Health Care Spending James Brewer HCS/440 April 11, 2011

Health Care Spending In many countries as well as the United States, health care spending is at an all-time high. Within health care, there are several factors, which have contributed over the years to increase higher cost. As spending throughout many countries is a key factor. The United States is above average, resulting in many citizens who are unable to afford the high cost of health care. Although it is difficult to determine the exact cause of why the increase of health care spending has risen, there are a few health care situations to blame. These causes could be health care prices, new and different disease patterns, and consolidation of many corporations, legal systems, new providers, advanced technology, and the aging population. Another cause of rising health care costs is cost sharing. This cause will not diminish anytime soon in the United States. Many people believe that disease management, consumer choice for health care and even evidence-based practice could help solve the problem of spending. These solutions however may not be sufficed to drive health care costs down. Health Care Spending
Organization for Economic and Development (OECD) has published an analysis concerning health care spending based on about 30 countries. This analysis demonstrates the current health care spending trends. The United States was included in this analysis. From the conclusion it was determined that patients and consumers spend more on health care than any other countries that was included in the analysis study. “The average that the United States spends is roughly $5267 per capita; this is about $3074 above the average median from the other 29 countries” (Anderson, Hussey, Frogner, and Water. 2005, p. 904.). This amount of money spent can result from higher cost of living throughout the United States as well as higher income per each individual. Health Care Resources The areas most looked at regarding increased spending are health care resources and malpractice litigation. A large supply of health care resources such as elective services, hospital beds, medical physicians, nurses, and computed imaging effect that these spending increases. In the past, the United States has relied on demand- sided services. The services are given on as-needed basis without any waiting time. Waiting lists are said to lower health care spending as well as limiting the necessary numbers for hospital beds, medical personnel, and medical technology used for patient stay.
Patients, living in the United States, rarely have to wait for health care service. This results in a higher number of high technology tests given, which leads to higher health care costs per individual as well as health care spending in general. In other countries, wait lists for high-tech testing is common as well as inpatient and outpatient surgeries. In the United States the emergency rooms and the physician offices both have waiting lists. Because of waiting list for high-tech testing there should also be waiting list for high dollar testing and elective procedures. In all, waiting lists can cause other problems as well as dissatisfaction with patients and increased health care problems.
High technology medical equipment is stated as causing the higher costs in current health care spending. The United States uses the medical equipment more efficiently than the other countries but pays a higher price for equipment services. The United States also possess a low supply of this high-tech medical equipment than the other countries. The patients also pay higher prices than other countries for pharmaceuticals’, hospital stays and physician visits.

Malpractice Claims An average of 50% more malpractice claims are filed in the United States compared to the other countries in the OECD analysis. “The cost of defending U.S. malpractice claims are estimated at $6.5 billion in 2001, only 0.46 percent of total health spending.
The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices” (Anderson, p. 904). Approximately two-thirds of these claims were dropped, dismissed or found in favor of the defendant. In one- third of these claims, the plaintiffs were given a compensation benefit after the settlement. Americans have a tendency to spend more per person than any other country on litigation for malpractice claims.
The average settlement in malpractice litigation was $265,103 per person. The legal costs range on an average of $27,000 per person. All of these litigation claims total about 6.5 billion per year for the United States people. If they add defensive medicine to the list of claims the number will double.
Defensive medicine is the practice of physicians ordering tests or procedures to avoid litigation and lawsuits. The United States spends more money on these defensive medicines measures, therefore causing a higher health care spending cost. The estimate is around 70 – 126 billion per year in defensive medicine by physicians.
Between 1996 and 2001, the total malpractice claim payments grew at an average of 5%. It is safe to say that growing malpractice premiums are to blame for the growing average payments. The insurance market and personal investments are also to blame for the growing rate of malpractice claims and premiums. Many consumers find they cannot pay their premiums and bills, which put physicians at risk for growth of lawsuits for unnecessary testing and procedures. Future of Health Care Spending As spending for health care are on the rise the United States needs to put in place more government control. By comparison to other OECD countries, the United States has very little government control. If this current trend persists, the government health care spending will consume the growth population of national income. Because the aging population, makes up for a majority of the health care growth, this growth of premiums and benefits is the main cause with larger populations and demographics’ determine health care costs.
“In 2006, the average population of 65 and older was 16 percent. By mid-century the average will extend to 26 percent” (Pear, 2008, para. 1). Also by mid-century the government spending for health care will claim a larger share of national resources than today. Of all the countries in OECD, the United States will most likely hit to spending limit from what is taken from the younger generation to accommodate the aging health care.
Consumer demographics will play a big role in health care spending. The average person 65 and older will account for the health care spending being higher. As the United States allows these health care benefits to grow, the average spending will never decrease. Although the costs for the elderly are important, keeping benefits for the elderly need to be controlled. Health care spending needs to focus on quality of care for our youth. Conclusion Policies and procedures of the United States need to focus on individual health care prices for services rendered and work on improving the quality of services.

“Although Americans benefit from many of the investments in health care, the recent rapid cost growth, coupled with an overall economic slowdown and rising federal deficit, is placing great strains on the systems used to finance health care, including private employer-sponsored health insurance coverage and public insurance programs such as Medicare and Medicaid” (Kimbuende & Rangi, 2010, para. 3). As all of the above reasons are valid, they are not the only reasons for health care spending. Americans need to be concerned with quality of care provided as opposed to the growing cost of health care within the United States. The growing cost of health care is not going to decrease nor is health care premiums anytime soon unless we come up with a universal health care plan.

Reference Anderson, G., Hussey, P., Frogner, B., Waters, H. (2005). Health Spending In The United States And The Rest Of The Industrialized World. Health Affairs. Volume 24, No. 4. The People-to-People Health Foundation, Inc. Kimbuende, Eric & Rangi, Usha. (2010). U.S. Health Care Cost. Kaiser Family Foundation, para. 3. Retrieved from Website: http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx Pear, Robert (2008). Health Spending in the U.S. exceeds 2 trillion for the First Time. Para.1. NY Times. Retrieved from Website: http://www.nytimes.com/2008/01/08/world/americas/08iht-health