The Health Sector in America - Assignment Example

Rising cost of health products and services Rising cost of health products and services Introduction The health sector in America is quite at a crisis with over 50 million U.S. citizens that do not have a health insurance cover. This number is predicted to rise in forthcoming years if no proper health reform policies are enacted. This issue has overshadowed another, very critical issue; that of the constant rise in costs of health care. The constant use of more recent and sophisticated medical technology has caused the health costs to rise annually at an estimated rate of 7% per year. These escalating costs threaten to make the Medicare program bankrupt in about 9 years. Also, cost of health care is projected to rise from the current $2.1 trillion yearly to $4 trillion in the next 10 years (Callahan, 2008). These escalating costs are significant contributors to the rising number of uninsured people. Business entities are finding it difficult to cater for their employees’ health benefits. The current statistics show that about 61% of employers afford to pay for their employees insurance as compared to a decade ago which was about 70%. Also, employers that give their employees the health benefits are using co-payments and deductibles as a means of reducing their expenses thus forces employees to pay more. The uninsured lot that is about 15% is at a risk of both health-wise and financially. Nevertheless, the high health cost currently threatens everyone, even those in Medicaid and Medicare programs (Callahan, 2008). Hitherto, though there is great awareness among people on the risks of rising costs, this problem has not compelled the attention of the public, media or presidents with the pressure of the uninsured (this is true irrespective of the recent opinions polls showing its rising popularity). There are quite developments of strategies to achieve universal care, but not much has been done in cost control since it is implicitly unpopular. This is the case since by controlling the costs, it means others will have to give something up and agree to something different (Callahan, 2008). Pharmaceuticals Pharmaceuticals play a major role in providing medical resources for cure, treatment and prevention. Patents rights and rights to intellectual property develop obstacles to competition and manipulate pricing. There are some recent policies that try to limit access to certain types of pharmaceuticals. One of such policy is proposed by the Obama administration. The policy restricts the range of insurance plan on the various drug classes. This proposed policy is receiving strong opposition from both drug companies and patient advocates. Also, some of the Republicans and Democrats from the Congress have voiced their opposition of the policy. The opponents argue that it would have detrimental effects on patients if enacted. The proponents (Federal government) argue that this policy will considerably lower the health care costs and decrease the misuse of drugs (Katie, 2014). The proposed policy requires insurance companies to cover “all or substantially all” drugs in specific categories of treatment (Katie, 2014). Surprisingly, drug benefit managers and insures that have been in the past great supporters of added limits on drug coverage, now are not in favor of the policy. Some of the sections opposed include the part which limits consumers to certain networks of pharmacies and one which limits the number of insurance plans offered by insurers in a region (Katie, 2014). This proposal means that the previous protection of the following three classes of drugs would be removed: “antipsychotic medicines, antidepressants and immunosuppressant drugs used in transplant patients” (Katie, 2014). Examples of these drugs are Prozac, Paxil, and Wellbutrin used to treat depression; Seroquel and Abilify used to treat schizophrenia. The categories of drugs which retained their protection status include drugs that treat H.I.V., cancer and anti-seizure drugs. The previous concept has been for insurers to provide a wide coverage for these categories since patients need to undergo several tests of drugs to determine which one is effective. This proposition by the federal government was meant to ease the transition of patient to adopting the new Medicare program. Also, it was influenced by the failed negotiations between drug companies and insurers. The insurers did not successfully convince the drug companies to lower their drugs costs. In support for these, the administration referenced a previous study by Milliman firm conducted in 2008. The results revealed that about 17% to 33% of drug spending by outpatients arises from the six protected categories of drugs. The patients were in the Medicare program part D section. Furthermore, the study found out that these drugs costs were about 10% more than when not all of the classes were covered (Katie, 2014). Thus, the covering of part of the classes and excluding others would potentially mean that the Medicare program and beneficiary save costs. It will also provide insurers with mechanisms of restricting the overuse of drugs. Those against the policy say it will adversely affect patients. For instance, providing cover for only two drugs that treat schizophrenia is derisory. Since, antipsychotic drugs perform differently in the body and produce dissimilar side effects. Thus, it is essential to have a wide range of options so as to choose the best of them. In turn, restricting drug coverage could translate into higher costs in other sectors. For example, it will lead to incurring of extra costs because of avoidable and unnecessary hospitalizations, visits by physicians and other medical interventions (Katie, 2014). Job Lock-out Job Lock is a phenomenon whereby “a person is forced to remain in a certain job he does not like because it offers a health insurance benefit” (Dewan, 2014). Research findings by the Harvard Business School in 2008 found that about 11 million workers were held hostage by this “Job Lock” phenomenon. Parallel studies reveal that when people have security of health insurance, their tendency of shifting jobs is higher. Obamacare was formulated partly to fill this gap in the workforce. That is to avoid people being restricted to certain jobs because of the health insurance benefits. The Obamacare entails a huge transfer of risks. Previously, when somebody relinquished his job and failed to acquire health insurance, he would be susceptible of financial ruin in case he got injured or sick. The Obamacare system has distributed the risks to all those who purchase health insurance. Hence, this system aims at giving an opportunity to jobless Americans to take on risks that are related to their visions and aspirations. For instance, a practical benefit can be seen through the case of Lauren Braun. She used to work in a clinic and came up with an idea of developing bracelets that could remind mothers of their upcoming appointments. However, after graduation she set the idea aside and went to work for a health insurance company. Her new job provided insurance benefits and a good salary which seemed a better choice at the expense of the uncertainty of her idea being feasible. Luckily after a year and a half she was given $100,000 to work on her idea. By quitting her job, she would forego a 60% pay cut, which she was okay with. However, if quitting her job meant losing her health insurance she could not have chosen the life of an unpredictable entrepreneur. Hence, because of Obamacare she was able to quit her job, otherwise she would in a phenomenon known as “Job lock” (Dewan, 2014). The opposers argue that the Obamacare may lead to loss of Jobs. This was due to an estimate of 2.5 million jobs being reduced because of the Affordable Care Act, through a report given by the Congressional Budget Office. However, the opponents might have misunderstood this statement. The statement meant that the decline was due to people choosing to supply labor and not businesses declining need of labor. These might be counter-intuitive, although to economists it is essential in enabling the labor force to regulate itself. For instance, the old lot will comfortably retire giving opportunities for the younger generation. Individuals can freely shift to jobs that best suit their talents or where they get satisfaction. On the other hand, parents will get more time to spend with their families. Even though this change does not contribute to riches, it makes people happier (Dewan, 2014). References Altman, Drew. (2013, September 27). How Obamacare May Be Holding Down Costs. Retrieved from Kaiser Family Foundation: http://kff.org/health-reform/perspective/how-obamacare-may-be-holding-down-costs/ Callahan, Daniel. (2008). Health Care Costs and Medical Technology. Retrieved from The Hastings Center: http://www.thehastingscenter.org/Publications/BriefingBook/Detail.aspx?id=2178 Dewan, Shaila. (2014, February 20). How Obamacare Could Unlock Job Opportunities. Retrieved from The New York Times: http://www.nytimes.com/2014/02/23/magazine/how-obamacare-could-unlock-job-opportunities.html Katie, T., & Robert, P. (2014, February 21). Plan to Limit Some Drugs in Medicare Is Criticized. Retrieved from The New York TImes: http://www.nytimes.com/2014/02/22/business/plan-to-alter-medicare-drug-coverage-draws-strong-opposition.html U.S. Congressional Budget Office.(2008, January 31). Technological Change and the Growth in Health Care Spending. Retrieved from Congressional Budget Office: http://www.cbo.gov/publication/41665 Read More