HA415: Demonstrate An Understanding Of The Relevance Of ✓ Solved

HA415: Demonstrate an understanding of the relevance o

HA415: Demonstrate an understanding of the relevance of economic concepts within the healthcare sector. Describe trends in the costs of care for treating at least three diseases or conditions. Examine the burden of health care costs on businesses and governments and the extent to which Americans can afford needed care. Analyze trends in the efficiency of care delivery and the competitiveness of the delivery system and the key factors in keeping costs down. Recognize that this is a policy paper and not a clinical paper.

Paper For Above Instructions

Abstract

This policy paper summarizes recent trends in the cost of care for three major conditions—cardiovascular disease, cancer, and diabetes—examines the economic burden on employers and governments, assesses affordability for Americans, and analyzes trends in efficiency and competition within the delivery system. It concludes with policy options to restrain cost growth while maintaining access and quality.

Introduction

Health care spending in the United States remains a central policy concern due to rising costs, uneven outcomes, and mounting fiscal pressure on public and private payers (CMS, 2024). Understanding disease-specific cost drivers and system-level factors that influence efficiency and competition is necessary to design policies that preserve access and control spending without undermining quality. This paper focuses on three high-burden conditions—cardiovascular disease, cancer, and diabetes—as illustrative cases, then examines affordability and system-level efficiency and competition trends.

Trends in Costs of Care for Three Conditions

Cardiovascular Disease

Cardiovascular disease (CVD) remains the largest single component of health spending due to high prevalence, expensive procedures (e.g., cardiac catheterization, stents, bypass), and long-term management costs. The American Heart Association reports persistent increases in direct medical costs driven by aging, procedural intensity, and costly new technologies (AHA, 2023). Per-patient spending varies widely by care setting, with hospital services and specialist fees accounting for the majority (AHA, 2023).

Cancer

Cancer care costs have risen sharply because of novel targeted therapies and immunotherapies with high prices, extended treatment durations, and intensive diagnostic imaging (ACS, 2023). While survival gains justify many innovations, treatment price inflation has outpaced inflation leading to larger per-patient spending and substantial out-of-pocket exposure for those with inadequate insurance (ACS, 2023).

Diabetes

Diabetes imposes both large direct medical costs (medications, supplies, hospitalizations for complications) and indirect costs (lost productivity). The American Diabetes Association’s estimates show growth in national diabetes-attributable spending due to rising prevalence and the adoption of newer—and more expensive—pharmaceuticals and devices (ADA, 2020). Preventive management can reduce downstream costs, but uptake is uneven.

Burden on Businesses, Governments, and Affordability for Americans

Employers shoulder a large share of U.S. health spending through premiums and benefits; rising premiums translate into higher labor costs and can depress wages or employment (KFF, 2023). Small businesses face disproportionate burdens and limited bargaining power compared to large employers, often passing costs to workers via higher premiums or cost-sharing (KFF, 2023).

Governments—federal and state—fund a growing portion of care through Medicare, Medicaid, and subsidies. CMS data show that public spending growth strains federal budgets, especially with an aging population and growing entitlement costs (CMS, 2024). The Congressional Budget Office highlights rising federal subsidies for health coverage and the fiscal implications of health price growth (CBO, 2021).

For individuals, affordability depends on insurance coverage design. High-deductible plans and rising cost-sharing have increased financial exposure, producing medical debt and delayed care for some Americans (KFF, 2023). Even insured patients can face substantial out-of-pocket costs for cancer or specialty drugs, reducing adherence and worsening outcomes (ACS, 2023).

Efficiency of Care Delivery and Competitiveness

Efficiency gains have emerged from care redesign—value-based payment models, coordinated care, and use of evidence-based guidelines—which can lower avoidable admissions and redundant testing (Porter & Lee, 2013). Accountable Care Organizations (ACOs) and bundled payments have shown modest savings in some settings by aligning provider incentives with cost-effective care (OECD, 2022).

However, provider consolidation has reduced effective competition in many local markets, allowing larger systems to negotiate higher prices from private insurers and raising overall spending (Cooper et al., 2019). Anticompetitive consolidation undermines price discipline and can offset efficiency gains achieved through care coordination (Gaynor & Town, 2012).

Technology diffusion (e.g., telehealth, remote monitoring) and digital health have potential to increase access and efficiency, but value depends on appropriate payment rules and integration into care pathways (Porter & Lee, 2013).

Key Factors in Keeping Costs Down

  • Payment Reform: Shift from fee-for-service to value-based arrangements can reduce unnecessary utilization and reward outcomes rather than volume (Porter & Lee, 2013).
  • Price Transparency and Regulation: Greater transparency and targeted regulation of dominant provider markets can restrain excessive price growth (Cooper et al., 2019).
  • Prevention and Chronic Care Management: Investing in prevention for diabetes and CVD lowers long-term costs by reducing complications (ADA, 2020; AHA, 2023).
  • Drug Pricing Policies: Negotiation, reference pricing, and targeted subsidies can mitigate the impact of high-priced oncology and specialty drugs (ACS, 2023).
  • Competition and Market Structure: Policies that preserve competition—antitrust enforcement and support for independent practices—help maintain price discipline (OECD, 2022; Cooper et al., 2019).

Policy Implications and Recommendations

Policymakers should prioritize: (1) expanding payment reforms that reward outcomes; (2) strengthening antitrust enforcement to limit harmful consolidation; (3) improving price transparency and encouraging competitive contracting; (4) promoting preventive care and chronic disease management programs; and (5) pursuing targeted drug-pricing reforms to reduce patient cost exposure while preserving innovation. Implemented together, these steps can improve efficiency, reduce spending growth, and enhance affordability for Americans (Porter & Lee, 2013; KFF, 2023; CMS, 2024).

Conclusion

Costs for major conditions—cardiovascular disease, cancer, and diabetes—are rising due to demographic trends, expensive technologies, and market factors. The burden on employers and governments is substantial and rising, while many Americans face affordability challenges. Policy levers that combine payment reform, competition policy, preventive care, and sensible drug-pricing measures can improve efficiency and constrain cost growth without sacrificing quality.

References

  • American Cancer Society. (2023). Cancer Facts & Figures 2023. American Cancer Society.
  • American Diabetes Association. (2020). Economic Costs of Diabetes in the U.S. in 2017. Diabetes Care.
  • American Heart Association. (2023). Heart Disease and Stroke Statistics—2023 Update. Circulation.
  • Centers for Medicare & Medicaid Services (CMS). (2024). National Health Expenditure Data. Centers for Medicare & Medicaid Services.
  • Cooper, Z., Craig, S., Gaynor, M., & Van Reenen, J. (2019). Hospital prices grew faster than physician prices for inpatient admissions. Journal of Health Economics, 67, 102–117.
  • Congressional Budget Office (CBO). (2021). Federal Subsidies for Health Insurance Coverage for People Under Age 65.
  • Gaynor, M., & Town, R. (2012). The impact of hospital consolidation—update. Health Affairs, 31(8), 206–216.
  • Kaiser Family Foundation (KFF). (2023). 2023 Employer Health Benefits Survey. KFF.
  • OECD. (2022). Health at a Glance 2022: OECD Indicators. OECD Publishing.
  • Porter, M. E., & Lee, T. H. (2013). The strategy that will fix health care. Harvard Business Review, 91(10), 50–70.

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