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Management in Health and Social Care

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Let us look more closely at the forces contributing to reform throughout the 1980s and 1990s, beginning first with the concern over growth in total health care spending. Throughout the 1970s there were significant increases in the proportion of gross domestic product (GDP) (the total value of all goods and services produced by a country) absorbed by health care spending. Between 1972 and 1982 there was a 36-percent, 30-percent, 26-percent, and 25-percent increase, respectively, in the percentage of GDP spent on health care in the US and UK, and the Netherlands.

Between 1982 and 1992 there was only a 2-percent increase in the Netherlands, but the US, New Zealand, and the UK still saw increases, respectively, of 36 percent, 12 percent, and 20 percent. These increases were partly due to the after-effects of the oil-shocks and to recessionary periods that slowed the growth of GDP within these countries. (Callahan 2002) However, there was a concern that even if growth rates in GDP improved it would not be enough to keep pace with the aging of the baby boomers and their demands for high-quality medical care and the best medical technology available.

Although increasing costs are often cited as a justification for health care reform, it is far from clear what is “ too much” in terms of total expenditures on health services. Why are we not similarly concerned that we are spending increasing amounts on telecommunications services, cable television, computer products, or novelty toys? The concern over rising total health care expenditures is, in fact, rooted in two separate issues— concern over government spending and concern over inefficiency. In most Organization for Economic Cooperation and Development (OECD) countries, the government pays for the majority of health care expenditures.

Even in the US, government expenditures account for over 44 percent of total health care spending. Moreover, in most countries, health care is the most significant component of total government expenditures.

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