Economic Drivers Behind the High U.S. Health Care Costs

Subject: Healthcare Financing
Pages: 2
Words: 650
Reading time:
3 min

Unequal income distribution is a key driver of the United States of America’s high health care costs. Excessive income spending on investment in the healthcare sector plays a crucial role in the overall performance of the economy. The U.S has an unsustainable healthcare cost and growth patterns that are not in line with the prevailing GDP performance. In line with the video, it is clear that economic drivers that include health insurance taxes, advancement in health and Medicare technologies, aging population and rise in chronic ailments and tax administrative burdens highly contribute to the high U.S healthcare costs.

Another aspect of the country’s healthcare system is the poor cost-sharing mechanisms that exist in the U.S healthcare policies and the need to streamline key issues that shape the healthcare system. Combined with bipartisan healthcare policies, U.S economic drivers highly contribute to healthcare costs. Factors like national healthcare and Medicare costs, high and unequal distribution of population and unbearable Medicare prices are issues that contribute to the country’s high healthcare costs.

Impact of the baby boomers

While the baby boomer management strategies may not have immediate impact on the performance of the U.S economy and the growth and development of the country’s healthcare and Medicare systems, it is highly likely that baby boomers would profoundly affect the U.S economy and healthcare system in a number of ways. The baby boomers are likely to highly cost the tax payers as their healthcare cost would continue being a burden to the working class and the relevant government agencies. In the long run, baby boomers would enhance economic growth and lead to low tax rates.

The percentage of the total healthcare spending of Medicare and Medicaid

In line with the information contained in the Reinhardt Video, the total Medicare and Medicaid healthcare spending is 16% of the country’s GDP. This alarming rate is expected to steadily grow if not effectively managed. The high rate is not the source of the healthcare problem but rather an indicator that the current healthcare system and Medicare and Medicaid strategies are not quite effective.

Other nations’ annual increase of healthcare spending

A number of industrial nations have different healthcare spending rates. The United States of America spends more than what most industrialized nations incur on healthcare (Healthcare Sails into the Perfect Storm). The high U.S spending rate is due to the country’s intense use of different medical technologies and high cost of medical and healthcare services. Countries like Japan, New Zealand, Norway, Switzerland, Germany and France spend less on healthcare due to the high level of efficiency and cost effectiveness in their provision of healthcare services. However, in comparison to the expenditure of the U.S, it is evident that the quality of the U.S expenditure is of good quality and objective.

How the Obama Care Plan addresses the rising cost of healthcare

The rising cost of healthcare is addressed by the Obama Care in a number of ways. It focuses on reducing healthcare cost by eliminating the costly aspects of credit rates. As a result, limited credit cards are demanded by the public. The Obama Care also compels physicians in various high cost states to minimize their high spending trends. The streamlining of insurance policies, provision for subsidiary employers, insurance costs and expansion of healthcare for children and Medicare for the aged are strategies aimed at addressing the high cost of healthcare in the U.S.

Lessons learnt from the lecture

I have learnt that the Obama Care is not the ultimate solution to healthcare problems in the United States. However, it is an objective; practical, affordable, accountable and viable solution to the Medicare and Medicaid challenges currently being experienced in the U.S. Healthcare spending is one of the good economic strategies of the U.S economy. Health economics are an appropriate solution to America’s healthcare challenges. Channels of enhancing stable economic growth, better healthcare and wellness standards should be sought.


Healthcare Sails into the Perfect Storm. Ex. Prod. Uwe Reinhardt. New Jersey, Vic.: Princeton University.2009. DVD.