Funding the Rising Cost of the U.S Health Care

Fundingthe Rising Cost of the U.S Health Care

Fundingthe Rising Cost of the U.S Health Care


Currently,the rising the cost of health care in United States has a greatimpact on its economy. Health care insurance companies are thewillpower of any munity due to the benefits they give to thecustomers. Citizen subscribed to insurance can effortlessly deal withchronic and acute diseases. However, the growth rate in fundinghealth care has outpaced the rate of growth in inflation, grossdomestic product (GDP), and population. Correspondingly, the economyhas nation’s economy has been affected either positively ornegatively.

Fundinghealth care services results in better health care for citizenshence, high labour market productivity. When people are healthy, theycan work for long hours compared to unhealthy people, some of whomwho cannot even get outside their houses. According to Price andEibner(2013),for the last thirty years, increased healthy life accumulated up tothree trillion dollars annually to national wealth. Accordingly,increased labour has increased employment and incomes in health carecentres and their affiliates. Holahan(2012) urges that funding the rising cost of health care naturallyfacilitate the growth of health centres and other related sectors,both in terms of income and employment for workers in the sectors. Arecent monthly newspaper supports this hypothesis. It reports that,for the last ten years, there have been creations million of jobs inthe health care sectors, and other health-related sectors such ashealth insurance and pharmaceuticals.

Onthe other hand, there are adverse impacts of funding the rising costof health care in the economy. For instance, the high cost raisesprices, reduces investments, infrastructures, education, andcompetitiveness of the health centres in the international market.Secondly, the government increases it borrowing in order to fundpublic health care expenditure hence, fuelling inflation. Thirdly,if citizens were left to finance their health care services, theywould have less income to spend on other needs. High health carecosts deplete retirement savings and reduce health care access.Ultimately, the taxes that the government use to fund health careservices suppress the economic growth, as well as reduce theafter-tax income of households and firms.


TheAffordable Health Care Act (ACA) has influenced the US economy.Health Insurance Company and health care centres are examples ofsectors that the Affordable Care Act has made some changes. TheAffordable Care Act has enabled more than ten million Americancitizens to access health insurance. According to U.S Department ofHealth and Human Services research, increased medical services aremodest (Holahan,2012).In the meantime, the health system is also in a position to absorbthese increases. Therefore, this has called for the need ofsufficient hospitals, doctors, and other health providers to meetthis demand. Currently, the US government is implementing thesechanges by incorporating technological equipments such astelemedicine.

Since2014, the Affordable Care Act has influenced the health insurancecompanies by expanding and subsidizing coverage for businesses andindividuals and providing more benefits that are comprehensive. ACAcovers a greater percentage of the total costs. Previously, mostinsurance policies only covered fifty-five to sixty percent of thetotal cost benefits. The consumer was then responsible for the restpercentage of the cost. However, ACA plan covers a minimum of sixty,seventy, eighty, and ninety percent of coverage costs under bronze,silver, gold, and platinum plans respectively. Furthermore, ACAcovers a wider range of benefits such as vision care, paediatricdental, and prescription drugs. However, the younger beneficiarieslost some of their advantages. The ACA varies it premium based on theage of an individual. Prior ACA, young people were charged threetimes less compared to the older people. However, under ACA, thecharge younger people are five times less compared to adults.


Withno doubts, the Affordable Care Act, ACA, has a broad and long-termimplication for Americans. Although the Act is designed to increasehealth-care access and lower health care costs, there are pros andcons of using private insurance versus the new affordable healthinsurance system. According to the study conducted by NationalMonitor, implementation of ACA coupled with other health issues suchas nation’s aging population, is likely to lead to a shortage ofprimary care physicians in the future (Blumenthal and Collins, 2014).Further, the study shows that the visits to the primary carephysicians offices will increase hence, straining the system. Inthis case, private insurance stands to be the best. In addition,there is a likelihood of high drug costs. Eibneret. al. (2013), urges that pharmaceutical companies are likely to becharged highly in the future to replace the “donut hole” inMedicare. Correspondingly, the cost of drugs will increase. On theother hand, there are advantages of using affordable health insurancesystem over private insurance due to increased coverage, reducedhealthcare costs, reduced budget gaps, higher taxes, and lowerdeductions. More than thirty million American cannot afford privateinsurance. The introduction of affordable insurance has increasedcoverage where more than three million American between nineteen andtwenty-five years have been added to their parents. The congressionalbudget office states that the affordable insurance system reduceshealthcare costs, as well as makes health care services accessible tomany. Insured clients do not have to wait until their ailments areextreme or for emergency cases. Further, Congressional Budget Officeurges that affordable insurance reduce the national budget because ofassociated taxes and fees Acts.


Theprimary goal of Affordable Care Act (ACA) is to reduce the number ofuninsured Americans by offering them an affordable coverage optionsthrough new Health Insurance Exchanges and Medicaid (U.S Departmentof Health and Human Services, n.d). According to Urban Institute’sHealth Insurance Policy Simulation Model, expansion of ACA varyacross states based on the number of insured and coverage level(Blumenthal et. al., 2014). Overall, implementing cost of ACA ismodest, unlike the federal funds. Therefore, states are likely tohave reduced net budget savings. Following the Supreme Court decisionin 2012, every state opts to decide whether to adopt Medicaidexpansion. The decision made is likely to influence health coveragefor the low-income population. However, saving and incremental costsof implementing ACA expansion vary from one state to another.According to research, implementing ACA would reduce Medicaidspending in ten states. These include the states that had alreadyexpanded their coverage to the poor adult prior ACA. They wouldreceive high federal matching payments of an adult with no dependentthat was equivalent to regular Medicaid. In addition, the researchshows that implementing ACA would increase the Medicaid spending intwelve states. Expanding ACA means that providers will receive morerevenue and states will spend less on healthcare services.


Blumenthal,D., &amp Collins, S. (2014). Health Care Coverage under theAffordable Care Act – A Progress Report — NEJM. Retrieved May 8,2015, from

Holahan,J. (2012). The cost and coverage implications of the ACA Medicaidexpansion: National and state-by-state analysis.

Price,C. C., &amp Eibner, C. (2013). For states that opt out of Medicaidexpansion: 3.6 million fewer insured and $8.4 billion less in federalpayments.HealthAffairs,&nbsp32(6),1030-1036.

U.SDepartment of Health and Human Services. (n.d.). About the Law.Retrieved May 8, 2015, from