Current Economic State of Healthcare in the United States

Paper Type:  Research paper
Pages:  6
Wordcount:  1430 Words
Date:  2022-11-28

The overall economy of the United States is likely to "decelerate at the end of 2018", however, momentum appears to remain on a downward trend in Q1 of 2019. The economic growth of the United States should slow due to several headwinds, most probably the health sector and fiscal stimulus and reduced global growth. The United States Healthcare System has been boosted by high financial injection to the health sector. In the past years, the U.S healthcare expenditure seemed to be controlled, and this made the economy of the United States to slow down. (Marjoua, 2012). "The percentage of the GDP spent on healthcare was flatter than a "Nebraska cornfield" in November. "Here is a trend of United States expenditure between 2009 and 2013 (Schieber, 2018). For example in 2009 United States spent 17.4 percent of the GDP and in 2013 they used 16.9 percent of their GDP on health sector.

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The pattern shows that the spending of the United States on healthcare has been at a low rate. However the expenditure of the United States has risen, and currently, it is at 17.8% of GDP. The growth started back from 2015 and Medicare took the largest share.

Brief History of Healthcare Finance

The history of United States healthcare finance began in the 19th century and has progressed down to the 20th century (Marjoua, 2012). In the 1900s, the patient care and funding were purposely meant to prevent diseases, through "recommending" healthy diets, offering best nursing care, performing necessary surgery and praying for quick recovery (Marjoua, 2012). The working class was not supported in terms of social insurance. In 1915 there was a limited cover for working class; however the covered those workers who earned less than $1200 a year.

According to (Bate, 2014), in the early 1920s the costs of health care especially those linked to hospitals began to increase slowly. From 1919 to 1929 the hospital costs rose from 7.6% of the total family medical to 13%, as per the "Historical statistics of the United States" the average yearly earnings in the health sector in 1926, As that the monthly budget was $1473. (Bate, 2014). Those households earning annual incomes of $2000-3000 and had no extra expenses in terms of the hospital bill, spent an average of 67% of revenue on Medicare (Marjoua, 2012). While those who had hospital cover spent an average of 8-13% of annual income. Estimate expenditures on the health sector were $3650 million by 1929.

During the 20th century the reforms, there were reforms in the medical insurance (Omnibus Budget Reconciliation Act) which was meant to assist the states in controlling the Medicare supplementary insurance (Marjoua, 2012). In 1992 the president of US back then announced a health insurance plan which involved incentives for those in the poor household to buy private health insurance and tax credits for families whose incomes were up to $80,000 (Marjoua, 2012). In the late 20th century there was a plan to provide "health security" which proposed employers to pay 80% of premiums to their workers and the family share of premiums were not to exceed 3.9%. There was also a subsidy of public funds for families who earned low wages.

There was an act which was enacted by the Balanced Budget Act which introduced numerous legislative initiatives that affected the health insurance industry.

In the 21st century, the Congress passed the "long term care security act" that provided for the creation of a program under which the long term care insurance would be available to federal employees (Marjoua, 2012). There was a development in the year 2003, where the Congress passed the "Medicare Prescription Drug, Improvement and Modernization Act" which aside from providing cover for the elderly, it also developed a way through consumers to cater for their health care costs (Marjoua, 2012), which is meant as health savings account. Which can help to cater for the bills and the insurance policy for larger medical bills (Marjoua, 2012)? There was an act which was passed in 2005 known as the Deficit Reduction Act which developed elements of consumer-driven proposals known as health opportunity accounts for "Medicaid patients."

Current US Spending on Healthcare based on GDP

"The National Health Expenditure Accounts (NHEA)" show the official projections of the total well-being expenditure in the United States, it dated back to 1960, the NHEA projects yearly expenses of health care goods and services, public health activities, state administration and investment linked to health care (Schieber, 2018). The U.S. state spending on health care grew with 3.9 percent in 2017, reaching $3.6trillion which includes $10,740 per person, which accounts for 17.9% of Gros Domestic Product of the US expenditure.

The United States tends to spend more on an individual's health care and fund other related expenses than lower countries with low income (Schieber, 2018). For example, health spending per individual was $10,224 two years ago which was 28 percent higher than Switzerland as per the graph below.

Fig 1: How does Health Spending in the U.S Compare with other Countries

What is the Current HealthCare Plan in the U.S.?

The United States has an exclusive health care system than other industrialized countries. However it does not have a uniform healthcare system, it does not also have a universal health care coverage and only made to the law, the act was put in place to mandate healthcare coverage for almost everyone. (Bate, 2014). The system of health care used in the U.S can be described as a hybrid, for example, five years ago the spending by US health care system constituted 48 percent, and most of the funds originated from private funds, with 28 percent coming from household and 20 percent arising from private businesses.

In 2014, approximately 284 million people in the U.S which represents 90 percent of the U.S population were covered by health insurance, with roughly 67 percent of workers covered by private insurance plan. Among those insured, 116 million people representing 35.9percent of the population got health coverage through the U.S. state in 2014 (Bate, 2014). Those who were covered through Medicare constituted of 50.6 million, Medicaid represented of 62 million, and the final group which were the "veterans and other military care" got 14.20 million, the saddest thing is that nearly 33million people in the U.S lacked health insurance plans.

The main problems that American lament about in the health sector is higher costs of accessing both public and private health care services, and that is why the government allocates a lot of percent of its GDP to ensure that public and private health care becomes affordable to an ordinary citizen living in the country.

According to (Marjoua, 2012), In a report revealed by OECD stated that six years ago," the U.S spent $8,713 per individual or 16.5 percent of its GDP on health care which was higher than the OECD coverage which averages at 8.9 percent of GDP per person" (Bate, 2014).Other countries with higher percentage GDP

According to (Schieber, 2018), allocation on health is the Netherlands and Switzerland at 11.4 percent and 11percent. Followed closely by Canada and Mexico who spent 10.3 percent and 6.2 percent respectively.

Fig 2: High Expenditure per Capita, 2013

Future Predictions of Healthcare Finance in the U.S

The health care system predicts to look at shaping the future of care and establish a sustainable and smart looking society, which can collaborate well with key players and stakeholders in the health sector. Their financial model is shaped at ensuring everyone is covered by various state program which will help all people to access better health services (Victor, 2011). In the proposed "Free-for service" (FFS) model the health systems in the US seek to generate more revenue or profits after attracting more volume of patients (Victor, 2011). Through their credit or subsidy programs, this will help them retain the loyalty of the patients and build a brand and a reputation which focuses on ensuring the nation is healthy.


It is evident that United States uses a lot of its GDP to fund the health sector with a tune of 16.5% of GDP going to provide funds in the health sector this has enabled many citizens to access health care services at a more affordable cost in private sector and in public sector at free access using the Medicare, Medicaid cover.


Marjoua, Y., & Bozic, K. J. (2012). A brief history of the quality movement in US healthcare. Current reviews in musculoskeletal medicine, 5(4), 265-273. Retrieved from

Schieber, G. J., & Poullier, J. P. (2018). International health care expenditure trends: 1987. Health Affairs, 8(3), 169-177. Retrieved from

Bate, P., Robert, G., & Bevan, H. (2014). The next phase of healthcare improvement: what can we learn from social movements?. BMJ Quality & Safety, 13(1), 62-66. Retrieved from

Victor, C. R. (2011). Health and health care in later life (p. 122). Milton Keynes: Open University Press. Retrieved from

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Current Economic State of Healthcare in the United States. (2022, Nov 28). Retrieved from

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