managing health care cost

“The United States spends more on healthcare than any other country in the world but has the higher rates of infant mortality, diabetes and other ills than many other developed countries. ”- Reuters In an article reported by Bloomberg newsweek, about the effects of health care reform on business either self-employed or small business. It was noted that, some self-employed people and small employers will begin to feel the impact almost immediately while other won’t notice changes for a few years.

The article went on to state that, by 2014, insurance companies will be barred from rejecting individuals because of preexisting conditions. The article went on to describe how many employers are wary in employing more workers since they will have to pay for their benefits. The tax credits for small businesses that have more than 50% of employees’ health benefits, have fewer than 26 employees and pay average annual of less than 450,000 can claim a tax credit of up to 35% the cost of premiums tax year. “In the past three years, my health costs have increased each year by double digits. That cuts right into the profit margins of my company. For my small business, whether it has 10 or 500 employees, it’s a challenge having enough working capital. But to be competitive and attract the employers as the bigger guys, we have to offer the same benefits package the do” The growing and aging population in the United States has increased the cost of health care. The rising health cost threatens Americans and the spending of income on care has increased.

As quoted by the New York Times, “the unrelenting rise in medical cost is likely to wreck havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly. ” Many people rely on government aid or programs to get treated by participating in the Medicare, Insurance, and Medicaid programs. It is reported that, in 2002, the United States spent about $5,3267 per person on health care. The United Kingdom, a frugal system, spent $2,160 per person in 2202, 41% if the U. S. amount.

Four major actors occupy the healthcare stage: purchasers, insurers, providers, and suppliers. According to, Thomas Bodenheimer, MD. ,” the high and rising costs are created by forces external to health system, by weakness of a competitive free market within the health system, by rapid diffusion of new technologies, by excessive costs of administering the health system, the absence of strong cost-containment measures and undue market power of health care providers. ” The rising cost is a very big problem which is affecting every class and social environment.

One of the reasons there is a high cost is because certain people do not go through preventative measure to control their conditions therefore leading to serious and dangerous health risks. The Centers for Medicare and Medicaid Services (CMM) concluded that; “private spending is expected to slow in 2008-2009 to a 15-year low due to the impact of a recession: conversely, public spending growth is expected to accelerate through 2009, in part due to increased Medicaid enrollment and expenditures, something that is typical in a recession. Health day reported that 14,000 Americans are losing their health insurance each day during the recession. The cost of health care increased with inpatient and outpatient services. In a report by Craton et al, it describes how health care cost was evaluated. “To gain insight into factors driving growth in hospitals spending, we disaggregated the spending trend into its price and quantity components. We used all other prayers” series of the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for general medical and surgical hospitals to proxy changes in hospital quantity privately insured patients.

A study done on the Outlook for the Future in health care concluded that, although premium trends could decline further as a result of the workings of the underwriting cycle, trends underlying costs appear to have stabilize at a rate that exceeds growth in incomes. Also recognizing that over time premium increases cannot be lower than increases in underlying costs without continued buying down of the benefit structure, major relief from the problems un financing health care cost not to appear to be on the horizon. The increase in health care costs is a result of an excess use of the system.

There is a high demand for services, drugs, and other advanced procedures like surgeries for patients. It is reported by Ginsburg, PhD. , that in 2001, per capita health care spending rose by 10 percent. Where 51 percent accounted for hospital costs, 21 percent on prescription drugs and 8 percent on increased service utilization. There are major problems that cause health care to rise higher than before. The rapid expansion of specialty facility including; inpatient, outpatient, freestanding centers, and additional ancillary service capabilities in physicians’ offices.

Also the rise in obesity in the United States has become a cost driver. Kenneth Thorpe et al estimated that 27 percent of real per capita growth in spending from 1987 to 2001 is attributed to increasing rates of obesity and increasing relative spending expansion by those who are obese. Management professionals tend to deal managing the care and expenses of health care facilities. Most of the high cost in care is caused by medical errors, uninsured patients, payment methods, technology advances among other things. The increased use of health facilities are in a all time high which is very alarming and increases the utilization of care.

It reported that; estimates indicate that providers pay $100 billion in malpractice premiums annually in health care expenditures are result of increased utilization or defensive medicine practices by physicians to avoid malpractice suits. Both the costs of premiums and increased utilization are passed on to patients and third party payors by providers in the form of higher prices. The latest advances in health care like scans, drugs, X rays, Magnetic Resonance Imaging (MRI), surgeries have all affected the cost of care since they help control or cure certain diseases by early detection.

The cost of treating people has also become one of the important things to focus with the level of new technology and its approaches. New technology has to satisfy by extending to a broader population and also how many times the technology will be used. It is not possible to directly measure the impact of new medical technology on total health care spending; innovation in the health care sector (16% of gross domestic product in 2005) and its diversity (thousands of procedures, products, and interventions) also render direct measurement and its impractical.

Economists have used indirect approaches to try to estimate the impact of new technology on the cost of health care. Many physicians have dropped out of certain programs in order to save money because it costs those more to see a patient with a certain plan than not at all. In an article written by the New York Times on March 15, 2010, “as Medicaid shrink, Patients are abandoned” there is a growing problem of doctors not being able to take of their patients who are on Medicaid. According to Dr.

Sahouri, “my office manager was telling me to do this for a long time and I resisted, but after a while you realize that we’re really losing money on seeing those patients, not even breaking even. We were starting to lose more and more money, month after month. ” This he said after Michigan had cut payments by 8 percent last year to help close budget gap shortfall. As hospitals and employers focus on different things to do in order to reduce cost, the government is also fighting to get universal care for all its citizens.

It is evidenced that mounting employee health management plans can help organization boost productivity, reduce health care claims and premiums and help employees to live healthier lives. Certain factors influence the increase in care. The demand by consumer for a good care is the primary factor. Research shows that the use of medical care rises with income: as people and the nation become wealthier, they provide a fertile market for new medical innovations. Consumers want medical care that will help them achieve and maintain good health, and advances in medical technology are perceived as ways to promote those goals.

There are certain strategies that can be used in controlling health care cost. There are many measures states can user to control the cost of health. Educating the community on preventive measures may lead to cost savings. Public and private sectors can work together to leverage cost by providing benefits to employees at a reasonable cost. The leapfrog Group, a private and public group evaluates health provider performance and rewards those who improve health and safety. Many corporations have implemented health benefits that provide cost-sharing strategies, insurance benefits. Since chronic diseases are the cause of most problems in the U.

S. , preventive measures are important, better heath care provides better outcome and lower spending. Improve patient awareness on health. Providing free medications to people also helps reduce cost. Providing services such as: screenings, prenatal care classes, and immunizations, expansion of benefit coverage, treatment, reducing health care cost, and counseling. About 5. 5 cents of every dollar was spent on health research in 2005, a decrease from 5. 8 in 2004. Cutler et al concluded from a research from 1960 to 2000 that, average life expectancy increased by 7years, 3. 5 years of which they attribute to improvement in healthcare.

Comparing the value of a year of life (anywhere from $50,000 to $200,000) to the study’s findings that each year if increased life expectancy cost about $19,000 in health spending (after adjusting for inflation), they concluded that the increased spending, on average has been worth it. ” Annual Growth Rates per capita Medicare Spending in five U. S. Hospital-Referral Regions, 1992-2006. Data was acquired from Dartmouth Atlas Project. During this time the overall spending by 3. 5 yearly. In order to reduce cost burden on hospitals or other facilities the physicians have a choice of who can receive care and where they can get care.

After a brief respite in the mid-1990’s, significant annual increases in health care spending over the past few years have refocused U. S. policymakers on the impacts that rising health care costs have on business and individuals and on federal and state budgets. Compared to other developed nations, the U. s. spends more on health care per capita and devotes a greater share of its GDP to health. Since 1980, the U. S. also had among the highest average annual growth rates in per capita spending on health care. Despite the relatively high level of spending, the U.

S. does not appear to provide substantially greater health resources to its citizens. In conclusion, this article tackles different aspects of people’s struggle with the increase in insurance spending and its effects on small businesses. In planning a innovation to prevent or improve business, there are few lesson to be learned in order to do well according to Steiz a leadership consultant for companies like Hewlett-Packard: Move the unproductive put quickly, set big goals, and spend time together with employers to talk about benefits and adjustments.

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