The Supply and Demand for Hospital Care in the United States - Assignment Example

? The Supply and Demand for Hospital Care in the United s The Supply and Demand for Hospital Care in the United s Healthcare in the United States is majorly operated by the private sector. Although several distinct organizations have a stake in the United States health care, statistics indicates that 62 percent of the hospitals are under non-profit organizations while 20 percent are operated by the government. The rest of the hospitals are operated by profit-making organizations. Most of the US population is insured either by their family members or their own insurance schemes. Nevertheless, there are people who lack insurance cover despite the government’s provision of insurance for employees in the public sector. The supply and demand for hospital care in the United States is affected by several factors. For instance, people’s individual income and preferences affect their demand for hospital care. It is well established that shortage of physicians, presence of uninsured populations and government regulations significantly affect the supply of hospital care in the country. This paper seeks to elucidate how these factors affect the provision and quality of health care in the United States (David, 2009). a. Income of individuals and their preferences People’s individual incomes enable them to afford hospital care. This is why the demand for hospital care among the employed is considerably higher. Indeed, it is well established that people will likely seek the kind of health care that they can afford. In this respect, the higher the people’s income, the higher their demands for quality hospital care. In health economics, the patients’ demand for hospital care is said to be influenced by the physician given that they know more about patients’ condition. They advise patients on the treatment options that are available for them at any given time and where to seek treatment. It then becomes the responsibility of the patient’s to seek funds for the level of treatment they prefer. As such, it is always more about what the physician prefers rather than what the patient prefers. Nevertheless, the patients reserve the final say because ultimately they will pay for whatever services offered to them. It is therefore true that people’s individual incomes and their physician’s preferences dictate their demand for hospital care. This is the reality of health economics in the United States (Kavitha, 2013). Physicians, based on their training and experience, are able to advice patients on the right hospital care available for them based on their level of income. It would certainly be irresponsible for any physician to advice his or her patient to seek hospital care from high-income health facilities if the patient is not likely to afford. This fundamentally explains why they are required to give their patients a range of options to choose from. A research carried out by the National Bureau of Economic Research in 2012 showed that more people seek hospital care in the states where the average levels of income are considerably high. Although it is a basic requirement, lack of funds significantly stifles the pursuit of quality healthcare. Chronic illnesses are often the most affected as people can live with them long enough. Given that they are not quite debilitating, people often do not find it urgent to seek hospital care. They consistently shove the demands aside in order to deal with other pressing needs like housing. This is especially true for low income earners as they have to make such choices. In the end, the quality of their health becomes compromised as their illnesses become worse with time. This explains why higher incomes are prerequisite for the demand for higher quality health care (David, 2009). b. Insurance Coverage The demand for hospital care is considerably high among the insured in the United States. A research conducted at the Princeton University showed that citizens are currently keen on taking advantage of the government policy on insurance coverage to have their own insurance plans. Quite a number of uninsured populations have shown willingness to pay for their own insurance as this would enable them access the right quality of hospital care, even in emergency situations. This has been outlined as the greatest achievement of the Affordable Care Act of 2010. Principally, the research found out that 60 percent of citizens who currently lack insurance cover will most likely buy one by the year 2014 for an average cost of $2,000. Notably, the government subsidies under the Affordable Care Act will ensure that 39 million more American get insurance cover by 2014. This is expected to increase the demand for hospital care in the United States given that high cost of healthcare has been the greatest hindrance for most people (Peter, 2001). With the increased availability of low-cost insurance plans, more people are currently purchasing their own insurance cover. This will in turn increase the demand for hospital care in the United States as more people will be able to afford. It goes without mentioning that acquisition of insurance cover is an important pillar in the country’s pursuit of hospital care. Researchers maintain that similar policies as the Affordable Care Act of 2010 will significantly increase access to health care. It is important to note that the policy has enabled many poor people to take advantage of the subsidized insurance plan. In this manner, they have been able to access the same quality of hospital care that business executives can purchase for themselves. Basically, people who have an insurance cover do not feel the economic burden of health care. Thus, their demand for hospital care rises tremendously as a result. This reality should be well understood by the policy makers in the United States in order to formulate other policies that will increase access to hospital care in the country (Kavitha, 2013). c. Presence of Uninsured The demand for hospital care among the uninsured populations in the United States has stagnated over time. However, the Patient Protection and Affordable Care Act of 2010 nearly reversed the trend. The Act stipulates that all citizens should ideally get an insurance cover. In light of this, the state has made provisions to enable citizens to access insurance cover more affordably. According to recent research, focus has shifted from people’s response to the call to get insurance plan outside the workplace to the traditional employer-provided cover. This is due to the fact of relative affordability of the conventional insurance cover. Notably, people have responded generally well to the call to acquire an insurance cover as it is important to accessing quality healthcare. Indeed, illness strikes when it is least expected and may totally incapacitate individuals to the extent of not being able to raise any immediate funds. This makes it imperative to have alternative sources of funding for people’s health bills. It principally assures people of constant access to quality care without being able to foot the medical bills from once savings (David, 2009). The supply of hospital care to uninsured populations has remained quite low over time. This is due to the fact of the high risk involved in treating this population, especially with respect to their ability to pay. Most healthcare providers prefer people who have an insurance cover because they are sure the bills will eventually be paid by their insurer. Although the largest healthcare providers in the United States are non-profit organizations, they also require the basic payment to run their facilities. This explains why they also insist on patients’ ability to pay their medical bills. Indeed, these health organization would certainly grind to a halt they treated patients free of charge. According to World Health Organization, people’s demand for hospital care significantly depends on their ability to pay. In this regard, uninsured populations usually demand less of hospital care as compared to the insured. Perhaps, this is why the government has insisted on the acquisition of insurance cover by all citizens. Indeed, this would be the only way to overcome the ever-increasing cost of healthcare in the United States (Peter, 2001). d. Managed Care Organizations Managed Care Organizations are a set of organizations that have been established to provide specialized care to specific populations. For instance, some are made up of physicians, pharmacists or advanced practice nurses. They are specifically set up to improve the quality of health care by either focusing on health facilities or the health practitioners. For instance, the state may opt to provide incentives to medical staff with a view to boosting their morale and hence improve their delivery. Eventually, some of the provisions of managed care organizations are adopted in the health sector in general. This has the benefit of increasing the quality of hospital care and a reduction in the cost. As a result, the demand for health care will increase as more people would be able to afford the country’s health care. The introduction of managed care in the United States emanated from the Health Maintenance Organizations Act, 1973. While critics argue that it has had little impact on the country’s health care delivery, proponents maintain that managed care organizations have been beneficial to the country. Due to the fact of increased quality of health care arising from managed care plan, it goes without mentioning that it increases the overall demand for hospital care (Kavitha, 2013). e. Shortage of Physicians Shortage of physicians is likely to adversely affect the demand for hospital care. It is postulated that there will be a shortage of 91,500 physicians in the country by 2020. It is a reality that may come as a real disappointment to people provided that the Affordable Care Act of 2010 stays intact. Initially, the demand for hospital care will be relatively higher compared to the supply of medical staff. This is due to the fact that most of the current physicians will retire by 2019 while the enrolment in medical schools has steadily remained low. Thus, it will get to a point where the demand for hospital care will not match the availability of medical staff to attend to patients. As a result, the quality of hospital care will tremendously decrease leading to fewer people seeking medical attention. It should, however, be noted that these projections are based on past patterns that are likely to change at some point in time (Peter, 2001). The shortage of physicians is also expected to rise from maldistribution of medical personnel in the country. At the moment, most of the country’s health workforce is concentrated in cities, leaving only a few working in the rural areas. According to recent research by the Princeton University, fewer medical students are interested in primary care. Most of them prefer to go for training in specialized care. This means that the country is likely to have more specialist doctors and only a few physicians. The eminent shortage of physicians will reduce the quality of primary care and eventually increase the cost of hospital care. This means only a few people will be able to afford to pay for their hospital care. As a result, the demand for hospital care will tremendously reduce. Basically, the country has to train more nurses and clinicians to fill the gap. This way, considerable stability will be achieved in the country’s health care (Kavitha, 2013). f. Government Regulation of Hospitals The government has set out regulations in the way hospitals are managed. For instance, several measures have been put in place to ensure that contracts and tenders issued by the hospitals for supply of medical equipment and other requisite facilities are done in a transparent manner. This has led to the improvement of hospital care in the country as hospitals get quality for their funds spent in the purchase of medical equipment. In other cases, the government has put in place regulations to streamline admission and patients’ stay in the hospital. As a result, the level of patient satisfaction increases tremendously. Nevertheless, there have been regulations that increased the cost of health care in the country. For instance, high taxes imposed on imported raw materials to be used in the pharmaceutical industry. This translates to increased cost of the medicines and therefore, higher cost of health care in general. It should however be noted that government regulations have been beneficial to the general public and increased the quality of health care in the country. Thus, it can be safely said that regulations by the government on hospitals generally increase the quality of health and hence the demand of hospital care in the country (David, 2009). In conclusion, health care in the United States is majorly operated by private sector. The demand for hospital care among the employed is considerably higher than among the unemployed because their individual incomes enable them to afford hospital care. It should however, be noted that patients’ preferences do not significantly affect their demand for hospital care as the final decision is usually made on their behalf by their physicians. The demand for hospital care is considerably higher among the insured in the United States as they can afford hospital care, courtesy of their insurance cover. However, the presence of uninsured persons reduces this demand. On the other hand, the supply of hospital care has been said to be increased by managed care organizations and government regulations. These basically ensure that medical staff get better terms of service and thus become more motivated to offer high quality hospital care. Eventually, the demand also increases as more people seek the better services offered by the highly motivated medical personnel. The availability of insurance cover is the single most important factor that affects demand for hospital care. This is because people will visit the hospital as much as they wish if they insurance company will pay the bill. Essentially, the demand shoots as the immediate seekers of health care do not pay the bills they incur. References David, C. (2009). New study finds 45,000 deaths annually linked to lack of health coverage. Harvard Gazette. Kavitha, A. D. (2013). The Most Efficient Health Care Systems in the World. The Huffington Post. Peter, R. K. (2001). The Managed Health Care Handbook. London: Aspen Publishers, Inc. Read More