Governments Role in Health Care Market - Health Care Economics - Research Paper Example

Research Paper Health Sciences and Medicine Government’s Role in Health care Market: Health care Economics Contents Introduction 3 2.Health care Economics 5 3.Health care Industry and the United States government 6 4.A Statistical View of US Health care Spending 9 5.Way Forward 10 References 12 1. Introduction According to Maslow and Clayton’s hierarchy of needs, physiological needs lie at the base of need pyramid (Huitt, 2007). Primary needs of people compulsorily include food security and health care. It is not possible to earn welfare of people without fulfillment of these basic needs. Today, awareness has empowered people to take pragmatic collective decision. Their interests are logical and comprehensive when they repose their trust in governments to fulfill physiological aspect of their lives. For welfare states to prosper governments try to come up with legislations and schemes for public. And today developed nations are striving to establish comprehensive plans to serve people in various aspects. In recent times, health care concerns are increasing due to ever increasing complexity of ambiance people live in. Pollutants, Genetic Modification, Environmental degradation and Global warming are making things a mesh of problems. In spite of galloping advancements in bioinformatics and medicine, deaths are becoming increasingly terminal. This statement can be supported by discussing various types of cancers, increasing obesity and even more complex psychological problems in highly urbanized areas. Keeping in view these concerns United States government has been in the phase of transition which has Health care services as one of the major moot points. Investments in the development of effective medicine, attempts to promulgate health care schemes and finding cost effective all inclusive health care facilities are apparently important for the government. This research is an attempt to delve into the details of US health care industry. It is aimed at finding comprehensive facts and figures about the health care services and the econometrics that are proving to be the driving force of this sector. Distinct organizations have emerged during recent times in order to serve and do business related to health care. The cost and access to health care facilities is the bottom line of this research. As a big picture the health care facilities in US are largely private sector business, whereas government facilities come next to the private sector. These statistics are one of the major concerns for health care policy makers and operators who reside in the echelons of power. About 65% of the health care spending for people below 67 years comes from programs like Medicare, Children’s Health Insurance Program (CHCP) and Tricare. Average US life expectancy is 78 years which ranks her 27th among 34 highly industrialized countries (THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT). These figures are not encouraging when a comparative analysis of 17 high-income nations is done (Murry, 2013). Unites States has the highest infant mortality, sexually transmitted infections, disability, lung and heart disease. Another interesting fact issued by World Health Organization is that the US ranks lowest among the quality of health care index as compared to other similar nations. Despite highest per capita spending (above $8500) in 2011, US dropped to the rank of 46th among 48 countries in 2013. These figures indeed pose a grim situation that calls for immediate action to curb these challenges. Unnecessary deaths in US rose to the astonishing of 48,000 every year. During 2010 Patient Protection and Affordable Care was enacted as law which called for changes in health care policy and insurance schemes. Federal regulations were provided to be complied with. Despite these changes it seems that affectivity of the program is not calculated. Role of government needs to be scrutinized in order to find the point of failure. Recent economic crisis in the wake of US interventions are being held responsible for such a loss and is said to be an approach-avoidance conflict of interests of the US government. 2. Health care Economics When people pay taxes to run government businesses they expect a share for public service. Companies collect taxes from their employees to provide their share to the government. The impact of tax collection is indeed of prime importance for the various services. Expectations increase with government’s assurance for fair distribution of facilities. Economists are concerned with demarcation of shares for health services and their distribution. Health care provision is one of the most important concerns for the government economists. Therefore keeping the complexity of cash flows in view it is important to see the model over which health care facility is provided to the public. As financing streams are different for various business, government and non-government organizations a conceptual model is given to understand the health care economics. Health care economics is a field of economics which deals with the financial management and economic impact of health care industry and services. It is concerned with the discussion of positive issues which primarily involve policies and economic resource allocation and distribution. The policies are subject to government manifestos but they are fairly similar as public concerns are always primary. The resource allocation is concerned with building capacity, production, distribution, training and provision of specialized areas of medical research for physical and mental wellbeing of people. It might include provision of compulsory and temporary means to avert a challenging situation. Another aspect of economic management in health care is the distribution of the resources. States are bound to form methods and processes to comply with specified standards at national level. For example plans for anti-smoking campaigns, finance allocation, watchdogs and rehabilitation directives are enforced once state authorities ratifies unanimously about it. Price control, quality management, availability and fair treatment for all are also a concern of resource provision. Although, United States government has formed policies to meet the challenge, as can be seen by the Act passed in March, 2010, there is still a gap. This gap is evident from the international surveys and studies as discussed above. Prioritizing health care policy making and meeting challenges with effective use of financial resources are necessary. In 2011 highest spending on health care could not bear fruits because of this problem. It seems as States and Federal institutions are not synchronized for the implementation of the central policy. Governments are not in the main stream as they keep making policy for revenue generation and imposition of taxes. In 1965 Congress embraces for Medicare to address the issue of health care for elderly and poor. About 6 percent of total economic output was spent of provision of health care. Then in 1992, about 14 percent of the total revenue came into the cycle of health care. This increasing financing on health care was seen as important and by 2000 it was enhanced up to 19 percent of the total public spending. The present US ranking is not matching with the spending. This is because adoption of policies did not care for the ground realities. A research in 2000 reveals that facilities provided by employers and the insurance programs sanctioned by the government were subsidy based. This contributed to higher spending by the end of each year with no success. 3. Health care Industry and the United States government The Patient Protection and Affordable Care Act which comes under the Public law 111-148 are the health reforms that were taken up by the United States government on March 23, 2010 under President Barack Obama. Another bill Health Care and Education Reconciliation Act of 2010 was passed on March 25 the same year (Berdine, 2013). These were the reforms that envisaged a large number of health provisions. The Medicaid was expanded by a substantial amount which provided subsidies and insurance options for the public. They also aimed at providing business incentives to the health care industry and curtailing coverage problems. Another main reform stated provision of tax bracket and favoring Medicare. The overall impact of these health care reforms aimed at reduction of the deficit by $143 billion for next 10 years (Diana, 2012). The congress budget office estimates were inclusive of reconciliation act (NIH, 2013). These reforms called for provision of single payer system and Vermont became first state which enacted the reforms in 2011. It is pertinent to mention that the state under Article 48 maintains health care for the public as basic human right. This move by Vermont is seen as confidence in the said reforms. However the effect needs to be evaluated. Statistical analysis conducted during 2013 does not show healthy figures. Also the ranking system by international survey and study organization speaks of grim situation. Another concern that proves to be burden in obtaining objectivity in implementation and evaluation of these reforms is the health care and health insurance coverage for the immigrants. There were about 27 million immigrants during 1998. Currently the reports are projections due to vast influx and border issues with the Central American intrusions. However a comprehensive report suggests that about 20 percent of the total immigrants are still not able to avail themselves with insurance. It also transpires difficulty for immigrants in United States in wake of health care reforms. Still most of the commentators suggest that immigrants will be able to opt for better plans due to more comprehensive approach taken for them in the reforms. A retrospective and critical analysis of the reforms that were opted by the United States government is important at this stage. It will help in the evaluation of the role of government. Analysts suggest that during 1984 the drug monopolies established strong holds due to President Reagan policies. The Drug Price Competition and Patent Term Restoration Act allowed patents of organizations to extend for 20 years which proved to be the main problem. The pharmaceutical manufacturers were also given free hand to involve the physicians for alternate and expensive drugs. These prescriptions should also be taken to task for reforms which tries to establish monopolies and petty corruption. Similarly in 2003 the George Bush Administration Medicare Prescription Drug, Improvement, and Modernization Act perpetuated the problem. This was due to the subsidies provided for elderly people to purchase drugs. It is still speculated that Patient Protection and Affordable Care Act of 2010, known as Obama Care, will provide insurance exchanges, subsidies and mandates to the expansion of Medicaid. It is also seen as an attempt to extend monopolies of the pharmaceutical companies either deliberate or inadvertent. A research shows that United States department of health and Human Services held expenditures to the tune of $ 2.5 trillion during 2009 which meant $ 8086 per person. According to Bureau of Labor Statistics a US customer unit (2.5 persons) in 2008 was able to earn $ 63,563 income inclusive of tax. The taxes surged up to $ 12,077 and half in food expenses. The housing expense stood at $ 17,109 for 2008. The inflation at the time, before 2008 was manageable but sudden economic crisis took the recession to maximum. This brought huge pressure on the government for its failure in managing the job market. Since then the health care facility is not customer centric, rather it has taken shape of government’s ability to provide a type of service. The scheme proposed by Medicare for elderly came under pressure and 46.3 million people of this age group could manage to get a benefit of not more than $ 11,743 which was slight below the average across previous years (Mike Holly, 2013). The partiality of the late bills also suggests that new policies are still beneficial for those who are in government services. The history of Government policies that came from time to time are not trusted by the above mentioned commentators. The inflation projections suggest that the hypothesis of monopolization stands as a concern bringing wide criticism against the government. Although contested, yet it can be among the reasons of less affectivity of the United State government and low ranking among OECD nations. The bill labelled as Obama Care is seemingly a compromise to inculcate wider facilities in a stipulated budget. It is important for government to institute comparative research in health care economics of Canada and other European nations. 4. A Statistical View of US Health care Spending A statistical view (summary) of the spending is given in the below mentioned table. These stats can be verified from US Census Bureau report published in 2013. As mentioned above the per capita spending reached its maximum in 2011, these stats provide spending during 2013 which are less than $8500 per capita. It is also pertinent to mention that California tops the list of health facilities with more than 97,000 companies. Other states are also mentioned below. Total health care revenue rose to the tube of $1.668 trillion yet the effect did not show up in the Bloomberg report regarding the ranking of US among The Organization for Economic Co-Operation and Development. The stats tell that non-profit and charitable infusion of finance is substantial which cannot be relied for a longer time. The policy need more comprehensive outlook. The number of health care company employees is more than 16 million. A substantial amount is being spent on cosmetic routines such as dental interventions. (Bureau of Statistics, 2013) The healthcare coverage is also a point of concern which was addressed in the bill. However out of about 800 thousand companies, 100 thousand companies are in California alone. Texas, New York and Florida show approximately similar densities. It is an important area of research to evaluate the health care coverage throughout the United States. 5. Way Forward The US government should work for incentives for employees who promise health care and insurance programs. These incentives should be tax based in order to divide the contribution of all stake holders. Further it is important to device programs which enable ratings that might be community-rated system. Various new financing schemes like subsidy programs, vouchers earning will help in cost effectiveness of this system ("The Governments Role in the Health Care Industry: Past, Present, and Future", 1994). Contribution of private sector shall be brought into public-private partnership that will help in provision of care for poor and elderly people. The cost affectivity will call for greater role of private sector’s community involvement. References Berdine (2013). The Economics of US Healthcare - Gilbert G. Berdine, M.D. - Mises Daily. Retrieved  2014, from https://mises.org/daily/5496/ Bureau of Statistics (2013). Health Care Industry Statistics | Statistic Brain. Retrieved  2014, from http://www.statisticbrain.com/health-care-industry-statistics/ Diana (2012). Why the fiscal cliff matters - Diana Furchtgott-Roth - MarketWatch. Retrieved from http://www.marketwatch.com/story/why-the-fiscal-cliff-matters-2012-11-23 Huitt (2007). Educational Psychology Interactive: Maslows hierarchy of needs. Retrieved from http://www.edpsycinteractive.org/topics/conation/maslow.html Mike Holly (2013). How Government Regulations Made Healthcare So Expensive :: The Mises Economics: The Circle Bastiat. Retrieved from http://bastiat.mises.org/2013/12/how-government-regulations-made-healthcare-so-expensive/ Murray, Christopher J.L.; et al (July 10, 2013). "The State of US Health, 1990–2010: Burden of Diseases, Injuries, and Risk Factors".Journal of the American Medical Association 310 (6): 591–608.doi:10.1001/jama.2013.13805. PMID 23842577. Retrieved July 11, 2013 U.S. Health in International Perspective: Shorter Lives, Poorer Health" (2013) National Institutes of Health Committee on Population, Board on Population Health and Public Health Practice Read More