Research Paper on Government Investment in Health: Vital for Economic Growth

Introduction

Investment in the health sector is a vital role of the government as it significantly impacts on the economy. The economic growth rate is directly linked to life expectancy and a healthy population.

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On the other hand, ill-health in a country has numerous financial burdens and has been associated with half of the growth differential between developing and developed countries. Compared to other services and goods, whereby increased spending translates into higher quality, increased spending on healthcare does not necessarily lead to improved health outcomes. There are many reasons for this, one of them being that a considerable proportion of the money directed towards healthcare is wasted (WHO). Other causes include failure to exploit all the available resources through administration and finance fragmentations, irrational programs, mismanagement and misallocation of resources, and weak procurement practices.

The rate of wastage and poor exploitation of resources differs significantly between countries, making some more successful and economical in their usage of resources (WHO). As such, certain countries register better health outcomes that relate to health expenditure, while some have disproportionate health outcomes (Getzen, 2012). Therefore, while raising the allocation for the healthcare sector is necessary, it is also essential to review the utilization of the available resources.

Australian vs. US's Public Health Expenditures

For a better understanding of the differences between the healthcare systems in the US and Australia, it is essential to highlight the sources of funding for both systems. The healthcare system in Australia is funded through public and private means. The Australian government supports the healthcare system through taxation (individuals pay 2-3.5 percent of their monthly income) (Picchi, 2017). In addition to public funding, 6 out of 10 of the total Australian population have private insurance, which enhances the accessibility of services that are excluded from the public health-plan such as dental care. Also, private insurance enables the public to access a wider variety of doctors and hospitals.

On the other hand, the healthcare system in the US is funded by employers (49 percent), individuals (5 percent), Medicaid (16%), Medicare (13%), and other public means (1%), while 16 percent of the total population remains uninsured. Individuals also adopt private insurance to increase their choices and for use during extreme cases. Medicaid is an insurance plan that covers an average of 65 million US citizens based on need, while Medicare targets older adults (over 65) and disabled individuals aged below 65.

Based on different measures, the Australian healthcare system provides better outcomes at a much lower cost than the American one. In the United States, one in ten citizens is uninsured, while the Australian government avails subsidized or free healthcare to citizens as well as individuals with permanent visas. Healthcare funding is provided under the universal healthcare system. In terms of health outcomes, the US suffers the highest disease burden and the lowest level of life expectancy compared to other OECD countries such as Australia (Davis, 2008). Besides, the US reports more top cases of infant mortality and overweight and obesity compared to Australia (Papanicolas, Woskie, & Jha, 2018). This disparity occurs even though the user spends an average of $8,745 per capita on securing healthcare, while Australia spends $3,997 per person, which is less than half the amount paid by the United States (Picchi, 2017). Therefore, the healthcare system in Australia is performing better than that of the United States.

Research shows that the highest proportion of the total expenditure of the United States goes to administrative costs and input prices, including devices and pharmaceuticals. The whole healthcare expenditure in 2016 constituted 17.8 percent of the gross domestic product (Papanicolas et al. 2017). This proportion was extremely high compared to Australia, whose spending was 9.6 percent of the total gross domestic product. Also, despite the top public health expenditure, the US registered the lowest percentage of insured individuals at 90 percent, as other countries including Australia ranged between 90 and 100 percent (Papanicolas et al. 2017). However, the US had a higher percentage of individuals under private insurance (53%). Compared to Australia, the US lacks universal health coverage, making access to healthcare difficult for more needy individuals in the population.

Insights

Based on the observations made above, it is clear that allocating high amounts of money to the healthcare sector is not the solution to improved health outcomes, instead, improving efficiency and adopting universal health coverage for all citizens reduces wastage while promoting better health outcomes (Davis, 2008). One way of increasing productivity is through the elimination of unnecessary expenditures on medicine (WHO). Additionally, the drug in use should be of standard quality and should be used appropriately. Inefficiency also stems from the under-utilization of human resources, technologies, and services. Therefore, practices such as motivating people and maximizing benefits from resources and techniques would be a vital step in the maximization of efficiency. Other ways of enhancing cost-effectiveness and energy would be through the promotion of competence in the length of stay, reducing medical errors, eliminating corruption and waste, and assessing the most critical services (WHO). The adoption of these strategies would result in a near-perfect balance between the cost of healthcare and the health outcomes acquired.

References

Davis, K. (2008). Slowing the growth of health care costs-learning from international experience. New England Journal of Medicine, 359(17), 1751-1755.

Getzen, T. E. (2012). Health economics and financing. Wiley Global Education.

Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.

Picchi, A. (2017). Trump says Australia's healthcare beats the US's: he's right. Retrieved from https://www.cbsnews.com/news/trump-says-australias-health-care-beats-the-us-hes-right/

WHO (n.d.). More health for the money. Retrieved from https://www.who.int/whr/2010/10_chap04_en.pdf