Unnecessary Money Expenditures in Health Services, Research Paper Example

Introduction

The United States healthcare system is the main cause of the economic deficit at the present moment of time.  In 2009 the US government wasted 5 percent of his overall capital due to a wide range of malpractices in the healthcare field. The federal medical program Medicare spent several billions of dollars on wrong recipients who can be described as unscrupulous people that have no conscience when it comes to spending Americans money.

The matter is that some Medicare beneficiaries spend money without being aware of the collateral damage that will be caused. There are many other problems in the healthcare system that cause enormous financial damage to the federal budget and huge losses of taxpayers’ money that would be well spent in more necessary fields. The situation has not changed drastically from the end of the 20^th century because of the noted steady increase in prices for medical care at a pace considerably exceeding the level of price increases for any other consumer products. However, the beginning of the 21^st century was marked by the shocking raises in pricing both for medications and healthcare services, which cannot help producing its negative impact on the well-being of the whole nation and the growing budget deficit.

The necessity of a revolutionary healthcare reform has been recognized and all federal effort is now being directed at detecting the main pitfalls in the contemporary system of medical care delivery – as soon as all negative influences on it are clearly understood and assessed from an economic point of view, adequate measures will be taken. This is why nowadays the growing need to take a critical view at the healthcare system of the USA is evident, and this paper will be dedicated to the discussion of the most burning issues of waste and irregularities in the modern state of affairs in medicine as well as to defining the main directions of action that will be taken in accordance with the plan to restore the healthy, coherent and reasonable system of healthcare provision.

Statistics and Reasons for the Modern Financial Waste in Healthcare Delivery

The 2009 reports show the growing concerns about skyrocketing figures of expenditures for healthcare that inevitably become the additional burden for taxpayers of the USA. According to a number of investigations conducted in the sphere of financial waste, over-spending nowadays reaches from $700 billion to $1,2 trillion annually, which is nearly a half of all financial resources allocated to medical care by the government (Perr, 2009; Kavilanz, 2009). The improper application of funds alone takes up to $100 billion annually, which is unacceptable due to its scale and negative financial impact on the overall funding of the healthcare system (Thompson, 2009). Nearly 25% of the total budget of medical institutions are spent on billing and administration, which signals about the improper organization of the inner structure of medical organizations that has to be improved and reformed first of all. Thus, the assumptions on waste experienced by the federal government annually are accompanied with a set of conclusions that have been made on the set of the most troubling spheres causing the heaviest waste and needing urgent attention. Judging from the level of seriousness and referring to the PricewaterhouseCoopers’ Health Research Institute report, there have been six main reasons for financial losses found in the modern healthcare system.

The first reason is conducting too many tests and examinations in modern healthcare institutions – independent analysts argue that a large portion of them can be skipped, saving $210 billion for the nation’s budget. The common opinion is that the excessive tests are prescribed either because of the doctors’ concern with the patients’ liability or for the sake of their own profit. The main fear eliminated by doctors this way is the malpractice suits that can be submitted against them in case they fail to provide the sufficient health care for their patients, causing the defensive medicine practices in the US hospitals (Perr, 2009). The main ways to fix the problem are seen in legislative measures for capping malpractice awards and to increase the patients’ awareness of the financial losses that accompany their full, often unnecessary, examinations. Though the US President Barack Obama supports full examination practices for the sake of well-being of the nation, there is still a set of ways to make examinations and tests more appropriate and less costly (Kavilanz, 2009).

The second problem faced by the modern medicine is processing of inefficient claims. Every insurer has its own insurance form, so the medical institution officials waste too much time and money to fill out the forms to get payments from them. According to the discussed report, automation in this field can save the budget from $210 billion expenditures annually (Kavilanz, 2009).

The third problem to deal with is excessive usage of emergency rooms (ER) as a clinic. This problem is the most disputable one because the ER remains the only place to which an uninsured patient may turn in case his or her state of health is rapidly worsening and they have no way out but to turn for immediate medical help. These practices were acceptable as long as the ER usage was limited to the emergency cases, but nowadays the extreme over-usage of ER services is witnessed. The most threatening problem is that once the patients have been rendered medical help, it is next to impossible to make them pay for those services, which causes sufficient financial losses of about $14 billion. What is even worse is the fact that medical institutions try to return those financial expenditures wasted on uninsured patients in ER, so they try to impose that financial burden on those who pay for their services in cash, raising prices considerably and causing patient disapproval (Kavilanz, 2009).

Medical errors represent the forth major problem with the health care in the US. They cost the country about $17 billion of the federal budget annually. The way out from such an unappealing situation is seen in the automation and computerization of medical systems, health records and the assignment of electronically counted medical dosages, which will eliminate the possibility of making suchlike mistakes (Kavilanz, 2009).

Discharging patients too soon, which can be called medical negligence, is also worth consideration. Annual losses from this malpractice account for the $25 billion loss for the national budget and result from too early discharges of patients, which further on leads to the aggravation of their health status and returning to the hospital. Such repetitive treatment practices are too expensive for the US, so they have to be properly handled in the course of doctors’ interactions with their patients and more thorough estimation of their state of health (Kavilanz, 2009).

Finally, the sixth problem that causes a $3 billion waste is the increase of healthcare associated infection cases in the US medical institutions. The situation can be fixed with the help of introduction of stricter hygiene requirements in medical institutions, which is one of governmental concerns nowadays (Kavilanz, 2009).

Devingne (2009) refers to the same problems that are experienced by the modern health care delivery system, adding some considerations of secondary problems in medical care in his reference to the consultancy Pricewaterhouse-Coopers report:

“Other areas of waste mentioned in the report are “up to $493 billion related to risky behavior such as smoking, obesity and alcohol abuse, $21 billion in staffing turnover, $4 billion in prescriptions written on paper, and $1 billion in the over-prescribing of antibiotics” (Davingne, 2009).

As Fox (2009) also notes, one of the burning issues in the US healthcare system is the contemporary paper-based system of healthcare records existing in the majority of medical institutions nowadays despite the fact that the USA is fairly considered one of the most advanced economies. The benefits of computer-based systems for unification and sharing of records have been already recognized in many spheres, and the perspective savings resulting from the application of such systems in healthcare delivery organizations cause no doubts as well. According to the latest estimates, the financial losses from paper-based records equal 6% of the overall over-spending, which is in itself a considerable sum of money. The reasons for such waste are double tests and examinations that have to be held in various institutions to which the patient turns, whereas the computer-based system of records and nationwide access to medical records of all patients would eliminate the necessity of these tests at all. In addition, time expenditures for physicians are also stumbling – American doctors spend about 8 hours a week for paperwork, which is a huge loss of time that could have been spent on servicing the patients (Fox, 2009).

The Main Groups of Population Badly Influenced by the Unstable Healthcare System

According to the opinion of Fox, Yucel and Taylor (1993), there is a great impact on the population of the US produced by the instability of the medical care system. Rising prices and the uncertainty that various groups of population feel about the upcoming years, possible changes in pricing and procedures of healthcare delivery affect the consumption of healthcare considerably. Looking deeper into the problem, one can state that the groups affected this way can be distinguished as follows: politicians, citizens and businessmen (Fox, Yucel and Taylor, 2003).

The first group influenced is the citizens of the US – they have fears as for the healthcare system because they are not sure about what future has in store for them and whether they will be able to pay for the medical care that is obviously necessary for every person in the world:

“This sharp increase in health care prices has led consumers to fear that they are being priced out of the market for health care. Publicity on the 35 million uninsured Americans lends credibility to those fears” (Fox, Yucel and Taylor, 2003).

It is necessary to note that the figure indicating the number of the uninsured pertains to the period of time 15 years ago, and nowadays the statistics of uninsured and underinsured people is much more frightening. This fact proves how strongly the changes in medical care happening in the USA affect its population who become simply unable to fight against the worsening situation and threatening income statistics that prevents them from affording medical care in full.

The second vulnerable group is the US businessmen. The widely-spread practice of healthcare insurance provision in the USA is connected with the employer payment for medical services according to the employment contract. Some years ago the possibility to provide employees with healthcare insurance was much more sustainable, which is unfortunately not so nowadays:

“Rising health care prices also concern business because employers pay a large proportion of the Medicare and Medicaid taxes and 64 percent of private insurance premiums” (Fox, Yucel and Taylor, 2003).

For this reason many employers are urged to reduce the measures of healthcare they can provide for their personnel, and either seize to provide the insurance or provide it in restricted volumes, making employees take care of other medical issues on their own and at their own expense.

The last group to be discussed is the US politicians – they become the key players in the field of healthcare reform and handle the budget deficit and the growing demands for federal financial provision of healthcare:

“Federal expenditures for Medicare, which finances health care services for the elderly, and Medicaid, which finances health care services for the poor and disabled, have been growing more than 10 percent per year since 1985” (Fox, Yucel and Taylor, 2003).

It is also necessary to remember that politicians have been skillfully using healthcare issues and healthcare reform as a part of their political campaigns to win the sympathy of electorate. However, the actions that are taken upon their election are rather limited and the impact is still not clearly felt. For this reason politicians become the target of prosecution and disapproval as a result of the unchanging negative, even catastrophic situation with healthcare delivery.

Conclusion

Thus, as it can be seen from the statistics of the latest research in the field and the historical viewpoint on the problem that was taken more than 15 years ago, there have been no considerable changes in the tendencies that the US healthcare system follows. Prices are growing, waste and fraud have become the most burning issues of today’s reality, which requires urgent attention. It is essential to direct the effort of the federal measures on the legislative level to eliminate the negative influences on billing, the procedures of conducting health records. The vital necessity for transforming the paper-based medical records system into a computer-based one is also evident due to the astounding figures of waste on paper work and double testing that results from loss of paper records of visits of one patient to several medical institutions.

As it has been clearly found out, the high level of instability in the healthcare delivery system has an enormous impact on the well-being of several groups of population and affects such sectors as politics and commerce, which is totally unacceptable. Urgent measures have to be taken to restrict the price growth that raises fear and hesitation in vast groups of population and reduces the percentage of insured people annually because of their inability to pay for their insurance programs and the unwillingness of employers to handle the insurance issues that bring them more and more financial losses with each coming year.

There is no doubt that there are also objective factors producing their inevitable impact on the price growth and increase in expenditures in the US healthcare, such as aging of the population and natural processes in the international market. However, their impact is so insignificant that it can be easily faced by the federal government and overcome successfully, which cannot be said about the subjective factors analyzed in this work. Aggravation of the situation with the healthcare reform can be seen in the interconnection of fraud and waste problems with the financing of reform.

The government has entered a vicious cycle stating that the capital extracted from the unnecessary expenditures portion will be spent on promotion and financing of the healthcare reform, but at the same time the changes in the current state of affairs are impossible without proper financing of institutions that are aimed to fight against over-usage and waste of medical care funds. Hence, it becomes possible to assume that without a fresh look at this interconnection and search of alternative approaches to the problem is the only way for certain steps for improvement of the situation being made in the near future.

References

Delevingne, L. (2009). What Causes $1.2 Trillion Of Healthcare Waste? Business Insider Clusterstock. Retrieved February 11, 2010, from http://www.businessin sider.com/what-causes-12-trillion-of-healthcare-waste-2009-8

Fox, B.J., Jucel, M.K., & Taylor, L.L. (1993). America’s Health Care Problem: An Economic Perspective. Economic Review. Retrieved February 11, 2010, from http://www.dallas fed.org/research/er/1993/er9303b.pdf

Fox, M. (2009). Healthcare system wastes up to $800 billion a year. Reuters. Retrieved February 11, 2010, from http://www.reuters.com/article/idUSTRE 59P0L320091026

Kavilanz, P.B. (2009). Health Care’s Six Money-Wasting Problems. Yahoo Finance. Retrieved February 11, 2010, from http://finance.yahoo.com/insurance/article/ 107498/health-care-six-money-wasting-problems.html

Perr, J. (2009). Study Claims U.S. Health Care System Wastes $700 Billion Annually. Crooks and Liars Magazine. Retrieved February 11, 2010, from http://crooksandliars.com/jon-perr/study-us-health-care-system-wastes-700-billion

Thompson, D. (2009). $98 Billion: Embarrassing Wasteful Spending for White House. Retrieved February 11, 2010, from http://business.theatlantic.com/200 9/11/98_billion_embarrassing_wasteful_spending_for_white_house.php