Health Care Spending

Health care and its associated costs have become the focal point of national debate as lawmakers and citizens alike seek ways to guarantee health care services that are safe, effective, and affordable. Consider the following:

Health expenditures in the United States neared $2.6 trillion in 2010, over ten times the $256 billion spent in 1980. Since 2002, employer-sponsored health coverage for family premiums have increased by 97%, placing increasing cost burdens on employers and workers….Total government spending has increased considerably, straining federal and state budgets. In total, health spending accounted for 17.9% of the nation’s Gross Domestic Product (GDP) in 2010 (Beamesderfer & Ranji, 2012).

There is an ongoing need to strike a balance between the clinical imperatives associated with patient care and the financial realities under which health care organizations operate. As health care is an issue that touches every individual in the country, the levels of health care spending have a direct effect on the well-being of all stakeholders.

In this week, you examine the current financial state of health care in America and how it influences your daily decisions as a nurse manager.

No one is immune to the rising costs of health care. Consider the following news stories:

  • “In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job” (Halle & Seshamani, 2009, Introduction, para. 1).
  • “President Obama’s health care law is putting new strains on some of the nation’s most hard-pressed hospitals, by cutting aid they use to pay for emergency care for illegal immigrants, which they have long been required to provide” (Bernstein, 2012, para. 1).
  • “Doctors in America are harboring an embarrassing secret: Many of them are going broke. This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists…Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat” (Kavilanz, 2012, para. 1, 2, 5).

In this Discussion, you examine the overall state of health care costs in America, the different factors impacting the finances of health care organizations, and the effect of rising costs on all stakeholders.

To prepare:

  • Review the Learning Resources on the level of health care spending in the United States.
  • Consider the ramifications of continuing at this level of spending as well as issues involved with reducing spending.
  • Reflect on which stakeholders (payers, providers, and the general population) should be responsible for making decisions on health care spending.

Post a 2 page assessment of the consequences (on payers, providers, and the general population) of continuing current levels of health care spending in the United States as well as the potential consequences of reducing the level of spending. Explain which stakeholders should make health care spending decisions and why.


Required Readings

Baker, J. J., Baker, R. W., & Dworkin, N. R.  (2018). Health care finance: Basic  tools for nonfinancial managers (5th ed.). Burlington, MA: Jones and  Bartlett Learning.
Chapter 1, “Introduction to Health Care Finance” (pp. 3–10)
In this chapter, you are introduced to the four key elements of financial management as well as the two types of accounting. These help set the stage for the weeks to come.
Chapter 5, “Revenues (Inflow)” (pp. 37-45)
This chapter focuses on how health organizations receive revenue for services and highlights the different sources of revenue.

McClellan, M. (2011). Reforming payments to healthcare providers: The key to slowing health care cost growth while improving quality? Journal of Economic Perspectives, 25(2), 69–92.
Copyright 2011 by American Economic Association. Reprinted by permission of American Economic Association via the Copyright Clearance Center.

This article discusses the need for cost control in health care costs, as well as the impact for patients, providers, and physicians. The author highlights provider payment reforms that may be key to promoting quality and cutting costs.

Kaplan, R. S., Witkowski, M., Abbott, M., Barboza Guzman, A., Higgins, L. D., Meara, J. G., & … Feeley, T. W. (2014). Using time-driven activity-based costing to identify value improvement opportunities in healthcare. Journal Of Healthcare Management, 59(6), 399–412.
Copyright 2014 by Health Administration Press. Reprinted by permission of  Health Administration Press via the Copyright Clearance Center.

This article discusses the importance of better outcomes and lower costs when delivering care to patients.

Miller, H. (2011). Transitioning to accountable care: Incremental payment reforms to support higher quality, more affordable health care. Pittsburg, PA: Center for Health care Quality and Payment Reform. Retrieved from

This report provides the myriad options for addressing the growing problem of the cost vs. the quality of health care. The paper presents “middle ground” possibilities as part of a payment reform. These include such approaches as “bundling,” “warranties,” and paying physicians based on an entire patient stay.

Dickson, J. K., Bulley, S., & Oliver, D. (2014). Efficiency and perceptions of cost in healthcare. British Journal Of Healthcare Management, 20(5), 222–226.

Nickitas, D. (2013). Health care spending: the cold, hard facts of cost, quality and care. Nursing Economics, 31(1).

This article discusses the high cost of health care in the United States and how this spending is adding to the federal budget deficit and impacting the finances of American families.

Alliance for Health Reform. (2013). Cost of health care. In Covering health issues (6th ed.). Washington DC: Author. Retrieved from

This chapter discusses the background behind the rising health care costs, the factors that increase costs, and the consequences of attempting to bluntly cut costs. The chapter suggests some solutions, such as increased cost sharing, changes in provider reimbursement, and investing in health information technology.

Alliance for Health Reform. (2012). Medicare. In Covering health issues (6th ed.). Washington DC: Author. Retrieved from

This chapter provides facts on Medicare and offers some background information on the issues surrounding this program. The chapter also discusses current legislation affecting Medicare and potential results on patients, providers, and physicians.

Alliance for Health Reform. (2012). Medicaid. In Covering health issues (6th ed.). Washington DC: Author. Retrieved from

In addition to providing facts and background information on Medicaid, this chapter discusses many facets of the system, including the spending and “dual eligibles” component. The chapter also includes a discussion of how recent legislation has changed the program.

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