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Impacts of Rising Healthcare Costs in the US

Paper Type: Free Essay Subject: Health
Wordcount: 3310 words Published: 30th Oct 2017

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Assessment 3: International Policies and Economic Dilemmas


Health is highly valued by the community, and many would agree that “Health is indeed Wealth”. In this constantly changing environment what becomes of the counties’ financial wealth when health care costs are expanding beyond national income? In a New York Times interview, Victor Fusch argued that all our fiscal problems will be solved when the solution to healthcare spending is formulated (Koalata, 2012).

How are countries able to cope with the increasing cost of healthcare spending while remaining fiscally sustainable? Sustainability of a decent healthcare system is further challenged by the global economic down-turn. High-quality healthcare is not necessarily expensive but does take a huge chunk of the government budget especially for countries with universal healthcare. While developed countries struggle to provide universal coverage, poorer nations find it hard to afford even the most basic health care services.


Healthcare is a challenging area for all nations. Cost, access and quality are three main factors that need careful consideration in healthcare policy regulation. The sky rocketing cost of healthcare is a gradually expanding international dilemma and its impact on a national and international level will be discussed in the following section.

2.1 International comparison: How does the U.S fare with other developed countries?

The ailing healthcare system of the United States is no news to the world. For decades the healthcare system has placed a substantial amount of pressure on the country’s fiscal sustainability and at most a root cause of its fiscal problems (Koalata, 2012). On 2010, the United States spent about $8,508 USD per person which is 17.7% of its GDP (Gross Domestic Product). That is 2.5 more than most of the developed countries’ healthcare expenditure like Canada (14.7% of GDP, $4,522 per person), New Zealand (9.5% of GDP, $3,925 per person) and United Kingdom (9.4% of GDP, $5,643 per person) where healthcare is universal (The Commonwealth Fund, 2013).

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Apart from rising administrative costs, another reason for the United States’ grandiose spending lies on its complex billing system- one that is arguably biased. In this system, healthcare providers can hand-pick their patients (Koalata, 2012). A more expensive health insurance mostly increases the likelihood of care, treatment and hospital admission or physician consultation. Therefore in most cases, people with private insurance are more eligible for healthcare services compared to the ones with government subsidised insurance such as Medicare and Medicaid. This leaves the country with a high level of inequity with regards to healthcare services. People who are underinsured, in many cases, might as well be considered uninsured.

The United States Healthcare system is currently a mess, it has been for years now. In fact no country is as economically healthy as it is expected to be in lieu with their respective healthcare systems, although countries like Sweden and Canada surpass others in this regard (The Commonwealth Fund, 2013). Globally, the increasing cost for healthcare is due to numerous factors such as; an increasing ageing population, advancing technology, increasing expectations due to increasing income and a widening range of new treatments (The Commonwealth Fund, 2013).

2.2 Addressing increasing costs in healthcare

Every country has its respective healthcare issues. It is perfectly understood that no healthcare system is flawless. Every policy has its trade-offs. The measure of a successful policy however, lies on its flexibility and sustainability.

2.2.1 Cost-containment

Cost-containment allows countries to put a cap on healthcare spending. In contrast to the United States, France and Japan use a common fee schedule which allows them to pay hospitals, doctors and other healthcare providers a uniform rate for most of the patients that they attend to. In addition, Japan ensures flexibility by lowering fees to certain areas that are growing faster than projected (The Commonwealth Fund, 2013). Similarly, The National Fund for the Insurance of Employed Workers (CNMATS) in France closely monitors spending on all kinds of services (The Commonwealth Fund, 2013). If a particular area grows faster than expected, CNMATS intervenes by lowering the cost of the specific service (The Commonwealth Fund, 2013). Other interventions include monitoring prescription medication. Whenever appropriate, the physicians are encouraged to use cheaper generic drugs by employees in insurance funds sent by the CNMATS (The Commonwealth Fund, 2013).

In the United States, cost containment is very inflexible . Because the healthcare system mostly runs on private insurances, business owners have the choice of asking providers to contain their costs or passing on higher costs to patients with higher premiums.

2.2.2 Re-organizing Health care

Information and communications technology effectively cuts down healthcare costs. Cutting back on healthcare professionals’ workload can immensely save a couple of dollars per hour. For example, Sweden uses electronic drug prescription where a message is sent directly from the doctor’s office to the pharmacy (The Commonwealth Fund, 2013). This particular intervention cuts back an hour or two of the pharmacists’ work per day. Not only is the intervention efficient, it also increases effectiveness due to a decrease in medical errors. Another intervention would be admitting acute care patients in a community setting rather than a hospital setting (The Commonwealth Fund, 2013). Hospital admissions are far more expensive than clinics privately owned or governmentally operated. A health workforce mix can also be used to cut back on physician costs wherein nurses and pharmacists are allowed to do some of the physicians’ responsibilities (The Commonwealth Fund, 2013). In a way, heath care mix alleviates the health workforce crisis at some extent.

  1. Impact on International Policies

The World Health Organisation has made it clear that prevention is better than cure and is less expensive in most cases. As of 2013, WHO has focused on the prevention of communicable and non-communicable disease.

Community and Public interventions mandated by WHO include cost-effective policies such as tax and price increase on tobacco products (The Commonwealth Fund, 2013). Developed and developing countries including Bangladesh, Egypt and Pakistan have gained substantial amount of profit and have saved many lives due to the regulation of the said policy (The Commonwealth Fund, 2013). Less smokers lead to lesser cardiovascular and pulmonary disorders (i.e. arteriosclerosis- a major pre-cursor to heart attacks and stroke, asthma and Chronic Obstructive Pulmonary Disorder). In addition taxes on alcoholic beverages have also been regulated which has significantly decreased accidents related to alcohol intoxication and cirrhosis occurrences (The Commonwealth Fund, 2013).

Non-communicable diseases such as diabetes and high blood pressure are very costly. Treatment and management of non-communicable diseases such as diabetes and high blood pressure are very costly. Majority of NCD’s can be averted through interventions and policies that reduce major risk factors- such as obesity. Many preventive measures are cost-effective and have quick impact on the burden of disease at the population level. All the said preventative measures decreased the number of unnecessary disability and mortality which significantly cut back on health costs.


3.1 Education and Training

A healthy population leads to sound development. With education, public awareness and training countries will be able to provide the necessary community healthcare needs –especially in rural areas. In other words, education leads to economic growth and a major tool in the solution of today’s economic crisis.

New technology and new development of vaccines and chemotherapeutic agents are incapable of change on their own. They need vectors–healthcare workers who are well-trained and adequately motivated, to make a difference. Education and training provides public protection against environmental hazards and control of communicable diseases such as HIV- an estimated 35.3 (32.2–38.8) million carriers as of 2012 (WHO, 2008).

A shortage of 4.3 million trained healthcare workers has been reported on 2006 (WHO, 2008). This shortage coupled with the burden of infectious and non-communicable diseases in developing countries and the ageing population in developed countries are placing increasing demands on health systems worldwide and are resulting in avoidable deaths and unnecessary disabilities.

In addition to provision of treatment and care, healthcare workers are necessary in the spread of health awareness. One method that has proven effective in decreasing healthcare cost is the self-management program (The Commonwealth Fund, 2013). The said program reduces the use of healthcare services among people with chronic illnesses. In the U.S about 70% of all healthcare expenditures are related to chronic illnesses. Recent studies have shown that a person can cut back on 2 years’ worth of healthcare expenditures (an average of USD $590) with a brief self-management training (The Commonwealth Fund, 2013). Apart from health improvement and less deterioration, the program also cuts on hospital stays and outpatient visits.

3.2 Tax Benefits and Payments to Caregivers

Tax benefits serve as indirect compensation to caregivers wherein governments aim to encourage family members and relatives to assume the informal caregiver role. Through this policy, the cost of healthcare is minimised through reduction or delay of an individual’s institutionalization.

Every country’s compensation plan differs from one another. Incentives are provided to suite the community’s need in lieu with the country’s provision capacity. Canada for example, gives out personal credits or what is often called as the “equivalent to spouse credit”- tax deductible incentives (Canadian Centre of Elder Law, 2013). In addition, Medical expenses credit is also available to further support caregivers with respective medical expenses (Canadian Centre of Elder Law, 2013). Even though Canada has a seemingly good compensation plan, it misses the ‘direct’ compensation aspect of the Caregiving Policy.

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In contrast, Australia, United Kingdom and France are able to provide direct compensation to informal caregivers wherein actual payments are given to care recipients for their services (Canadian Centre of Elder Law, 2013). U.K provides Care Allowances to support family caregivers via social security programs instead of providing tax incentives. In Australia, the ‘Carer Payment’ provides a bi-weekly benefit to caregivers where caregivers from both low to high-income families are supported (Canadian Centre of Elder Law, 2013). Approximately AUD $1,450 per month plus an annual bonus is provided by the government to support informal caregivers. In some European countries the ‘Family Caregiver Wage’ exists where family caregivers are given wages the same as a paid caregiver (Canadian Centre of Elder Law, 2013).

3.3 Respite Care

Certain studies conducted in the United States, showed that the level of disability or care is directly proportional to work absences and inversely proportional to job acceptances (The Commonwealth Fund, 2013). Therefore, respite care is provided to support and provide temporary relief for family caregivers. Respite care can be utilized regularly or irregularly based on the caregivers’ transgression.

Similar studies have showed that respite care results in fewer hospital admission and lower emotional health problems for both caregivers and care recipients (The Commonwealth Fund, 2013). Caregiver stress is a common problem for informal caregivers. Respite care prevents caregiver burn-out and relieves care-giver stress. These short breaks allow the caregivers to attend to urgent matters or provide themselves with the vacation that they deserve. The prevention of caregiver health problems through respite care eventually lowers healthcare cost.

  1. Business Regulation Combining Work and Caregiving­

For the past decades, many employers have implemented working policies, programs and incentives for employees’ work-family needs. The work-family agenda that family advocates and professional human resource associations promote recognizes how difficult it is to juggle responsibilities at home with those at work. Employers are encouraged to embrace a work-family agenda not only because it creates a more positive relationship between employers and their employees, but it has positive economic effects as well. Failure to address family issues may cost employers billions annually due to lost productivity (Canadian Centre of Elder Law, 2013).

Flexible workplace policies enhance employee’s productivity, reduce absenteeism, reduce costs, and appear to have positive effects on profit. In addition, these policies aid on the efforts of recruitment and retention wherein employers tend to retain a talented and knowledgeable workforce while money that would otherwise be used in the recruitment, selection and training of a new employee would be retained.

Family has been referred to as the building block of a community. A healthy family is productive to both state government and business community. Therefore, the government must monitor the needs of the working force to sustain a productive economy.

  1. Financial support and provision of pension credits for care giving

Reduced participation in paid employment has significant consequences for the family caregiver’s pension security. Lower income earnings undermine the caregiver’s ability to save for retirement and reduce accumulated pension credits (Canadian Centre of Elder Law, 2013).

Informal Caregiving remains the least expensive form of care. In a household where people have to cut back on working hours or quit their jobs altogether, comprehensive measures need to be put in place to compensate for the services provided by caregivers. Although this area of provision remains inadequate to sustain most care-giver needs, many countries have paved the way for its innovation.

‘Carer Pension’ in Australia and Norway are provided to care givers who have not sustained employment due to their caregiver roles. Other Pension plans in Germany, France, U.K and Sweden act as contributions for family caregivers.


Healthcare cost inflation has risen yet again after its hibernation during the 1990’s. Billions are spent on healthcare cost annually with the United States at the forefront. Along with rising healthcare cost is rising dissatisfaction on the system. People are struggling to accept the price hike on healthcare indirectly proportional to the quality of the system. People’s dissatisfaction coupled with the impending crisis because of the healthcare price hike, policy makers have started to look on possible reforms to decrease healthcare costs without compromising access and quality.

Expensive healthcare is increasingly becoming a burden especially to developing countries where healthcare provisions are of the most basic. Increasing cost of healthcare also increases the inequity gap for all countries. It means more people in poverty are getting lesser care and treatment than people above the poverty line. This goes against internationally established healthcare ethics. Unless a compromise or a solution is set in motion as soon as possible, problems arising from rising healthcare costs will become much more of a burden tomorrow that they are today.

Strategies to contain or even reduce healthcare costs have been tried in recent years. Further education and training have been encouraged especially to poorer nations in an attempt to eradicate the shortage of healthcare workers and professionals. Adequate healthcare workers make a huge difference on a micro-economic and macro-economic level. In a bacterial or viral view, more vectors means faster transmission of illnesses and higher rates of mutation thus a swifter eradication of the human race. This theory applied to the healthcare worker shortage mean more workers for economic stability and more people against the spread of illness. Examples of these policies have been mentioned in the previous section. Education and Training is just one step that can make a huge difference when regulated properly and consistently.

Caregiver incentives such as tax relief, pension credits and security benefits financially assist informal caregivers. These policies enable a more personal care provided to family members who are disabled, ageing or just incapable of self-maintained care. The international overview of these policies pave the way for a global reform. Although changes will be country specific, developing countries or other developed countries can make use of the template provided by the nations who have undergone reforms with positive outcomes. It is then important to look at evidence-based practice to further every nation’s development.

Lastly, business policies on caregivers need to be put in careful consideration due to possible caregiver discrimination. A strong workforce is needed for an economy to remain sustainable. It is mostly through taxes gathered from the working class that a nation is able to operate. Thus employers have to be encouraged to establish a good relationship with its employees with regards to work hours and work incentives.

No matter how many policies are put in place and no matter how many times a nation reforms its healthcare system, flexibility and sustainability of all the policies need to be solidified first. Trying times call for desperate measures and I believe that unless solutions are formulated soon, either the economy will fail or nations will give more of the citizens’ healthcare responsibilities at their own cost. To remain fiscally sustainable and capable of high quality healthcare provision, individual countries need to learn from each other’s policies and reforms. There is no ‘magic bullet’ for this healthcare dilemma but history has recorded that international cooperation remains the world’s only hope for any global struggle.


Canadian Centre of Elder Law. (2013). Family Caregiving. Vancouver. Author.

Kolata, G. (2012, March 5). Knotty Challenges in Health Care Costs. The New York Times. D6. Retrieved from http://www.nytimes.com

The Commonwealth Fund. (2013). International Profiles of Health Care Systems, 2013. New York: Author.

World Health Organisation [WHO]. (2008). Scaling Up, Saving Lives. London. Author.



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