Week 2 Assignment
The National Health Expenditure Accounts (NHEA) estimates health care spending over time, including everything from health care goods and services to public health activities, government administration to health care investment. For this assignment, we will focus on health spending by major sources of funds. Please see below for a summary:
|Medicare: Medicare spending, which represented 20 percent of national health spending in 2012, grew 4.8 percent to $572.5 billion, a slight slowdown from growth of 5.0 percent in 2011. A one-time payment reduction to skilled nursing facilities in 2012, after a large increase in payments in 2011 due to implementation of a new payment system contributed to the slower growth.
Medicaid: Total Medicaid spending grew 3.3 percent in 2012 to $421.2 billion, an acceleration from 2.4-percent growth in 2011. The relatively low annual rates of growth in Medicaid spending in 2011 and 2012 can be explained in part by slower enrollment growth tied to improved economic conditions and efforts by states to control health care costs. Federal Medicaid expenditures decreased 4.2 percent in 2012, while state and local Medicaid expenditures grew 15.0 percent—a result of the expiration of enhanced federal aid to states in the middle of 2011.
Private Health Insurance: Overall, premiums reached $917.0 billion in 2012, and increased 3.2 percent, near the 3.4 percent growth in 2011. The net cost ratio for private health insurance —the difference between premiums and benefits as a share of premiums —was 12.0 percent in 2012 compared with 12.4 percent in 2011. Private health insurance enrollment increased 0.4 percent to 188.0 million in 2012, but still 9.4 million lower than in 2007.
Out-of-Pocket: Out-of-pocket spending grew 3.8 percent in 2012 to $328.2 billion, an acceleration from growth of 3.5 percent in 2011, reflecting higher cost-sharing and increased enrollment in consumer-directed health plans.
Source: Centers for Medicare & Medicaid Services. (2014). National Health Expenditure Data Highlights. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf
NHE (1960-2010) Graphical Representation
During the earlier periods, the out-of-pocket, as well as private and third-party healthcare insurance plans, were dominant before Medicaid and Medicare took over. From the graph above it is evident that costs of healthcare have consistently increased over the years. The increase is not backed up by economic growth as the healthcare cost has increased by 8.2% compared to the per capita income over the same period. The annual per capita growth rate has decreased from approximately 12% in the late 1970s to about 5.5% from 200 to 2010 (Centre for Medicare and Medicaid Services, 2010).
Analyzing changes in expenditure sources
Out-of-pocket costs would fluctuate over the year, and these fluctuations may be influenced by expansion, which affects the net consumption level. The cost of health insurance is usually calculated once a year. Fees for premiums are paid by consumers on an annual basis. Changes are frequently based on the inconstancy of insurance plans and the economy’s annual spending statement. Medical coverage expenses would also have an impact on third-party payers. Changes occur throughout the year and are impacted by a variety of causes, including government and political considerations. Consumption during the year would be determined by economic forces. Compared to all the national healthcare costs, the out-of-pocket costs increase by 1.8% in 2010 compared to 0.2 increase in the previous year. (Centre for Medicare and Medicaid Services, 2010). The rise in out-of-pocket costs is related to increment in cost sharing in specific health care plans and los lack of adequate coverage.
Interpretation Changes and Societal Factors
The cost of healthcare varies depending on a person’s gender and age. Adults aged 65 and over tend to have the highest healthcare costs. As society’s income rises, so does the amount of spending on healthcare costs. Healthcare is critical, and advancements in innovation and research can help deliver better service (Short, 2011). Long-term, this continual innovation improves health, but also puts society to the test in terms of finding ways to cover the higher expenditures. Ensuring that the healthcare prices fall close to the overall economic growth rate may necessitate the creation of cost-cutting initiatives as well as the use of innovative technologies and efficient procedures. Some societal factors that determine the healthcare costs also include; Income, education and tradition. Income plays a great role in accessing of healthcare because high incomes means that people can access quality healthcare services. The higher the poverty level, the lower the savings that can be used up in healthcare. The inequality in income distribution is the main reasons why there is health inequalities amongst individuals. Education also plays a great role as most educated people are informed and able to gather information faster and access healthcare plans unlike the uneducated people. The other societal factor is culture and traditions that influence decisions to seek professional treatment or look for local treatment. Some culture has different perceptions when it come to hospital and prefer herbal treatments.