Options for Reducing the Deficit

There are various options available to reduce the health budget deficit. Hospitals will be affected the most through such measures because they served hospitals more patient than any other health care setting. Firstly, in order to reduce the budget deficit in health care sector, the government agency can decrease the mandatory spending on health programs which eventually decrease the quality of service in hospital United States is spending heavily since last 50 years. In 1960, the US health care spending was around $27 billion which increased to $427 billion by 1985 and further increased to $1678.9 billion due to which currently, health care spending takes the huge chunk from the GDP of US (Burwell, 2015). Despite such huge spending health care sector is not producing desired results and further decrease in spending will eventually lead to more worse health outcomes which can reduce patient satisfaction on hospitals.

Second option is raise more capital or revenue through tax related to health services. However, such initiatives will impact the process adversely because increase in tax will increase the cost of health care services which is not a good sign for hospitals and as well for the patient. The hospital profit margin will decrease and patient will have to bear price increment. Other option is to reallocate the health care spending from federal to private business (Dieleman et al., 2016). This step is beneficial as it will allows hospital to adopt new technology, but the cost of health care service will also increases eventually due to such initiative. In addition to this, federal government will be in position to establish performance based reward scheme where incentives will be given to control the cost while exposing them to more financial risk (Squires & Anderson, 2015). In this way, all the risk will be bear by private organization with an objective to gain financial incentives.

Overall, in order to reduce the deficit the government should focus on the operational side of the health care, where lot of wastage and fraud occur which affect the sector in great deal. The government needs to establish and implement laws and policies in order to avoid such inefficiencies (Squires & Anderson, 2015).

References

Burwell, S. M. (2015). Setting value-based payment goals—HHS efforts to improve US health care. N Engl J Med, 372(10), 897-899.

Dieleman, J. L., Baral, R., Birger, M., Bui, A. L., Bulchis, A., Chapin, A., ... & Lavado, R. (2016). US spending on personal health care and public health, 1996-2013. Jama, 316(24), 2627-2646.

Squires, D., & Anderson, C. (2015). US health care from a global perspective: spending, use of services, prices, and health in 13 countries. The Commonwealth Fund, 15, 1-16.