthcare spending is a difficult challenge. The growth rate of national health care expenditures in the past years correlates with the increase in the GDP.
Experts can use two models to reduce the amount of revenue spent on health care in the US, such that it positively reflects on the GDP. Firstly, the Massachusetts model of controlling health care can be applied in many states to achieve a balanced approach throughout the nation. The model was implemented in 2006 and ensured near-universal health insurance coverage for the residents through combined mechanisms. The plan comprises of a variety of specific policy initiatives primarily meant to provide residents with access to quality, affordable and accountable health care.
According to Chen et al. (2011), the most notable features of the law is that it gives way to a single consumer drove marketplace for health insurance in small businesses together with the workers as well as individuals. It as well promotes distinct contributions instead of the defined benefit system standard in employer-based health insurance that does not interfere with the tax treatment of health care currently. The plan also entails redirecting public health care subsidies from particular health care systems that cater for the uninsured to the individuals with low income to aid in the purchase of private health coverage. It’s eligibility for children to access Medicaid as well as changing the rules that govern health insurance markets while imposing a mandate on people to buy coverage and penalties on employers who provide to provide and subsidize cover for their workers.
The new health care plan is effective since it has created a new market for health insurance. As such, individuals together with their families can purchase private coverage of their preference, have it and move it from job to job and not lose their current favorable tax treatment for the insurance provided by the employer (Kolstad & Kowalski, 2012).
The law also permits the creation of an advanced system of premium assistance for lower income individuals to buy private cover according to the leveraging existing uncompensated care funds used to cover the care cost for persons who are not insured. Conversely, it is weakened by the counterproductive employer mandate meant to provide medical coverage and the insignificant Medicaid expansion. The reason that could lead to the ineffectiveness of the law is that it is the household, not the employer that bears the greatest health care burden cost (Chernew & Cutler, 2009). Employer mandates result in a regressive tax on employees and their families mostly in the form of reduced compensation or the extreme cases, loss of jobs.
The other strategy that the federal government could enact to lessen the burden of health care on and increase GDP is to cut down on Medicare and Medicaid funding. Legislation has in the past been proposed, that would significantly limit total spending to less than 20 percent of the GDP. As per the Congressional Budget Office (CBO) predictions, the estimated cuts would amount to $856 billion in Medicare and over $500 in Medicaid in the next nine years from when the Cap is passed (Berwick & Hackbarth, 2012). Notably, such cuts would grow further in subsequent decades. However, it is paramount to recognize that Medicaid and Medicare are welfare programs, in this regard; the best policy would be to allow the programs to mainstream individuals out of such care and into the private health care coverage that is available to other citizens. In essence, simple expansions in Medicaid would be an obstacle to achieving broader goals of comprehensive welfare reform.
Every American state grapples with the impact that rising health care costs and a high number of individuals who lack insurance. None the less, every state contains its health care delivery system that operates in its transparent manner. While the mentioned strategies are not particularly perfect, they can bring substantial improvement to affordable and quality health care for the people. The process illustrates how states despite their differing characteristics can deal with complicated health care matters and have them systemized to benefit those in need.
- Chen, C., Scheffler, G., & Chandra, A. (2011). Massachusetts’ health care reform and emergency department utilization. New England Journal of Medicine, 365(12), e25.
- Kolstad, J. T., & Kowalski, A. E. (2012). The impact of health care reform on hospital and preventive care: evidence from Massachusetts. Journal of Public Economics, 96(11), 909-929.
- Berwick, D. M., & Hackbarth, A. D. (2012). Eliminating waste in US health care. Jama, 307(14), 1513-1516.
- Chernew, M. E., Hirth, R. A., & Cutler, D. M. (2009). Increased spending on health care: long- term implications for the nation. Health Affairs, 28(5), 1253-1255.
- Orszag, P. R., & Ellis, P. (2007). The challenge of rising health care costs-a view from the Congressional Budget Office. New England Journal of Medicine, 357(18), 1793.