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The United States currently has the highest per capita spending worldwide, although preliminary evidence suggest that the healthcare burden will increase further in the future. According to Chernew et al. (2021), healthcare spending in America accounted for 17.7% of the national GDP in 2018, which was almost twice the average amount in other OECD nations. Additionally, the Commonwealth Fund’s projections indicate that the amount will reach 19.7% of the GDP or $6 trillion, leading to higher premiums and out-of-pocket costs for the citizens and state governments. In particular, addressing the rising healthcare costs is necessary because they increase the economic burden on families and business organizations, reduce patient access, compromise the quality of care for many individuals, and threaten citizens’ financial security. Overspending on healthcare has negative consequences because it reduces the available funds to support crucial federal initiatives such as Medicaid and Medicare that provide insurance coverage for disadvantaged populations. Other priority areas, such as transportation and education, also receive less funding from the government due to the increased spending on healthcare.
One of the strategies that can be implemented to regulate healthcare costs is capping provider rate increases by restricting price increases and limiting paid prices in state-controlled markets. Additionally, value-based models that involve establishing benchmarks against cost growth per capita and measuring performance based on the identified standards will help in reducing healthcare costs by making the healthcare providers accountable for attaining the targets (Shrank et al., 2021). Limiting the prices of prescription drugs and outlining penalties for exploitative pricing on therapeutics will also help in curbing the rising healthcare costs by ensuring that patients access affordable medicines for their conditions. State governments can also control healthcare costs by prohibiting anticompetitive contracts and mergers to avoid the negative impacts of healthcare amalgamation on provider pricing. The governments should also consider improving behavioral and mental health services to increase efficiencies by reducing the burden on inpatient services and emergency departments.
References
Chernew, M. E., Cutler, D. A., & Shah, S. A. (2021). Reducing health care spending: What tools can states leverage?The Commonwealth Fund.
Shrank, W. H., DeParle, N-A., Gottlieb, S., Jain, S. H., Orszag, P., Powers, B. W., & Wilensky, G. R. (2021). Health costs and financing: Challenges and strategies for a new administration.Health Affairs, 40(2), 235-242.
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