Economic issues in the U.S.A Healthcare sector


The American Healthcare system has been put into the spotlight due to some of the economic issues that seem to threaten the success of the entire system. There has been a lot of public outcry due to the general feeling that the healthcare issues aren’t moving in the right direction. The focus is mostly on the 46million Americans who do not have an insurance scheme that is capable of meeting their medical demands (Shi & Sigh, 2012). The successive American administrations, as well as the Congress, have good plans for the restructuring of the American healthcare system to ensure that every American is adequately served; however, the process is slow due to long bureaucratic issues as well as political interference


According to the ongoing public debate about the American healthcare system, the question of what needs to be done to the low-income household who cannot afford medical insurance has been put in the forefront (Niles, 2016). It might be true that the low-income Americans cannot afford their medical coverage, but it is also vital to realize that the economic issues that make it hard for most of the American people to afford healthcare need to be adequately addressed as soon as possible. The ever-rising costs of healthcare have provoked the feeling of dissatisfaction from the public (Niles, 2016). Although the people seem to have a strong sense of resentment about the rising costs, it is also crucial to know that numerous queries have been raised about the quality and efficiency of the current care provision due to the inadequate commitment from the healthcare providers (Niles, 2016). The support that comes from the entire healthcare providers, as well as the government, is essential for the management of all issues that arise from the healthcare system.

The American healthcare system has some of the leading medical practitioners and better facilities, but the most pressing issue is that the system is not efficient enough to meet the needs of the American people when compared to the delivery of healthcare services in countries like China (Niles, 2016). The provision of healthcare is more than what the American people consider to be the world class facilities in the healthcare system. It requires multiple factors collectively put into place such as the trained personnel and equipment to make the system to move smoothly in the right direction (Hicks, 2014). Therefore, I have synthesized some of the economic challenges facing American healthcare as well as how these life-threatening issues can be remedied.

Cost and affordability of the healthcare

The American people are already struggling to raise the current rates as well as the increasing cost of healthcare. The government has continued to spend a lot of money on healthcare issue like in the year 2007, the government pumped $2.2 trillion into the healthcare and that translates to more than $ 7000 per person (Biswas, 2013). It is a rate that is more than other rates in some industrialized countries like China (Biswas, 2013). It is a direct representation that the American people spend more money on healthcare than food and housing. Therefore, it is essential for people to recognize that the issue of the healthcare system in the country is already becoming more complicated. The healthcare challenges are getting worse each dayinstead of changing to the right direction as many Americans would expect.

The government and other stakeholders need to look into the healthcare issue with the seriousness that it deserves because the existing rates indicate that if the current data is anything to go by then by 2025, one in every four dollars willgo to the provision of healthcare in the country(Biswas, 2013). There are 45million Americans who are not insured because the increasing costs make it impossible for employers to willing fully cater to the employee’s medical obligations. The critical remedy to the challenge of the growing number of uninsured people is to put into place a policy that makes sure that 15% gain access to the proper medical cover.

However, the long-term solution is to push massive reforms that lead to lower costs in the healthcare sector while also improving the general condition of the care system (Biswas, 2013). If this initiative of healthcare reforms is put into place, then more sustainable expansions of the medical coverage including the medical covers for the underprivileged groups will take root without pressing challenges. It is also vital to ensure that transparency and accountability are given more prominence because they form part and parcel of an effective healthcare provision.

There is a need to put more resources in healthcare technology

The aspect of technology is essential to the success of any care system. The use of technology in the provision of healthcare boosts the delivery of services (Rosen et al., 2018). The purpose of IT in healthcare also reduces the costs that people get to invest in healthcare. For instance, an effective information system will easily link the care professional in such a way that the patient can contact the professional without having to physicallyattend the facilities(Rosen et al., 2018). The HIT which is the application of the computer system in the comprehensive administrative process, as well as other complementing components of technology, makes it easy to keep and also retrieve records(Rosen et al., 2018). Therefore, it is a detailed procedure that makes it easy for the doctor to retrieve the patient history of illness hence reducing the amount of time taken to care for a single person. The HIT is instrumental in computerized order entry, keeping electronic medical data, support decision through data retrieval as well as maintaining personal healthcare data.

The proper utilization of the HIT leads to reduced cost of administration, limited medical errors, easy access to data, collection as well as dissemination of metrics and the most crucially reduced paperwork that is affecting the efficiency of many healthcare facilities (Rosen et al., 2018). The HIT also enables the healthcare providers to make quick decisions because the history of the patient is adequately kept to act as points of references in case of future medical challenges. The problem is that the HIT is so effective when used in the healthcare provision but the public never benefit from these types of technologies, and if they do then it happens after a long time when the damage is already done (Rosen et al., 2018). It is important to realize that for the maximum benefits to be gained from the HIT, more reforms needs to be put into place to promote the delivery of services.

The proper use of the HIT enables quicker adherence to protocols as well as detailed guidelines that reduce the possibilities of errors in the provision of care. The DS is also embedded in the CPOE as well as EMR systems which are placed in the form of computerized reminders. It is essential in reducing unnecessary morbidity in medical care. There are so many researches that show that HIT saves more than one dollar in every eight dollars spent in healthcare invested in eliminating irrelevant care (Hicks, 2014). The primary care, as well as the proper keeping of records by the HIT, saves 85 dollars for the healthcare providers five years from the time of initiation thereby resulting in more than $70 billion worth of savings (Rosen et al., 2018). The secret to an efficient healthcare provision is the installation of the HIT to specific changes in policies that set the pace for the delivery of services

The failures of the current healthcare policies and regulations that promote reimbursement realignment to the healthcare providers

The existing laws have failed to recognize the positive role of healthcare professionals. For instance, healthcare professionals engage in numerous activities such as patient management, education, coordination without proper plan and compensation (Hicks, 2014). The existing healthcare rules and regulations are inflexible in settlement of innovations that comes from healthcare professionals. The FFS has been structured for a long time in such a way that they have not been able to reimburse the healthcare providers for the services provided to the clients. Therefore, it creates a situation where care providers do not strive to provide excellent care. It is, therefore, essential to push for more positive reforms to encourage the drawing up of proper payment models that promote rewards for any quality and coordinated care services (Hicks, 2014). The type of model that support rewards for the quality care delivered will not only improve the delivery of quality services, but it will also boost the morale of healthcare providers to put more efforts and commitment in the provision of care services.

The scholarly researches by Shi & Sigh, (2012) indicate that one of the best ways to promote healthcare provision is to initiate the use of policies such as pay-for the performance. It is a system that is abbreviated as P4P (Shi & Singh, 2012). It is a system that put a lot of efforts in the scrutiny of the service provider. And in most cases, the service provider is subjected to numerous measures before the reimbursement is executed. The performance of the healthcare providers in this situation is scrutinized through detailed treatment measures that are described as process measures (Falvo& Holland, 2017). For example, PCPs can get reimbursed on account of breast cancer screening that gets carried for female patients who have higher chances of contracting the disease.

The experiments that were formerly completed also reveal that P4P promote substantialdevelopments in the delivery of quality care even though costs saving mechanisms are not impactful in the short-run as well as the long run(Shi & Singh, 2012). However, the bundled fee often used for the hospital payments as well as the associated care services have more significant impacts on the cost of saving even though the quality, in this case, is not convincing. But the most important idea here is that the two components can be integrated and harmonized for the maximization of benefits through the mutually shared saving plan that promotes the reduction of costs incurred in the care system. This model was tested by the Medicare Physician Group, and the result indicated that it is more efficient as compared to the existing models of healthcare. The other studies have also been conducted to find out the best option between the FFS and the closed panel plans.

However, the result indicates that there are so many benefits associated with the closed plan model in terms of the quality as well as the effectiveness of the model. For example, the Rand health insurance carried out research where the patients were assigned to separate providers randomly demonstrated that 28% of the patients assigned to the HMO documented lower expenditure whenmatched to the FFS patients. The patient’s days for the hospital visitation were also 41% lower because they had zero rates of coinsurance. The traditional payment model is also an area where healthcare is experiencing setbacks. The HMOs and the related closed panel care plans have well-structured physician payments which are composed of well bundled and performance oriented type of reimbursement hence leading to limited spending as well as better utilization of healthcare

The challenge of inefficient healthcare result from high coverage rates and costs

The research that was conducted by the Watfa (2013) demonstrates that crimpling healthcare is because 45 million American people do not have a medical cover. However, this group of people who are not insured ends up spending a lot of money poor services that translates to the rising cost of healthcare in the country. The issue of lower premiums can be understood based on the three scenarios

The one percent reduction in the yearly annual growth and 1.5% moderate growth, as well as 3% growth in the annual cost of growth (Watfa, 2012). The previous analysis showed that to achieve the rates would demand massive amounts of investments which further imply that huge reforms need to be put into place. The inflation rates in the country are also the reason for the adjustment of premium rates to over 8%, and then later the rates dropped to 3% after the reforms that were initiated had stabilized the increasing rates. It is, therefore, important to realize that this type of growth slows down the premium rates to be slightly over the first one percent (Watfa, 2012). However, this rate is below that anticipated growth. It can, therefore, be a relief the American people because the majority can now be able to allocate a small percentage of the earnings to pay the premiums and it is an aspect that could drastically reduce the number of uninsured people in the country.

The problem of redundant practices and policies that is ineffective but very expensive

The American healthcare system has no current reports about the efficiency of treatment practices and procedures (Johnson & Stoskopf, 2010). The effects of the payment policies reports are also not available even though they affect the practice strategies. Although there is adequate support that has begun to reflect the increased outlying in the research that deals with comparative effectiveness, it is a good step in the process of generating benefits, evidence risks as well as the potential costs required to support the operation of healthcare decision making(Johnson & Stoskopf, 2010). It is important to note that the CER represent the clinical and economic evaluation that happen to the medical interventions while also contrasting them with the options available for the explicit clinical indications as well as the specific population of the patients.

According to the studies of Biswas (2013), the American healthcare therapeutic as well as diagnostic interventions and other care methodologies that are specific to the sick in the clinical context are also included in the evaluation. There is a need for the clinicians and the patients to get the knowledge on how the existing healthcare system that is expensive can be obtained through a more cost-effective approach that promotes wisdom in the purchase of care services. The general healthcare system will be more efficient, and the current trend of training more professionals will only improve (Fried & Gaydos, 2012). It is, therefore, essential to introduce a more robust and competitive CER infrastructure to accompany the healthcare system that is developing into a more private sector every year.


Based on this comprehensive report, there are so many reforms that have been revised and can potentially transform the healthcare system in case they are executed in the right ways (Ovretveit, 2018). Most of these reforms can bring about the desired improvement in healthcare. For instance, the changes can bring about a significant reduction in the amount of money spent in the healthcare delivery system while also ensuring quality services (Ovretveit, 2018). It is, therefore, critical for all stakeholders in the healthcare system to invest more in it through the incremental add-ons that only serve to improve the delivery of healthcare system as a whole to match the expectation of the nation. The investments should be well structured to realize the intended results such as increased accountability (Ovretveit, 2018). The investors should also put more emphasis on the strategies that promote effective use of resources while also ensuring no cost increments. There is also the need to put more resources into the measures that promote the effective care management system that is infused with reforms. The other crucial recommendations include

  • There is a need for a more collaborative and multi-layer regional approach to enable a more inclusive delivery system. For instance, the Medicaid, as well as Medicare, can play an important role that promotes the augmentation as well as the improvement of the general care system
  • The American Congress also need to put more efforts to the realignment of the payment system through the creation of policies that increase the reimbursements for the primary care services and the non-physician professionals who possess the capability to manage the coordination of the care services effectively. It is vital to realize that these types of changes can be put into place in the form of programs that promote the transition towards accountability; cost reduction and not just creating a payment system that only rewards the care providers (Shi, 2010). The increment of the reimbursement must be accompanied by the cost reduction as well as the increase of value on the part of the patient.
  • The American government, as well as other players and stakeholders, need to work towards the plan to develop sustainable payment models that are structured like the care organizations to promote more issues of accountability. It is an aspect that yields more significant results for the providers that plan to have a share that is linked to the overall care costs as well as the quality of patients being served.
  • The government should also make sure that the grants and loans released towards the promotion of health such as the building of healthcare infrastructures should be linked to the Medicare and Medicaid payments. In many occasions, the Medicare provides different types of subsidies especially in the first stages and later establishes a payment penalty for the providers who tend to ignore the application of eRX in the process of filling prescriptions for the patients.
  • There is a more urgent need separate the different combinations of the treatments with the effects of treatments as well as the policies that affect the use of certain treatments on specific subgroups of the patients that may respond differently to the modes of treatments
  • There is also a need for a comprehensive inventory as well as a thoroughly coordinated analysis of the CER programs in the public sector as well as in the private sector to line itself with the incentives that arise due to the need for such practices
  • It is important to recognize that the major areas that need reformation include the evidenced coverage policy, requirement for the drugs and food administration whose claims can support the comparative labels as well as the coverage decisions that are enhanced through assessments of the private payer technologies


The American healthcare system has a high potential that can be transformed into a vibrant industry that allows the consumers to get the most from care through cost-effective mechanisms.The reforms can significantly help the patients to benefit more from the healthcare system. For instance, addressing the more pressing issue of reducing the healthcare cost is very critical. The add-ons that are suggested also need to be used as a stepping stone to creating more reforms.It is also essential to bring all stakeholders together to share their opinion on the best way of going forward. It is also important to deploy the use of a systematic approach that promotes healthcare coordination using better evidence to reduce the costs while also improving the outcome of the care results to the patients.




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Shi, L., & Singh, D. A. (2012). Delivering health care in America: A systems approach. Sudbury, Mass: Jones & Bartlett Learning.

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