This paper explores published articles describing the rising cost of healthcare and various means
Should the government provide healthcare?
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Running head: THE RISING COST OF HEALTHCARE 1
The Rising Cost of Healthcare Arturo Villaseñor Governors State University
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Abstract
This paper explores published articles describing the rising cost of healthcare and various means
are mentioned to curtail the upward trend of those rising costs. Shi and Singh (2015) describe the growth of total healthcare spending of 7% from 1990 to 2010 (p.233). The articles vary in their causation for healthcare expenditures. Other articles discuss methods such as defensive medicine, costs of end of life care, health information technology (HIT), and technological diffusion. These articles are examined as causes as well as devices to alleviate the upward trend of healthcare costs. This paper examines methods for alternation and gives description to them while explaining possible usefulness in the current healthcare environment.
Keywords: Health information technology
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The Rising Cost of Healthcare
The healthcare system in the United States is a very massive and complex system. This
system offers its recipients numerous healthcare location settings that are manned by millions of healthcare professionals across all 50 states. According to the 2012 US Census Bureau (as cited in Shi and Singh, 2015), the US health care delivery system employs a staggering 16.4 million employees across various health delivery settings. This includes 838,000 active doctors of medicine (MDs), 70,480 osteopathic physicians (DOs), and 2.6 million active nurses (Shi and Singh, 2015, p.2). This system has often been described as technologically driven, organizationally fragmented, and highly expensive for the consumer. In 2002 US citizens spent 53 percent more on healthcare than any other country with $5,267 being spent by the average citizen (Anderson et al., 2005, para 12). By 2010 US citizens spent $8,402 on that same healthcare (Shi and Singh, 2015, p.233). In order to prevent escalating prices for healthcare services changes must be implemented to this system in order to provide quality care at affordable prices for individuals and families. The runaway costs of the US healthcare system must be curtailed through modifications to technology diffusion, health information technology (HIT), end of life care philosophy, and defensive medicine practices. The necessitation for modification is required in order to provide a better quality of life for individuals who spend vast amounts of out-of-pocket money on healthcare, otherwise the cost of care will only continue to trend upward.
During the modern era the growth of technology has proliferated immensely. This proliferation has found its way in all aspects of common human life for US Americans. Technology and healthcare have grown together hand-in-hand in order to provider better quality outcomes for those who require care. With new innovations the market driven tendencies of US
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healthcare has translated to high diffusion rates of medical equipment technology. Anderson et al. assert (2005), “High-technology medical equipment is frequently cited as the main driver of escalating spending” (para 8). Due to cultural perceptions of technology and its relation to healthcare, rapid acquisition of technology has driven costs of healthcare upwards at ever alarming rates. Once a technology is developed it is quickly acquired by hospitals and healthcare providers and with its utilization is rapid. The use of state-of-the-art technology at such high rates by providers and institutions translates to higher costs for health consumers. In the United States, little is done to limit this acquisition and various studies have found that higher costs associated with high technology diffusion do not necessarily equate better outcomes. “There is little or no evidence that the higher spending in high cost regions lead to better outcomes, with estimates of inefficiency range from 20 to 30 percent of overall health care expenditures” (Staiger and Skinner, 2009, p.1). This shows that despite the US health system having a large amount of high tech equipment the necessity of its rapid diffusion is questionable.
Methods to control high technology diffusion and utilization have been fiercely resisted in the United States (Shi and Singh, 2015, p.169). Physicians, hospitals, and consumers want to provider and consume the most innovated technologies. Cultural perceptions have prevented most consumers from advocating for stricter control on diffusion while providers may associate technology with prestige and better quality outcomes. The once prominent fee for service indemnity insurance caused many employers to move to managed care organizations such as health maintenance organizations (HMOs) and patient provider organizations (PPOs) in order to curtail costs. This slowed the pace of the cost of rapid technology expansion (Shi and Singh, 2015, p.169). Although, some changes have taken place in the last 30 years to provide alleviation to the out of control costs related to technology in healthcare further refinement is
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needed. This refinement would come as education for the public as well as greater government oversight.
In most European countries supply-side rationing and global budgets are in effect. This has reduced the health care expenditures for health care systems, providers, and consumers in a stark contrast to the US model. For example, a database by the World Health Organization (WHO), presented that the 2012 health expenditure per capita for a subject of the United Kingdom was $3,647 in comparison to $8,895 of a US citizen (“Health Expenditure Per Capita (Current US$)”, n.d.). Global budgets are defined as a national determinate for total health care expenditures while supply side rationing includes means to regulate pharmaceutical and medical technology as well as control over admissions to medical and nursing schools (“Rationing as a Response to Supply Side Constraints”, p.1). By setting a global budget, health care providers and settings must ration the diffusion and implementation of high technology. One criticism for these types of restrictions is the long wait times for utilization of services. In 2012 the Fraser Institute found that the average wait for a CT scan in Canada was 3.7 weeks, while an MRI scan wait was 8.4 weeks (Shi and Singh, 2015, 171). Although, these criticisms are valid, compromises should be investigated such as stricter constraints on non-emergency based utilization and elective procedures. Despite the drawbacks there must be great control for utilization such as global budgets and supply-side rationing.
Health information technology is another form of technology merging with the field of health. Medical technology is defined as the practical application of technology in the field of health by creating efficiencies in delivery and streamlining of services. One form of this information technology is the implementation of the electronic health record (EHR). An EHR is the use of electronic means to replace the traditional form of paper medical records. While the
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transition from paper to computers may seem like a small measure towards fixing the rising costs of healthcare in the US, it is an important undertaking for the US system. By developing a fully functioning EHR the healthcare settings and providers can create a stream lined service that offers better quality outcomes as well as reduced expenditures. “Manual record-keeping is inefficient and dangerous. It adds to administrative costs: An estimated $41.8 billion could be saved each year if medical records were stored electronically” (Goodman and Herrick, 2007, p.6). Savings are seen in such simple acts as the need to fill out patient history information every time one visits a referred or new provider. Additionally, not only does the utilization of EHR save on costs it also allows providers to interconnect with other each other. EHRs allow providers to share clinical information without the need for older methods such of letters, telephones, and faxes. Thus, this creates quicker and up to date information thereby allowing for better coordinated care. According to Burt and Sisk (2005), a mere 18% of physicians utilized EHR (p.334). In order to reduce the rising costs of health expenditures this must change with public and government support for broader scale EHR usage.
Medical malpractice will perpetually be a concern for all parties involved in the healthcare setting. Health care settings, providers, and consumers all have to be weary and concerned for malpractice incidences, however in today’s environment cultural society is quick to turn to litigation despite there being actual or perceived negligence. This litigious culture has caused hospitals and providers to necessitate malpractice insurance and those insurers in turn have protected themselves by charging exorbitant premiums. In the United States more than two-thirds of all medical malpractice claims were dropped in favor of the defense. Additionally, the US had 50 percent more claims filed than the United Kingdom and 350 percent more than Canada (Anderson et al., 2005, para 14). As a result, physicians order unnecessary tests and
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procedures in order to shield themselves from legal ramifications. According to recent studies, “More than 90 percent of physicians reported practicing positive defensive medicine in the past 12 months; unnecessary imaging tests accounted for 43 percent of these actions. More than 92 percent of surgeons reported ordering unnecessary tests to protect themselves” (Hettrich et al., 2010, para 3). This defensive strategy by physicians shows the contentious nature of our culture and it directly affects the healthcare system by causing over-utilization of procedures and tests.
It is estimated that liability reform would reduce healthcare expenditures from anyway between 5 to 34 percent. This would result in a savings from 54 to 650 billion dollars (Hettrich et al., 2010, para 5). That is no small penny. This shows that stricter controls and criteria for litigation are necessitated in order to aid in curtailing rising costs of healthcare. A change in government policies in regards to malpractice reform would reduce costs by making frivolous lawsuits more difficult by tightening controls over criteria for litigation. Additionally, reform could pursue the availability and pace of the judicial system by assigning specific judges for healthcare cases.
Another unforeseen causation for the rising cost of healthcare is the end of life care for the dying patient. Palliative care for the dying patient is often a difficult conversation between a provider, a patient (if they are able to communicate), and their family. Families may be obdurate in their cultural views towards death and quite often the autonomy of the patient is besieged. For the terminally ill or dying, life saving measures and procedures may prolong life but conversely increase suffering. If no positive outcome may be acquired from such measures these procedures only add to the cost of health expenditures with little to no benefit to the patient. According to a study by the National Institute of Mental Health and the National Cancer Institute, one-third of Medicare cost expenditures for those in their last year of life occurred during the last month of life. It was found that most of these costs resulted in life-sustaining care such as mechanical
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ventilation and resuscitation with acute care in the final 30 days of the patient accounting for 78% of total costs in their last year of life (Zang et al., 2009, para 4). This exemplifies the need for a cultural shift in the philosophy and practicality of end of life care. Communication and education between providers, the dying, and their family are a precarious but necessary conversation. The availability and support for advance directives is one such method for reducing the cost of end of life care. Additionally, hospice care may offer dying patients a preferable outcome than restorative measures. For a dying patient, living their last days in a comfortable setting surrounded by caretakers and family may be the best solution, while a positive side-effect would be reducing healthcare expenditures.
Discussion
The United States healthcare system is an exponentially growing system in both scope and technological assimilation. While this technology driven system has provided US Americans with the latest and most advanced innovations that has produced many positive outcomes the ever growing rising cost has become a malformation of this system. Changes in both culture and governmental involvement must occur to curtail this exponentially rising cost. There is no clear cut solution to stop the rising cost of healthcare. It is for this reason that further research for reform must be supported as well as political endeavors for reform must be strived for before implementing measures may be reached in totality. Numerous causes not mentioned in this paper are also a factor for health expenditures. It is for that reason that no one solution will be found for lowering costs. These others causes must be sought out and discovered. However, these causes and their associated reforms discussed in this paper are the first steps towards lowering the rising costs of healthcare. These steps are in the form of global budgets,
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supply-side rationing, comfort care for end of life patients, wide-scale usage of EHR, and medical malpractice reform.
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References
Anderson, G. M., Hussey, P. S., Froger, B. K., & Waters, H. R. (2005, July). Health Spending In The United States And The Rest Of The Industrialized World. Health Affairs, 24(4), 903- 914. doi:10.1377/hlthaff.24.4.903
Burt, C. W., & Sisk, J. E. (2005, September). Which Physicians and Practices Are Using Electronic Medical Records? Health Affairs, 24(5), 334-343.
Goodman, J. , & Herrick, D. (2007). The Market for Medical Care: Why You Don’t Know the Price; Why You Don’t Know about Quality; And What Can Be Done about It. http://www.ncpa.org/pdfs/st296.pdf
Hettrich, C. M., Mather, R. C., Sethi, M. K., Nunley, R. M., Jahangir, A., & Washington Health Policy Fellows, . (2010, December). The costs of defensive medicine. AAOS Now, 9(3). Retrieved from http://www.aaos.org/news/aaosnow/dec10/advocacy2.a…
Rationing as a Response to Supply Side Constraints. (2010, January). Econex: Trade, Competition & Applied Economics, 1-7. Retrieved from http://www.mediclinic.co.za/about/Documents/ECONEX…
Shi, L., & Singh, D. A. (2015). Delivering Health Care in America: A Systems Approach (6th ed., pp. 2-233). Burlington, MA: Jones and Bartlett Learning.
Staiger, D., Skinner, J. (2009). Technology Diffusion And Productivity Growth In Health Care (Working Paper No. 14865). Retrieved from National Bureau of Economic Research website: http://www.nber.org/papers/w14865
The World Bank. (n.d.). Health Expenditure Per Capita (Current US$) [Data file]. Retrieved from http://data.worldbank.org/indicator/SH.XPD.PCAP
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