Economics



[Name of the Professor]

[Name of the Course]

Economics

Impact of Health Care Cost on Economy

Health care spending has a very complex and multidimensional relationship with the economy of a country. Increase in the spending can be viewed from two perspectives. It means that it can be looked as a burden on economic growth or as one of the main drivers of the local and sectorial prosperity. The recent trends in the spending of health care shows that it is increasing with a faster rate as compare to increase in the rates of GDP, inflation and population. From World Health Organization it is seen that united States spend 7,146 dollar as per capita health care and 15.2% of the total GDP on health care. It is the highest amount of spending that United States is doing for their health care system and no other country of the world spends so many amounts on the health care (Newhouse, 1993).

According to economist increase in the health care spending has negative impact on the economy of a country. If the health care spending increases the GDP and employment rate goes down and it give raise to inflation. It is not only that it has negative impact only it depends upon the perspective if economists. According to some economist the health care spending does not have neither negative nor positive impact. Some economists also believe that health care technologies and treatments are improved from the increase in health care spending (Newhouse, 1993).

According to the above that it is seen that there is continues increase in the health care spending. The factors which contribute in the spending of health care are health care utilization, price inflation, new medical technology and demographics. Mostly it is seen that there is a negative impact of increase in health care spending on the economic growth and on other factors of the economy. According to the survey which took place in 2004, it was found that all the CEOs and business leaders are concerning about the spending on the health care (Newhouse, 1993).

The reason behind their concern is that the spending on health care impact on the federal budget. Many employers are now making their strategies according to rise in health care spending. They are seeking contribution from their employees and providing them different kinds of coverage. This would reduce the household income. Some take rise in health care spending from other point of view. According to them the quality of health is increased by the rise in health care spending. Another benefit is that technology is also improved and new treatments are provided to individuals in large numbers. Technology is always expensive but on the other the quality of service is also improved (Monaco & Phelps, 1995).

At local level the increase in health care spending s very beneficial and it provides great help to the individuals. Due to increase in the health care spending more jobs are provided in health care organizations, wages of employees working in health care system is also ...