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Governmental Efforts to Control Health Care Costs

Governmental Efforts to Control Health Care Costs

The healthcare industry in the USA has skyrocketed extremely, particularly considering healthcare expenditures. Nowadays, healthcare payments are at the level of $8,402 per person but they were $365 in the 1970s. The causes of such costly changes are the aging of the population, advancement in technologies, and the introduction of the insurance system that requires great annual payments. The US government implements some measures such as a free-to-face system, a transparency system, and a simplification of the administration system, while non-governmental organizations offer to prevent preventable diseases such as diabetes, and heart sicknesses instead of treating them that will be a step to save money.

Assessment of Efforts by the Government to Control Health Care Costs

The healthcare system is one of the most essential global achievements. Its significance is difficult to evaluate, as numerous interventions and treatments of previously mortal diseases can easily be accessed nowadays. Most mortal illnesses have taken a cure currently, while pain has been soothed. Moreover, the healthcare industry is remarkably huge in the US economy contributing great sums to the state’s budget. However, the costs of healthcare are rather significant even in comparison with some of the most advanced countries, and they keep growing every year. These increased healthcare expenditures make medical services unaffordable for numerous American populations as separate households, businesses, and large companies. Healthcare costs should be properly examined and regulated by the local and state governments, as the increasing expenditures can lead to patients’ incapability to pay for their treatment. The costs of medical insurance also increase which makes the taxpayers unable to buy some necessary items to pay for the insurance, thus being a financial burden for the individuals, organizations, and businesses. The increased healthcare costs make the population reject some necessities, while the governmental efforts for regulating these issues are invisible. More efforts of the government and social organizations should address the issues of control of health care costs.

Assessment of the Problem

The healthcare industry continues increasing, as doctors have learned to eradicate some diseases by vaccinating people, while many humans live have been saved due to organ transplantation. These were the reasons for the considerable rise in life expectancy. Moreover, developing healthcare has boosted the country’s economy due to creating numerous new jobs and adding an increase in life expectancy that has allowed people to stay active, involving the possibility to be able to work for a long time. The medical sphere of the nation constantly adds to the GDP growth. However, healthcare expenditures grow quicker than the Gross Domestic Product, and this situation is considered alarming (Alliance for Health Reform, 2012). Moreover, the amount of healthcare spending together with the states’ fiscal challenges, demands containing healthcare costs, as it has become a national precedency with a sense of urgency. All in all, high expenditures on healthcare deepen the government’s strained fiscal situation and worsen the living situations for many Americans.

Historical Developments Leading to the Problem

Healthcare expenditures were not always so high, and it took lots of time for the US healthcare industry to become among the costliest ones in the world. America spent $8,402 per person for healthcare support in 2010 which led to $2.6 trillion in costs for the healthcare sector that year (Henry J. Kaiser Family Foundation, 2012). The comparison can show that the total healthcare spending in 1970 was about $75 billion, or only $356 per person. Moreover, experts forecast healthcare expenditures growth at a rate of 20% of GDP by 2020 (Henry J. Kaiser Family Foundation, 2012). The healthcare cost started its increase after the Second World War, exactly at the time of the first insurance companies’ appearance and the requirement for the population to make monthly or annual payments for medical insurance (National Coalition for Health Care, 2012). The major causes of this extreme growth were inflation, the overall growth of the population as well as its general aging which led to the considerable need for the right medical treatment. Moreover, the drug price increase was seen during 2000-2011 which led to more extensive growth of the healthcare costs. Since 1990, the payments for insurance had increased by 2.1% per year, while personal Medicare payments grew quite significantly. In addition, the rapid increase in the number of people suffering from chronic diseases influenced a disproportionate percentage of overall health spending (Bipartisan Policy Center, 2012). Humans with chronic illnesses demand huge volumes of synthetic healthcare services. Thus, about 84% of the healthcare budget, as well as about 99% of Medicare expenditures, are allocated to these people (Bipartisan Policy Center, 2012). Millions should be spent on buying expensive apparatuses like magnetic resonance imaging (MRI) machines, computed tomography (CT) scanners, and others for supporting these people which is seen as the main cause of the increasing healthcare expenditures. Thus, US healthcare costs have increased largely over time because of some forces.

Identification & Analysis of Various Elements Affected

Such high healthcare spending has become an issue of concern for the average American because many people spend a significant amount of their monthly income on medical insurance payments as well as other healthcare expenditures. Moreover, high healthcare costs have also led to financial troubles for businesses, as employers have to pay extras for their employees’ expenditures on healthcare (National Coalition of Health Care, 2012). For instance, General Motors spent approximately $5 billion per year to defend its 1.1 million employees and retirees, adding $1,500-$2,000 to the price of each car (National Coalition of Health Care, 2012). Healthcare insurance is an aggressive expenditure for the citizens, as Medicare and Medicaid are a burden on states’ budgets because employers’ chief health insurance is restricted to taxable income; thus, the increasing expenditures on health insurance by entrepreneurs rise the amount of mislaid tax revenue to state administrations. Consequently, money, which employees might have received as their salary, and from which they would pay their taxes, is reallocated to expenditures on health insurance premiums.

Impact on the Health Care System as a Whole

The healthcare industry has some troubles due to such high prices. The costly healthcare system impacts not only the citizens but also the doctors and the whole system as well. First, people tend not to address the hospital in case of any disease but try to treat it by themselves. Thus, the doctors become less paid while the control over their jobs increases. The fewer the patients, the lower salaries they have, and thus the government gets fewer donations from the healthcare industry which badly influences the economics of the country. The cost of healthcare made a tendency to open private clinics where people are offered efficient treatment at a lower cost. Thus, high expenditures on healthcare and governmental control over this industry have little effect on price stabilization.

Unsuccessful Attempts to Resolve the Problem

The US government has made some tries to change the overall situation and take control over healthcare expenditures, but in most cases, the situation has not been solved. Numerous conditions made US healthcare spending rise nowadays. Thus, the US healthcare costs are rather unstable, because they are impacted by numerous factors like lack of coordination and management (Alliance for Health Reform, 2012). The US government tried to control healthcare expenditures by introducing health insurance systems to be able to defend and save people’s lives. However, these systems appeared to be rather costly for American citizens making them pay vast sums of money for insurance that is not always useful. The government also tried to coordinate the medical workers and patients properly, but this led to a bigger medical care cost increase, as the improper management of hospitals and their workforce provokes some rise in costs as well. The government also tried to control health expenditures by controlling the so-called lifestyle diseases, rising public awareness of them. However, the irresponsibility of the citizens as well as the medical system workers put the burden on further cost control activities while the prevalence of diseases was growing along with the healthcare costs.

Successful (or proposed) Efforts to Resolve the Problem

Governmental Efforts

The costs of US healthcare are really high, particularly in comparison with those of other highly developed countries. However, the US government tries to implement some reforms to make the healthcare expenditures not lower, then at least sustain them at a stable level. The government promotes privately negotiated expenditure rates within world spending targets. In this case, the payers and providers have to negotiate payment rates, which would be linked for all payers as well as providers in a country. Moreover, the privately negotiated payments should fit a global expenditure target for both private and public payers. One more implementation is the acceleration of utilizing the alternatives to fee-for-service payments. Thus, instead of making payments for each service, hospitals and physicians should receive a fixed sum for a bundle of services as well as for all the treatment a patient needs. The outcomes of these fee-for-service payments should become visible within 10 years; Medicaid and Medicare will allocate at least 75% of payments for alternatives to fee-for-service expenditures (Centre for American Progress, 2012). The US government also implemented an option of usage of competitive linking for all healthcare services. This possibility involves not governmental price setting for healthcare commodities, but suppliers and manufacturers can offer the lowest price. The systems like Medicaid and Medicare have to immediately expand this competitive bidding nationwide, while including laboratory tests, medical devices, and all other commodities in the system. Thus, Medicare’s market prices have to be then increased for each federal health program. Moreover, the US government tries to simplify administrative systems. The governmental program makes the payers and providers keep claims, eligibility, and other administrative data electronically, while the task of providers and payers is to monitor use rates, set binding compliance targets, and implement extra measures to achieve the amount of healthcare savings of $30 billion per year (Centre for American Progress, 2012). However, the greatest step in price control is a fully transparent price system that allows the consumers to know how much the medical services and commodities cost before treatment. All private and state insurers have to provide price information, which reflects agreeable discounts with specific providers.

Review of Non-Government Entities Proposals

Along with the governmental regulations, a great deal of health expenditure control measures is offered by non-governmental organizations, which consider more citizens’ issues. Most organizations come to the common idea that the best way of decreasing healthcare spending is to try to prevent the development of preventable diseases, which coincides with the possible elimination of unnecessary waste. A good example is the Henry J. Kaiser Family Foundation, which offers to decrease healthcare costs by attempting to prevent those illnesses, which can be avoided, such as, for instance, heart disease, diabetes, or obesity, by implementing habits of healthy eating and advertising the healthy lifestyle in mass media, thus provoking people to deny fast food consumption (Henry J. Kaiser Family Foundation, 2012). This organization is sure that preventing diseases will not only make the citizens healthier but also assists in healthcare costs decrease. The other non-governmental organization, Alliance for Health Reform, offers to identify the unnecessary wastes in the health sector and exclude them. Additionally, healthcare providers should have a mutual health data technology infrastructure that includes the clients’ information along with the clinical decision support items to aid them to make evidence-based solutions (Alliance for Health Reform, 2012). In addition, the organization reconsiders the significance of primary care and patient-centered medical homes, which assist in care coordination. The non-governmental organizations offer to make the patients’ observation and curing more thorough and listen to clients more carefully in order to make an accurate diagnosis that will lead to fewer costs for treating diseases. Moreover, the healthcare industry should consider utilizing tools, which provide patients with more extensive information about the cost and quality of medical treatment that could play a critical role in their decision-making.

Some Other Suggestions

The governmental and non-governmental healthcare control offers are the best to work when combined together into an organized system. The first step in this system, the non-governmental organizations should take, as they can prevent possible diseases. The institutions can carry on the social promotion of healthy lifestyles in social media, TV, and newspapers calling citizens to reject bad habits and try to eat healthy food and be more active which will sustain good health. The organizations together with the volunteers might open new buffets of healthy food that could offer healthy meals for low prices. However, the medical treatment control measures should be implemented by the government with the help of the newly implemented reforms. The US healthcare expenditures are really high; thus the government has to make the system as transparent as possible to allow the patients to understand the reason for the medicines and services prices. Moreover, social programs with cheap medication and free doctors services should be available for the low social classes citizens who are not able to pay the insurance or the treatment. The significant implication would be keeping the systematic data about each customer that would serve as a system of cause-outcome disease and help in collecting the statistical data that would serve for possible prevention of the illnesses and their control in the regions. Thus, implementation of the complex system of healthcare expenditure control could stabilize the healthcare cost situation in the US healthcare industry.


The high healthcare expenditures in the USA along with their rapid increase are the outcome of a variety of structural deficiencies as well as causes in the health system, thus a number of different approaches are required to address them. The medical costs are linked to quality minimizing costs in case quality maximizing might result in the highest overall value of the system. Thus, the governmental authorities offer to pay more precise attention to primary care by considering the value and quality of medical services. Primary care requires an accurate interaction with patients as well as their proper examination for making a precise diagnosis, which will play a critical role in decreasing the cost of treatment. In addition, the implemented technological system of tracing patients’ health history might result in cheaper and better treatment as well, while their proper information about the quality and cost of services could help to save the patients’ money by taking just necessary services. Implementing an alternative of fee-for-service payments could ease medical payments and make them transparent, as instead of making payment for each service, doctors and hospitals will receive a fixed sum for a complex of services for all the treatments conducted for a patient. However, along with governmental control, non-governmental organizations play a significant role in controlling healthcare expenditures, as they are those standing for prevention of the diseases instead of their treatment. Lots of illnesses like heart conditions, diabetes, or obesity could be prevented and thus unnecessary healthcare costs could be eliminated. These prevention programs include healthy lifestyle promotion through social media, organization the healthy food buffets, and calling for extensive physical activity. Thus, solving the issue of health expenditures is difficult, and it may take much time to turn the system a bit more perfect, but the newly organized one will help millions of Americans to be treated properly and save thousands of lives.


Alliance for Health Reform. (2012). High and rising costs of health care in the U.S. The challenge: Changing the trajectory. Retrieved from http://www.allhealthpolicy.org/wp-content/uploads/2017/03/Alliance_for_Health_Reform_121.pdf

Bipartisan Policy Center. (2012, September). What is driving U.S. healthcare spending? Retrieved from http://bipartisanpolicy.org/wp-content/uploads/sites/default/files/BPC%20Health%20Care%20Cost%20Drivers%20Brief%20Sept%202012.pdf

Centre for American Progress. (2012, August). Cutting healthcare costs. Retrieved from https://www.americanprogress.org/issues/healthcare/news/2012/08/02/11970/cutting-health-care-costs/.

Henry J. Kaiser Family Foundation. (2012, May 1). Health care costs key information on health care costs and their impact. Retrieved from https://www.kff.org/health-costs/issue-brief/health-care-costs-a-primer/