Imperfect Market In Healthcare

The economics of healthcare is not at all simple. What you put in is certainly not necessarily indicative of what you get out, as shown by the striking discrepancy between what we pay and what we get out of our healthcare system. This is demonstrated further by comparing our system to those of France and Italy, who come in first and second, respectively, in WHO’s international ranking of healthcare systems (“World Health Organization’s Ranking of the World’s Health Systems”). Counter to what many Americans may believe, a number of European nations do not have completely socialized medicine.

Rising medical costs are a worldwide problem, but nowhere are they higher than in the U.S. Although Americans with good health insurance coverage may get the best medical treatment in the world, the health of the average American, as measured by life expectancy and infant mortality, is below the average of other major industrial countries. Inefficiency, fraud and the expense of malpractice suits are often blamed for high U.S. costs, but the major reason is overinvestment in technology and personnel.

Is the US Healthcare system truly reflective of a free market economy driven by supply and demand? Initially, one would be inclined to think yes. In an ideal world, a free market is one which is driven by individual innovation and the concept that hard-work and ingenuity will be bestowed with success. Indeed, the biggest advantage of a free market is that it places the power of choice into the hands of the people. There is freedom to choose how you want to spend your money, what you want to spend it on, and whom you want to spend it on. Do you want to see a physician regarding a yearly physical? Open the yellow pages. You will more than likely find over 100 general practitioners in your immediate area to choose from. Do you want to spend your money on preventative care, early screenings, vaccinations, etc? Or do you want to spend your money on medications after you are diagnosed with an ailment? The main idea behind a free market is that prices will regulate themselves. In regards to the US Healthcare system, it is questions like

Health care spending in the United States of America as a percentage of the economy has reached astonishing heights, equating to 17.7 percent. This number is shocking when compared to other counties; in Australia health care is 8.9 percent, in United Kingdom 9.4 percent, in Canada 11.2 percent. If the American health care system were to hypothetically become its own economy, it would be the fifth-largest in the world. While these statistics sound troubling, they lead us to look for answers about the problems surrounding our system. The first health insurance company was created in the 1930s to give all American families an equal opportunity for hospital care and eventually led to a nationwide economic and social controversy that erupted in the 1990s and continued to be shaped by the government, insurance companies, doctors, and American citizens. In this paper, I will go in to detail about the various opinions regarding the controversy, the history behind health insurance companies, and the main dilemmas brought out by the health care crisis. Greedy insurance companies combined with high costs of doctor visits and pharmaceutical drugs or the inefficient hospitals all over America can only describe the beginning to this in depth crisis. Recently, the United States health care industry has become know for the outrageous costs of insurance models, developments of various social and health services programs, and the frequent changes in medicinal technology.

Rising health insurance premiums have made healthcare unaffordable in the United States. Health insurance premiums in this country have undergone a steady rise over the past few years while incomes have remained the same. More than 50% of individuals with low incomes holding private insurance in the United States are unable to afford their healthcare costs (Collins, Gunja, Doty & Buetel, 2015). In addition, costs related to healthcare are equally unaffordable to 25% of working-age individuals who hold private health insurance policies (Collins et al., 2015). According to the Kaiser Family Foundation/Health Research and Educational Trust (Kaiser/HRET) survey on employer health benefits, employer-sponsored health insurance plans have also had moderate rises in premiums in 2013 for both individuals and family coverage (Claxton et al., 2013). While

There have been many studies performed focusing on the rising costs of health care and some of the findings state that the rising cost of healthcare premiums is a worldwide problem. However, I believe they are higher in the U.S. In 2015, U.S. health care costs were $3.2 trillion. That makes healthcare one of the largest U.S. industries, equaling 17.8 % of the Gross Domestic Product (GDP) in comparison to the late 1960s; where healthcare costs were only $27 billion, or 5% of the GDP, which averaged $9,990 per person each year. The main reason for the rising cost of healthcare is a combination of government policies and lifestyles changes. Examples included lack of coverage or costly coverage, lack of available coverage for

Living in the United States, there is one essential thing you need to have, which is health insurance. Health insurance is a type of insurance that can covers cost of medical and surgical expenses when you need them. Without health insurance, the cost of one single surgery would be a enormous number. But in the United States, there are about 46 million americans are uninsured. To them, the cost of health insurance is too high. In America, the average cost of health insurance per month is about $328 and the minimum wage per hour in here is $7.25(where cite from?). From here, we can conclude that it is too expensive for those people to get sick. So, is the health insurance cost unjustifiably high? The answer is the highly developed technology, waste of health care budget and the free competitor in the health insurance market, caused health insurance’s price to remain so high.

Citizens in America obtain healthcare either through an employer, Medicare, or ,for the forty-five million, out-of-pocket. The number one in healthcare, Japan, uses the Bismarck model system- healthcare through insurance. America is almost the same, except the Bismarck insurance insures everyone without making a profit. Japan has more privately owned hospitals than America. This model can be funded several different ways for cost-control. The reason we have not changed our healthcare system is because of federal debt. Half of the health care costs are paid by the government. This debt will be America's downfall, but also the healthcare reform it so desperately

Supply and demand forms the most fundamental concept of economics. Whether you are a teacher, farmer, medical supply manufacturer, doctor or simply a consumer the fundamental foundation of supply and demand equilibrium is incorporated into the daily behaviors of our society. Consumers naturally look for the lowest price, while producer are influenced to expand outputs at greater cost. This is the same phenomenon in healthcare. With congress enacting the Affordable Care Act, many are seeking out the cheapest form of insurance, while at the same time wanting the greatest benefits.

“The Bitter Pill: Why medical bills are killing us” written by Steven Brill delves into the question as to why medical bills are so high. As Brill begins his research he analyzed bills from hospitals, doctors, and drug companies. Additionally, he interviewed doctors, Medicare and insurance administrators, and gathered patient stories across the nation. He found that the United States spent more money on healthcare than any other developed countries, he stated “We may be shocked at the $60 billion price tag for cleaning up after Hurricane Sandy, [however], we spent almost that much last week on healthcare” (Brill 2013). He also noted “yet in every measurable way, the results our healthcare system produces are no better and often worse than the outcomes in those countries” (Brill 2013). From the charts and graphs that Brill provided shows that the sixty percent of personal bankruptcy filings per year are related to medical bills. Life expectancy in the United States is the lowest amongst the countries that spend most on healthcare, our infant mortality rank is fiftieth in the world, and that one pill cost as much as seven pills in other developed countries such as France. Brill found that in many similar cases, like that ones he presented in the article, Medicare would have at least paid for a small portion of the bill. However, those who don’t qualify for Medicaid and don’t have insurance are often asked to pay excessive prices.

Another reason for the rising cost of healthcare is the cost of physician care, according to the American Hospital Association “the cost of physician care, both to insurance and patients, has risen 1.3% during the past year.” Because of this increase doctors are put in a corner, they are already locked into an agreement with the insurance companies and do not have much ‘wiggle’ room to negotiate fees and rates. So because of this the patients and consumers are forced to pay a much larger sum. Since there are higher costs and the insurers will not cover them, they are distributes to the customers through higher deductibles, co-insurance, and

Regulations that prevent insurance companies from participating in interstate commerce have caused competition to grow stagnant in the United States. This lack of competition has allowed the adoption of wasteful procedures by healthcare providers, which in turn passes the increased expenses back to the insurance companies. Therein, insurance costs increase, crippling consumer’s cash flow and quality of life. While healthcare costs continue to rise, people must scrutinize the current healthcare system.

The rise of the cost of healthcare has been a hotbutton political issue in the United States in recent years, especially with the passage of the Patient Protection and Affordable Care Act, commonly known as Obamacare. In 1995, the United States spent a little over 13 percent of its GDP on healthcare. By 2013, spending on healthcare had increased to around 17 percent of GDP (World Bank). This trend is projected to continue; healthcare spending will reach some 34 percent of GDP by 2040, with state and federal Medicare and Medicaid spending reaching 15 percent of GDP (Council of Economic Advisors). For comparison, the entire US federal government spent only 20.7 percent of GDP in 2015 (Office of Management and Budget 163) What is driving this

One of the issues that is widely discussed and debated concerning the United States economy is the healthcare system. Unlike in the majority of developed and developing countries, the healthcare system in the United States is not public, meaning that the state does not provide free or cheap healthcare services. This paper addresses many of the factors contributing to the rising cost of healthcare.

A competitive market is one that allows easy entry and exit: a market in which companies are generally free to enter or to leave at will. This does not describe the health care market in the US. There are certain assumptions that the competitive market model operates under some assumptions, first is the consumer/patient has full information about the nature of the services required, the anticipated results of their decision and the benefits obtain from the service. This is not true in health care often time the patient is operating at a distinct information disadvantage when they require health care services such as insurance. If a patient purchases health insurance often they don’t know enough information to ascertain if they have