Question #1

What are the major drivers of the rise in health care spending? How will the ACA affect these areas?

Several drivers are responsible for the rise in healthcare spending. One of these drivers includes technology and prescription drugs. Advancement in technology has caused hospitals to incur huge expenditures when they acquire new equipments. They charge patients high treatment costs in an attempt of recovering the costs they incurred while purchasing advanced medical equipment. In addition, medical researchers incur high costs while manufacturing prescription drugs for treating major illnesses. These costs are transferred to the prescription drugs offered to the patients seeking medical treatment. Increase in administrative costs of healthcare facilities is also responsible for the rise in healthcare spending. According to Reinhart (2008), United States incurs excess expenditure on health administration and insurance. High administrative expenditure can be attributed to the complex health insurance system that is present in United States. In addition, the medical underwriting expenses in America are high increasing the overall administrative costs. Some of the medical facilities also incur losses. It makes it hard for them to cover the administrative costs that they incur. Management of these hospitals is thus forced to increase the costs of healthcare in order to cover the administrative costs.

Another factor that contributes to rise in healthcare spending is the increase in chronic diseases. Chronic diseases such as diabetes, cancer and heart diseases have caused deaths of many American citizens. Healthcare costs covering chronic illnesses account for more than 75% of the national health expenditures (Kaiser Family Foundation, 2012). Obesity has increased in America. Health experts warn that poor eating habits and lack of physical exercises will cause many Americans to be obese. Obesity exposes patients to many health risks. Obese patients are more likely to have heart failure compared to non-obese patients. In addition, these patients are more exposed to diabetes compared to non-obese patients.

ACA will affect the drivers of the rise in healthcare spending in several ways. It seeks to involve the government in the oversight and regulation of health insurer premiums and practices. This will help in ensuring that insurance costs are low thus driving the administration costs down. It also seeks to increase transparency and competition in the sale of insurance policies through Health Insurance Exchanges (Kaiser Family Foundation, 2012). Patients will thus be able to obtain cheap medical covers from insurance companies. ACA also aims to fund comparative effectiveness research that seeks to compare different interventions for preventing, treating, diagnosing and monitoring health conditions. It will help in the reduction of chronic diseases in America. This will save costs incurred in treating diseases such as heart failure and cancer. ACA also seeks to introduce payment reforms seeking to reduce payments resulting from errors and poor quality care offered during treatment and hospitalization of patients. High costs from prescription drugs will thus be eliminated.

Question #2

How can health care be made more affordable without limiting access to necessary care?

Healthcare can be made more affordable without limiting access to necessary care in several ways. One of the ways is improving health efficiency and quality of care. Healthcare efficiency can be improved if people find new innovative ways of minimizing wastes in healthcare. Wastes can be eliminated in medical care if hospitals eliminate treatment procedures that fail to yield results. Examples of ineffective treatment procedures include radical prostatectomy, as it is not that effective in treating prostate cancer (Feldstein, 2011). Quality of medical care can be improved if the coordination of the provision of medical care is improved. Patients are required to see specialist physicians, take medications and undergo regular lab tests. Poor coordination between providers of these services in hospitals results to poor quality services. If hospitals are well coordinated, patients will be attended fast and with low costs thus making health care more affordable. Healthcare can also be made more affordable by using information technology in health care delivery system. If all the medical facilities are able to computerize their operations, administrations costs will reduce. The number of staff required to maintain hospital records would also reduce since computer database management systems automatically update hospital records. Computers also reduce errors while calculating hospital payments.

Question #3

What role should government play in controlling increases in the cost of care and the cost of health coverage? What different choices do state and federal policymakers have in containing costs?

Government can play several roles in controlling the cost of care. One of the ways that the government can control the increase in medical costs is allowing caregivers to advertise the cost of medical services that they offer. Hospitals in the same area may charge different rates and patients may not know due to lacking knowledge of the rates charged by different hospitals (Henderson, 2011). In addition, government could consider allowing people to buy medical insurance across state lines. Currently, the federal laws do not allow people to buy medical coverage from different states. In New Jersey, the cost of medical cover for every patient is about $ 4000. However, the cost of the same medical cover in Pennsylvania is about $ 1500. A patient from New Jersey would thus save $2500 if he/she were allowed to purchase medical cover from Pennsylvania. In addition, the government can help in reducing medical coverage costs if it allows doctors, hospitals and patients to enter into limited liability contracts. Federal law requires that all patients pay for malpractice insurance. Malpractice insurance increases the cost of provision of medical care significantly.

 State and federal government should consider formulating policies that will bring reforms to the Medicaid program thus making it available to most citizens. Federal government should consider increasing its funding to the Medicaid program. This will help elderly and pregnant patients cover the high medical costs that they incur while they access medical treatment. Both the state and federal government should also consider formulating strong policies that will help in improving quality of medical delivery systems thus minimizing wastages (Henderson, 2011).

Question #5

What is the responsibility of individuals in the cost of their care? Are health savings accounts and high deductible insurance policies an approach that should be expanded? What are the concerns for low-income individuals?

Individuals could play several roles in controlling the cost of Medicare. People should practice healthy lifestyle in order to reduce chronic illnesses. Smoking and consumption of alcohol exposes people to health risks such as development of cancer and heart diseases. People should also avoid consuming junk food since junk foods causes people to be obese. Obesity may cause patients to develop coronary artery diseases exposing them to heart failure. It may also cause high blood pressure that may lead to stroke. It is also the responsibility of people to choose affordable insurance covers. Before a patient takes medical cover, he should consider seeking assistance from financial advisors so that they can explain to him/her the financial implications of taking the cover (Garman & Forge, 2007).

Health savings accounts should be expanded because of several reasons. Holders of these accounts receive tax savings because savings in this account are exempted from income tax up to a certain limit (Garman & Forge, 2007). I some states, money in this account is not charged state tax. If a person withdraws money from this account to pay for medical expenses, the money is also not subjected to taxation. Patients can therefore rely on money from this account to pay for their medical costs. High deductible insurance policies should also be expanded. Although the deductibles in this cover are high, the premiums paid are low making it advantageous. In addition, as long as a patient pays the amount specified by the high deductible insurance policy, the policy covers medical expenditures of this patient no matter how high the hospital bill is. Low-income earners may not have the money to purchase high deductible insurance policies since they are expensive. They may not also have the funds for maintaining health savings accounts.

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