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TODAY\'S HEALTH CARE SYSTEM: COST
Both per capita and as a percent of gross domestic product (GDP), we spend more on health care than does any other nation, yet, unlike the rest of the industrialized world, we do not provide access for our entire population. In 1998, we spent over 1.1 trillion dollars on health care, up nearly 6 percent since 1997. This translates into nearly 15 percent of our GDP, up from 5 percent of the GDP in 1960. There are a variety of theories as to why health care costs continue to spiral upward. Most explanations are multifactorial and include at least the following: excess administrative costs; duplication of services; an aging population; growth, use, and demand for new diagnostic and treatment technologies; an emphasis on crisis-oriented care instead of preventive care; inappropriate utilization of services by consumers; and related factors.
Our system has more than 2,000 health insurance companies, each with different coverage benefit structures and different administrative requirements. This lack of uniformity prevents our system from achieving economies of scale (bulk purchasing at a reduced cost) and elimination of administrative waste realized in countries where there is a single-payer delivery system. The Health Insurance Association of America (HIAA) has stated that commercial insurance companies commonly experience administrative costs greater than 10 percent of the total health care insurance premium, whereas the administrative cost of the government\'s Medicare program experiences less than 4 percent. The expenses related to administrative waste in the private sector contribute to the overall high cost of health care and are forcing companies to require employees to share more of the costs, to cut back on benefits, and to drop some benefits altogether. These costs are largely passed on to consumers in the form of higher prices for goods and services.
The declining availability of health insurance coverage has led to a rise in the number of Americans who are uninsured or underinsured. These people are unable to access preventive care and seek care only in the event of an emergency or crisis. Since the cost of emergency care is extraordinarily high, these individuals often are unable to pay, and the cost is absorbed by those who can pay - the insured or taxpayers. This process is known as cost shifting.
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GENERAL HEALTH
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