Question

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).

Answer 1

Principle of opportunity cost:

opportunity cost refers to the best alternative use. Here, expenditure which is made on the health can be diverted to other uses such as infrastructure development and education.

Following is graph:

Spending to much:

US expenditure is around 18 % of GDP which is one of the highest in world. Other developed developed countries on average spend close to 8 % of GDP on health care. Outcomes of health care expenditure are more encouraging in other developed countries than USA.

Hence, we can say that US health care expenditure is too much and it has led to the misuse of fund by the private hospitals and health care advisors. Federal government needs to control it by the rationalising it.