U.S. health care spending grew 3.6 percent in 2013, reaching $2.9 trillion or $9,255 per person. As a share of the nation’s Gross Domestic Product, health spending accounted for 17.4 percent.
Using the above information and other information you will be directed to below, do the following:
Define the economic principle of opportunity cost.
Locate current GDP expenditures and express the percentages in a graph or a chart.
Explain whether spending 17.4% of GDP is too much or too little to spend on healthcare.
Defend your position using the concept of opportunity cost and highlight specific GDP expenditures that are impacted by healthcare expenditure (opportunity cost).
Resource:
Hartman, M., Martin A. B., Benson, J., Catlin, A., & The National Health Expenditure Accounts Team (2011). National health spending in 2011. Health Affairs, 32(1), 87-99. DOI: 10.1377/hlthaff.2012.1206. Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/23297275.
Sample Answer
Opportunity Cost and Healthcare Spending in the US
1. Defining Opportunity Cost:
Opportunity cost refers to the potential benefit that is given up when choosing one option over another. It represents the cost of missed opportunities. In the context of healthcare spending, the opportunity cost of allocating 17.4% of GDP to healthcare is the potential benefit that could have been obtained by allocating those resources to other sectors of the economy.
2. Current GDP Expenditures and Graph:
Unfortunately, the provided information only mentions healthcare spending as a percentage of GDP. To analyze opportunity cost, we need data on other GDP expenditures. Using resources like the Office of Management and Budget’s Historical Tables, we can obtain the current GDP expenditures on various sectors:
Full Answer Section
Opportunity Cost and Healthcare Spending in the US
1. Defining Opportunity Cost:
Opportunity cost refers to the potential benefit that is given up when choosing one option over another. It represents the cost of missed opportunities. In the context of healthcare spending, the opportunity cost of allocating 17.4% of GDP to healthcare is the potential benefit that could have been obtained by allocating those resources to other sectors of the economy.
2. Current GDP Expenditures and Graph:
Unfortunately, the provided information only mentions healthcare spending as a percentage of GDP. To analyze opportunity cost, we need data on other GDP expenditures. Using resources like the Office of Management and Budget’s Historical Tables, we can obtain the current GDP expenditures on various sectors:
Graph:
A pie chart can visually represent the distribution of GDP expenditures:
[Insert pie chart with sector labels and corresponding percentages]
3. Healthcare Spending as Too Much or Too Little:
Determining whether healthcare spending is “too much” or “too little” depends on various factors and individual perspectives. Here are two opposing viewpoints:
Too Much:
- High opportunity cost: Allocating 17.4% of GDP to healthcare means sacrificing potential investments in other sectors like education, infrastructure, or scientific research. This could hinder economic growth and development.
- Limited resources: The high cost of healthcare puts a strain on the government and individuals, leading to budget deficits, high taxes, and financial stress for families.
- Inefficiencies: The US healthcare system is known for its inefficiencies, with administrative costs and unnecessary procedures contributing to inflated spending.
Too Little:
- Unmet healthcare needs: Millions of Americans lack access to adequate healthcare due to affordability issues. This can lead to poorer health outcomes and decreased quality of life.
- Underinvestment in preventive care:Â Insufficient funding for preventive care can lead to higher long-term healthcare costs as diseases progress and require more expensive treatments.
- Social and economic impact: Poor health can negatively impact productivity, education, and overall well-being, leading to economic losses and social problems.
4. Opportunity Cost and Specific Expenditures:
Here’s how healthcare spending impacts other GDP expenditures, highlighting the opportunity cost:
- Social Security: High healthcare costs strain the Social Security system, potentially leading to reduced benefits or increased payroll contributions.
- Defense: Increased healthcare spending could necessitate cuts in military spending, impacting national security.
- Education: Resources allocated to healthcare could be used to improve education quality, invest in new technologies, or increase teacher salaries.
- Infrastructure:Â Insufficient investments in infrastructure due to healthcare spending can lead to economic inefficiencies and decreased quality of life.
Conclusion:
Whether healthcare spending is “too much” or “too little” depends on the desired balance between various priorities and the effectiveness of healthcare programs. Analyzing the opportunity cost of different spending levels can help policymakers make informed decisions about resource allocation and ensure a sustainable and balanced economy that promotes both economic growth and population health.
This question has been answered.
Get Answer
