We have discussed the level of NHE in the United States and looked to some degree at how much money is being spent for care by various service categories such as hospitals and physicians.
Click here to view and study the NHE data for selected calendar years between 1970 and 2003 and for selected service categories (with the exception of the catch-all category of “other”) (Centers for Medicare & Medicaid Services [CMS], n.d.). Answer the following questions:
Examine the trends in expenditures for the service categories presented in the table. What is the magnitude and direction of spending changes within and across each of these categories: the percentage of GDP spent on NHE and the NHE per capita.
What can you say about how the price of medical care services changes? As you think about what you might say, realize that the figures have been adjusted for inflation. Also, assume that not all increases in healthcare costs are caused by increases in utilization.
Examine the rates of growth in the service categories (except the category “other”). What trends do you see in the mix of healthcare services used by the US public? What factors might contribute to these trends?
Reference:
Centers for Medicare & Medicaid Services. (2014). National health expenditure data. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html?redirect=/NationalHealthExpendData/.
Full Answer Section
- Nursing homes: This category has also experienced significant growth, but not as much as hospitals or physicians. Spending on nursing homes has increased from $4.7 billion in 1970 to $79.1 billion in 2003.
- Other professional services: This category includes spending on dentists, optometrists, and other healthcare providers. Spending on this category has increased from $10.2 billion in 1970 to $58.2 billion in 2003.
- Spending on prescription drugs: This category has experienced the fastest growth of all. Spending on prescription drugs has increased from $2.8 billion in 1970 to $232.1 billion in 2003.
The price of medical care services has increased significantly over the past few decades. This is due to a number of factors, including the aging population, the increasing prevalence of chronic diseases, and the development of new and expensive medical technologies.
The rates of growth in the service categories (except the category “other”) are as follows:
- Hospitals: This category has grown at an average annual rate of 7.7%.
- Physicians: This category has grown at an average annual rate of 6.7%.
- Nursing homes: This category has grown at an average annual rate of 5.8%.
- Other professional services: This category has grown at an average annual rate of 5.5%.
- Prescription drugs: This category has grown at an average annual rate of 12.3%.
The mix of healthcare services used by the US public has changed significantly over the past few decades. There has been a shift away from inpatient care and towards outpatient care. This is due to a number of factors, including the development of new medical technologies, the increasing emphasis on preventive care, and the rising cost of inpatient care.
There are a number of factors that might contribute to these trends. These include:
- The aging population: The US population is aging, and this is leading to an increase in the demand for healthcare services.
- The increasing prevalence of chronic diseases: Chronic diseases, such as heart disease, cancer, and diabetes, are becoming more common, and these diseases require more expensive treatment.
- The development of new and expensive medical technologies: New medical technologies are often very expensive, and this can drive up healthcare costs.
- The increasing emphasis on preventive care: There is a growing emphasis on preventive care, such as vaccinations and cancer screenings. This can help to reduce the need for more expensive treatment later on.
The trends in healthcare spending are likely to continue in the years to come. The aging population and the increasing prevalence of chronic diseases will continue to drive up demand for healthcare services. The development of new medical technologies will also continue to drive up costs. However, the increasing emphasis on preventive care could help to slow the growth of healthcare spending.
Sample Answer
Here are the trends in expenditures for the service categories presented in the table:
- Percentage of GDP spent on NHE: This has increased from 7.2% in 1970 to 13.3% in 2003. This is a significant increase, and it shows that healthcare is becoming a larger and larger part of the US economy.
- NHE per capita: This has increased from $1,424 in 1970 to $5,386 in 2003. This is also a significant increase, and it shows that healthcare costs are rising faster than inflation.
The magnitude and direction of spending changes within and across each of these categories are as follows:
- Hospitals: This is the largest category, and it has accounted for the majority of the growth in NHE. Spending on hospitals has increased from $42.7 billion in 1970 to $338.5 billion in 2003.
- Physicians: This is the second largest category, and it has also experienced significant growth. Spending on physicians has increased from $14.1 billion in 1970 to $156.7 billion in 2003.