The Growth and Impact of Healthcare Costs
The rate of healthcare costs growth in the United States has overtaken the gross domestic product (GDP) growth rate for several years. Similarly, the GDP share standing for healthcare spending augmented to 16% in 2005 from 12.2% in 1990 and from 4.5% in1940. Healthcare spending since 1990s has increased more rapidly compared to the GDP of the country, population and inflation. In the recent available data, total healthcare national spending increased to $5670 per person of to $1.67 trillion (Sood, Ghosh & Escarce, 2009). The growing increase of the healthcare cost and particularly the GDP share devoted to healthcare might damage the economy of the United States. The rising rate of spending in healthcare is regarded to reduce the rate of GDP growth and general rate of employment, while increasing inflation.
Private enterprises are in particular vulnerable to the growth of healthcare cost since approximately three-fifths of the American workforce has employer-sponsored health insurance. According to ASPE (2005), rapidly increasing health insurance premiums apply pressure on employers to increase total workers compensation, since workers cannot lower wages easily to offset premium increase completely. To some employers, clear contracts might prevent wage cuts or even demand increase of wages. Other workers might be prevented from lowering wages by inherent norms, workers competition with unionized companies, or a desire to prevent destroying working morale.
Essential Indicators of Economic Benefits per Unit on the Country’s GDP and Employment
There are various indicators of economic benefits per unit on employment and on the gross domestic product of a county. With employment, the essential indicators of economic benefits include per capita income which the individual average earnings. This determines individuals’ ability to cater for their households needs and to afford any luxuries. With regard to healthcare, this determines the individuals’ ability to cater for out-of-pocket healthcare cost which keeps on increasing as the cost of healthcare increases.
Another indicator on the employment is the measure of workforce covered by group health cover provided by the employer and the percentage of individual contribution to the cover. Most employers provide group cover which increases workers bargaining power, reducing the insurance administration cost among other cost and hence increasing chances of getting health cover compared to those who approach the insurance firms as individuals. The rate of employment and unemployment also help in indicating the number of people who have the financial ability to pay for their healthcare cost or to top up their insurance cover and those who cannot (KFF, 2018).
The important economic indicators based on the GDP include personal healthcare consumption which indicates the level of healthcare demand in the country. Others include government purchases which can indicate the level of government contribution through various public health covers that include Medicare and Medicaid which are public cover funded by the government. Others include private inventories in healthcare which include the number of private facilities created to provide healthcare services or private healthcare cover.
Recommendations for Change or Improvement
The current increase in healthcare cost present a risk of low healthcare consumption in the country, despite high level of people who need this care. To balance the equation, the government and employers should consider increasing the number of people who secure health cover. This will assist in offsetting the healthcare cost and hence increasing its accessibility. The cost of healthcare has been going up for a while and if not controlled it may be costly to the country.
To control this, the government should consider providing incentives to healthcare organizations that manage to offer quality services at a reduced cost, by enhancing operational efficiency. This will make most healthcare organization to enhance efficiency as they look forward to securing high level of incentives. Increase in efficiency will result to reduction of the operational costs and hence the general healthcare cost.