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Cost Saving/Cost Increasing In Healthcare Essay

Cost Saving/Cost Increasing In Healthcare Essay

Describe the difference between cost-saving and cost-increasing technology-based innovations. Provide an example of each and analyze why a cost-increasing innovation would continue to be used. PROVIDE IN TEXT CITIATION


Health care expenditures is an increasing proportion of gross domestic product (GDP) in Organization for Economic Cooperation and Development countries as its share in GDP increased by an average of nearly 2 percent annually in last 40 years. Health care expenditures in the US increased 6.2 on average annually between 1991 and 2011. Health care spending consisted 17.9 percent of GDP in the US in 2011.Cost Saving/Cost Increasing In Healthcare Essay
There are many elements affecting increases in health care costs. The proportion of old people in the US population increases and aging population can raise health care expenditures. Because, compared to younger people, older people use more health care services as they are more likely to have non-communicable diseases. Non-communicable…show more content…
It takes a long time to increase the supply of health care professionals. Health care costs were soon rising rapidly. As a result, health care expenditures as a percent of GDP increased from 5 percent to 16 percent (Finkelstein, 2005)
There are many policies discussed in the literature for reducing health care costs. I argue that preventive health care is the most efficient way to decrease health care costs. Preventive health care can be defined as services to prevent people from diseases, or before they become more expensive to treat or cure. Health promotion efforts and personal self-care constitutes primary level of preventive health care. Treatment services are curative and rehabilitative care services for curing or slowing down a health problem which has already started. Preventive health care is an effective way of lowering health care costs. Health promotion and disease prevention provides a healthy population with reduced health risks, and helps businesses to save money by participating in these programs (Goetzel, 2009).
Preventive health care involves a wide range of interventions which help for maintaining good health habits, reducing the incidence of disease and disability, and slowing the progress of illnesses. These interventions can include providing childhood immunizations, raising taxes on cigarettes Cost Saving/Cost Increasing In Healthcare Essay

One of the core objectives of the Affordable Care Act (ACA) or Obamacare was to lower the cost of health care and reform the health care system in a way that it benefits the many people who were previously uncovered or underserved. President Obama sold the ACA as a health care reform program on the account that it contained every practical idea on reducing healthcare costs. It was projected that the massive investments in technology, payment reforms, and health care delivery would help to lower costs of providing and accessing health care. The Act would also result in huge cost benefits for individuals, families, communities, and businesses. Although the ACA has just been partly implemented, the results have been tremendous. Some of the advantages that were previously envisioned have not been realized while some unforeseen benefits have emerged. Similarly, there have been myriad unintended consequences. Despite the many sound policies anchoring the ACA, some of the intended benefits might not be realized. [“Write my essay for me?” Cost Saving/Cost Increasing In Healthcare Essay

Reducing the Cost of Health Care Coverage
The ACA act of 2010 has certainly helped to curb the cost of healthcare in the country. While the extent of this benefit is debatable, many analysts agree that many people have benefited from the ACA. Obamacare was designed to address two major challenges: coverage and cost of health care (Hammaker & Tomlinson, 2011). To cover many people, the Act made it mandatory for Americans to have health insurance. The Act also provides subsidies for people who cannot afford health care and bars insurance companies from demanding extra payments for “pre-existing conditions.” In 2013, over 41 million Americans had no health insurance coverage; today the figure is around 30 million people (Auerbach, 2014). It should be realized that reducing the cost of healthcare coverage in the country is a very daunting task. Traditionally, the health care system is wasteful and often inefficient leading to difficulties in curbing costs. Most medical bills were paid by insurers and other third parties, so many patients did not understand how the system worked or which option was cheaper than the other.Cost Saving/Cost Increasing In Healthcare Essay

Any sound health care reform policy must seek to reduce the cost of health care; consequently, the ACA was promoted on the basis of this benefit. The reform law was designed to provide rights, benefits, and protections that were previously unavailable in the health care system (Cohen & Cohen, 2013). Under the Health Insurance Marketplace, health care shoppers can compare and contrast different healthcare plans that serve as minimum essential coverage. Additionally, the act was intended to provide cost assistance to individuals, families, and businesses. Large companies employing many people are compelled to offer healthcare coverage to their full-time employees by 2016. Similarly, annual and lifetime limits were eliminated from healthcare. The Act makes medical insurance a guaranteed right, hence an individual cannot be denied cover.Cost Saving/Cost Increasing In Healthcare Essay

One of the unintended consequences likely to be realized is the increase in public spending over private spending on health care. The Congressional Budget Office report indicated that in 2015, the federal governments spent a sum of $936 billion on all health programs like Medicare, Medicaid, and the ACA, which represented a 12% increase from 2014 (Pirrone, 2015). Many advocates of the ACA applaud the greater role played by the government in the healthcare system. However, that increasing role does not shift the cost curve downward. To some extent, the ACA is not the solution to the growing challenges seen in the American health care system. The law outlines specific cuts to the allocations for the Medicare Advantage Program. Additionally, it schedules massive payment reductions for nursing homes, hospitals, and hospice care programs. By any consideration, these are painful realities that will translate to suffering for many poor people once the program in fully on course. Payment reductions and price controls are simply a recipe for more challenges and inefficiencies in the system.Cost Saving/Cost Increasing In Healthcare Essay

By reducing the cost of health care coverage, the federal government will have to pay more to fund the program. The result is higher taxes for the high income earners and the overall health industry. Similarly, while much focus was placed on low-income earners by 100% funding in the first year and 90% after that, many poor people have chosen to opt out (Yesalis, Politzer, & Holt, 2012). Millions of poor Americans have survived without health insurance and hence do not realize the benefits of Obamacare. Also, many people have opposed Obamacare purely for political reasons. There has been a political move to paint the program inappropriate and discredit the government for failing on health care reform (Yesalis et al., 2012). As a result, many state representatives do not support the program. Many poor Americans are caught in the crossfire as politicians, policymakers, and other players engage each other.Cost Saving/Cost Increasing In Healthcare Essay

Many poor Americans who signed up for Medicaid after the passage of the ACA have faced a new reality. A 2014 study indicated that 55% of doctors rejected the new patientscoming under Medicaid (Hemingway, 2014). On the other hand, only a few new private insurance patients have been refused by doctors. Despite its many policies and guidelines, Obamacare did not provide solutions to these likely challenges. Many Americans who previously enjoyed private health insurance were forced off their preferred insurance through Obamacare’s decrees. It is estimated that as much as 4.5 million Americans have been obliged to leave their private health insurance schemes in favor of Obamacare thus denying them access to their chosen doctors (Auerbach, 2014). These unintended consequences only add to the fact that the ACA has not actually provided the solutions required in the healthcare sector. While many people have gained access to the health care system, many others have lost their schemes. However, it might have been difficult to address some of these challenges beforehand.Cost Saving/Cost Increasing In Healthcare Essay

Medicaid Expansion
Medicaid expansion is one of the core pillars of the ACA. There has been raging debate on the pros and cons of expanding Medicaid program. It is seen that by bringing many people into the healthcare market, the majority of these people will make decisions without any price information (Hemingway, 2014). Expanding insurance coverage for millions of Americans under the ACA is likely to reduce labor productivity and the overall workforce. Working many hours a week makes people ineligible for financial aid under the Act hence many people limit their working time to 29 hours a week to qualify for assistance through Obamacare or private insurance (Davidson, 2013). Medicaid expansion is projected to add 11 million new people into the insured pool; however, the increase will likely limit accessibility and lead to other unfavorable outcomes (Davidson, 2013). Since doctors are already rejecting some of the new Medicaid patients, it helps to underscore the difference between health insurance and accessibility to health services. The difficulty in accessing health services, despite health insurance, will mean worse health outcome for the Medicaid patients.Cost Saving/Cost Increasing In Healthcare Essay

Medicaid patients have been reported to fare poorly in many surgeries, cancers, and other ailments. Expanding Medicaid is simply increasing the number of people to suffer. More fundamentally, expanding Medicaid does not just increase the number of insured people (Pirrone, 2015). In many states such as Delaware, Maine, and Oregon, it has been seen that the ACA has led to the movement of people from private health insurance to Medicaid (Pirrone, 2015). Expanding Medicaid is likely to increase costs for many people. Expanding Medicaid might, therefore, sound great as a way of reforming the health care system but in reality, it will increase the premiums paid by families under private health insurance. The healthcare system is a cogwheel with many components for proper functionality. Any proper reform must consequently be aimed at every aspect of the healthcare system. Like any new reform process, the ACA has also suffered from myriad implementation challenges and bottlenecks that affect its full benefits. Cost Saving/Cost Increasing In Healthcare Essay

One big challenge in health care is balancing between cost and demand. Introducing millions of people with different medical needs will substantially alter the budget of some departments like the Veteran Affairs (VA) (Davidson, 2013). While VA offers quality healthcare to the people it serves, increasing the number of people it caters for through Medicaid expansion will reduce the quality of care provided, thus placing many veterans who require specialized treatment at risk. In the previous years, Medicaid has been inefficient due to the large number of people it serves. The challenge will be made worse by the increase in the number of individuals served. In reality, addressing health care problems in the country requires an expansion of Medicaid to cater for many people. However, expanding Medicaid in its current setup will not solve the problem but create additional challenges. Americans mostly require quality health care and not simply an insurance cover that does not guarantee proper health care.Cost Saving/Cost Increasing In Healthcare Essay

States have to address other priorities besides health care. In Montana, Medicaid costs have been rising rapidly as people sign up for Medicaid. In 2012, the annual Medicaid spending in Montana skyrocketed to $1.2 billion from $560 million in 2007 (Yesalis et al., 2012). The costs are expected to grow in the coming years with the expansion of Medicaid. Other state projects could, therefore, face funding shortages in the face of the growing costs. While many Obamacare proponents claim that the law will see a reduction in the uncompensated charity care, many of these promises are unlikely to be realized as already seen in some states. The federal government has pledged to fund the Medicaid expansion in the coming years to alleviate fears about the rising costs. However, experience indicates that the government will likely not honor this promise in many states. State governments will, therefore, be forced to increase their allocations to the health sector. Much inefficiency will consequently arise due to the funding shortages since it is hard to scale down the Medicaid program once it has been expanded Cost Saving/Cost Increasing In Healthcare Essay


In conclusion, the ACA is a noble attempt to reform the health care system and address the many challenges that have dogged the sector over many years. The reform program is anchored on the need to reduce the cost of health care coverage and to expand Medicaid. These are certainly crucial needs that should be addressed. However, considering the significant number of people to be served, budget constraints and the forces of demand and supply, some of the benefits envisioned cannot be realized in the manner outlined. Many unintended consequences will, therefore, arise that can positively or negatively affect the implementation of the program. Similarly, many people will benefit from the expanded Medicaid and reduced the cost of accessing health care.

By 1970 the rising cost of health care coverage as a percentage of the Gross Domestic Product of the United States caught political attention. Health Maintenance Organizations as thought of today began under the Richard Nixon administration in an effort to the control federal healthcare spending (Rodwin, 2010). The federal government created subsidies to start HMOs, encouraged their use in Medicare and Medicaid, and encouraged commercial HMOs (Rodwin, 2010). Due to differing political aims the structure not only included efforts to control costs through oversight of medical practice, physician payment, and influence decisions about medical care, the legislation also included benefits to set a foundation for those policy makers seeking a pathway to nationalized health insurance by including comprehensive benefits, open enrollment and community rating (Rodwin, 2010). These competing aims resulted in HMO premiums costing as much as traditional plans (Rodwin, 2010).Cost Saving/Cost Increasing In Healthcare Essay
The many common features of health care plans today began with HMOs, such as coverage for preventative services and prescription drug benefits (Kongstvedt, 2013). Other features of the HMOs were: a) closed networks where only services could be provided by an HMO doctor, b) capitation where providers were paid a fixed amount based on the number of patients covered, c) the primary care provider as a “gatekeeper” to refer to specialists, d) required pre-authorization for elective procedures to ensure medical necessity, e) encouragement of outpatient procedures over inpatient, and f) oversight to reduce hospital length of stay (Kongstvedt, 2013).

Medicare” is a type of health service responsible for provision of services to old people. “Medicaid” is a health program that offers health services to poor people of all age groups. A person qualifies for Medicare if he is aged above 65 years and is eligible for social plus social security benefits. A person also qualifies if he is permanently impaired or has severe renal disease. For a person to qualify for Medicaid, he should be poor and medically unfit. Persons who require Medicare should be well covered by offering “health care” and “physician services”. An example of such a service is the health insurance. Persons eligible for Medicaid should also be covered. According to certain state laws, people who have the need for Medicaid should receive benefits. The benefits are to be in agreement to the set laws. Such benefits are those of “hospital and physician services”. Other services are “dental and eye care coverage” (Austin, 2011).Cost Saving/Cost Increasing In Healthcare Essay

With the current technological advancements both in hospital industry and other areas, the future of health care is expected to be marked by great changes. Most countries especially developed ones have now started to use electronic medical recording equipments. They are willing to spend much of their money in order to render record keeping in hospitals digital. With these technological changes, the need for health care will rise and costs of offering health care services as well. Technological innovation by various countries will change the market for medical gadgets and thus the future of “medical technology” (Austin, 2011).Cost Saving/Cost Increasing In Healthcare Essay

The costs of health care have been increasing in various hospitals, for example, in the United States the expenditures of health have been going up above the inflation levels of their economy. The methods of funding health care affects how health care is offered to people, its quality plus cost. There are several reasons for rising in spending for health care purposes: Drug prescription and costs imposed in hospitals as well as Medicare and Medicaid play a major role in the escalating costs. In America, changes have been put in place to control spending that is reducing certain amounts of “reimbursements” and other benefits. Managed care organizations (HMOs) whose purpose is to offer better health to people at a given amount of money, have played a significant role in affecting the health care costs. They have made governments to increase their funding to make certain proper health services are offered to those in need. The expansion of health care has accelerated increasing health care expenses. Some technological advancement in hospitals is the widening of medical devices. These services include “pacemakers plus other implants, research and development; medical imaging, surgery and genetic mapping” (CMS, 2006).Cost Saving/Cost Increasing In Healthcare Essay

There has been controversy among policy making bodies on the requirements and potential over-use of rising technology in health care. A vital development that has arised in health care is the use of electronic recording. Although it is not in use in the entire health care, it has replaced a number of written documents. An important influence of the accomplishment of electronic recording is the improvement of patient safety as well as workflow efficiencies. HMOs feature is the incentive to keep expenditures by use of “primary gatekeeper approach”. To come up with an explanation as to why the costs of health are rising, one has to scope the economics plus health policy and literature. The lack of markets with adequate strengths in competition may be responsible for increasing expenditures (Manning, 1998). Cost Saving/Cost Increasing In Healthcare Essay

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