U.S. Healthcare Systems

The American healthcare system has progressed immensely in response to the social development of its people. During the nation’s infancy, medicine was a predominantly family affair mainly attended to by women. However, in the event of serious medical situation, a doctor was called. Medical doctors were highly revered as were institutions training physicians. The Civil War accelerated the need for medicine to take greater role as a profession towards improving responses to diseases and the social conditions favoring germ spread (Rosen, 2015). Poor sanitation and epidemics encouraged the government to sponsor public health through hospitals that largely took care of the poor. This reduced the needs for doctors to journey to where the sickly were as they could offer services within a hospital setting. This allowed for health facilities as did medical schools to thrive. This encouraged medical research which enables assessing the economics of healthcare systems in the country.

Foundation

Professional bodies like the American Medical Association (AMA) and the American Hospital Association (AHA) emerged during the 1800’s and played a significant role in ensuring members were well remunerated and authoritative (Rosen, 2015). The association developed great political influence which worked against the possibility of allowing for a national health insurance scheme. However, through initiatives and institutions like the Food and Drug Administration (FDA), the U.S. Public Health service, and the Indian Health service, the government was able to run social programs (Rosen, 2015). During the 60’s, Medicare was founded to cater for the aging persons while Medicaid was introduced to support medical care for the poor (Rosen, 2015). In 2010, the Affordable Care Act was enacted towards the creation of policy that ensured affordable, accessible, and quality healthcare for the entire American populace (Frean, Gruber, & Sommers, 2017). It is evident that the government only acts as a subsidiary to the extensive healthcare sector to combat the imperfect market situations that result in unequal access, high cost, and average quality healthcare outcomes.

Role of Economics

The call for radical reforms to the entire American healthcare system came about as it became increasingly apparent that costs were climbing at an unmanageable rate while the quality of care outcomes was decreasing. Curative medicine has for a long time been the cornerstone of healthcare financing (Frean, Gruber, & Sommers, 2017). However, varying economic dynamics demanded for a different perspective from which to address healthcare as a primary national concern. Economics has played a core purpose in determining the effectiveness of the healthcare systems to maintain or enhance national as well as individual health statuses (Bernell, 2016). For instance, within the U.S., the health services market responds to the demand and supply aspects on a number of fronts towards establishing an equilibrium point.

In the production of good health statuses, the availability of healthcare services is simply one factor among others such as lifestyle choices, education, income, genetics, and the environment (Bernell, 2016). Demand is determined by factors like pricing, healthcare insurance and patient demographics while supply is influenced by elements that include technology, leadership effectiveness, and market size. In the public and private sectors of the healthcare industry, the questions relative to cost, quality, access, and outcomes are answered differently (Bernell, 2016). Scarcity of the healthcare services as a resource and price dynamics tend to express how Americans perceive their health statuses at a personal and national level.

Economic Models and the Concept of the Market Equilibrium

Economics in healthcare service delivery is a suitable means of understanding its distribution across different demographic parameters in the U.S (Carlton et al., 2015). It is indicative of the behaviors, effectiveness, efficiency, and the value that producers and consumers represent in regard to various market dynamics. Economics plays a critical role in presenting analytical frameworks that show the efficiency and effectiveness in the consumption and production of healthcare provision as a service (Carlton et al., 2015). Four models serve to not only explain the role of economics in healthcare but also the underworking towards achieving market equilibrium. These include cost accounting (CA), cost effective analysis (CEA), cost utility analysis (CUA), and Cost benefit analysis (CBA) (Sengupta, 2016). These are employed to assess the economic acceptability, viability, and feasibility of decisions towards the implementation of particular health programs at the institutional, state, or national levels.

Health services provision as well as the initiatives implemented in the public sector requires judicious planning as well as massive injection of public resources. This is essential to ensuring that beneficiaries are able to attain maximum benefits (Sengupta, 2016). Though these are measurable in monetary terms, it is difficult to adequately measure human health gains in a similar manner. For instance, CA seeks to account for wastages in labor and other resources based on estimated production costs of each unit of healthcare service (Sengupta, 2016). Conversely, CEA is a model allowing for comparisons to determine the favorable way for attaining a particular objective. It attempts to measure and concentrate the most desirable outcome for a given initiative like incidence reduction of a particular health problem through monetary terms. CUA measures means through which to lessen healthcare costs. It employs ratios cost of a specific intervention with the gain measured in terms of quality of adjusted life years with the costs of health related services offered during a program (Sengupta, 2016). Lastly, CBA works to validate the adoption and implementation of a given healthcare initiative and the gain expected to be realized from actualizing it (Sengupta, 2016). The budget impact model assesses the impact of a particular intervention on healthcare cost offsets, drug costs, predicted healthcare system utilization, and expenditures on adverse events (Carlton et al., 2015). Managed care payer use this model to measure costs for each member on a monthly basis.

The market equilibrium concept as applied in healthcare notes that the buyers and sellers are many yet they offer a homogeneous service. However, the market is awash with imperfections given that factors such as genetics, income, environment, wealth, education, and lifestyle preferences determine how national and individual is able to demand for the product (Lábaj et al., 2018). This implies that consumers are unable to make rational decision concerning the homogeneous product making it necessary for interventions like Medicaid to influence price therefore making the product more accessible to greater proportions of the populace (Lábaj et al., 2018). This implies that in an imperfect market such as the U.S. healthcare system, it is necessary for the government to interfere in the in the allocation of healthcare related resources towards enhancing equity and efficiency.

Demand and Supply for Medical Care and Health Insurance, and Relationship of Income and the Demand for Healthcare

The U.S. health services market is dynamic in many ways relative to the production as well as consumption of demand and also, its supply side. For instance, the consumption aspect of demand involves the individual notion of feeling and looking healthy (Sloan & Hsieh, 2017). Conversely, the production element includes investments made in the professional training of personnel to work in the sector as well as towards patient and community education initiatives. This implies that patient demographics determine how well or otherwise people demand the service (Sloan & Hsieh, 2017). Among people living healthy lifestyles, demand will be more for preventive care as opposed to curative medicine yet those engaging in unhealthy behaviors are highly likely to require curative medicine (Snavely, 2016). However, with the availability of health insurance, more people are compelled to demand for healthcare services given that it decreases price. In relation to supply, elements like technology make it easy for providers to appraise efficiencies and effectiveness of service delivery noting that the market size is already extensive. It also enhances managerial capacities to correlate positively with input markets thus ensuring greater accessibility, affordability, and quality of service delivery (Bernell, 2016). Income disparities in a free market economy like the U.S. implied that there were people who naturally demanded more of healthcare service delivery based on their ability to pay for fees charged by healthcare organizations (Snavely, 2016). These were the wealthy and above average income brackets of the population. For those earning lower incomes, demand for healthcare diminishes since the price factor makes it inaccessible (Bernell, 2016). The option of healthcare insurance like Medicaid has allowed more people to find the pricing affordable therefore increasing engagements with suppliers of healthcare services.

Individual versus Population Health

Population health appertains to engaging in prevention strategies aimed at controlling health determinants influencing the overall statuses of a particular community at local, state, or national level. On the other hand, individual health looks to address prevention initiatives at the personal level especially for persons highly susceptible to a particular health risk thus, offering them protection (Kassler et al., 2017). It aims at supporting positive behavior and lifestyle changes among chosen high risk people which makes it expensive due to the extensive screening procedures. Promoting greater population health programs is beneficial to many people given that it engages in a widespread approach towards combating unhealthy traits in a community though it fails at individually reaching out to each community member (Kassler et al., 2017). This implies that population health strategies are quite beneficial in easing weight borne by healthcare providers and staffs.

International Comparisons

The American healthcare systems works in a manner that world-class medical care it is able to offer is available only to persons registered with particular health insurance plans. The insurance packages ensure that one is able to acquire quality care based on coverage (Singh, 2015). However, it also implies that people with the wealth or incomes that are high enough to pay for medical services are able to easily attain and maintain healthy statuses. The uninsured have to make due with obtaining care at emergency departments within hospitals under legislation like the Emergency Medical Treatment and Labor Act of 1986 (Singh, 2015). They also tend to acquire care services from safety net providers or directly pay physicians which are comparatively higher that what is offered under health insurance plans. Reforms have only incrementally improved access to the poor thereby, enhancing population health outcomes through healthcare insurance coverage.

The healthcare system in Canada has been undergoing a series of reform agendas aimed at enhancing the coordination and integration of care services for chronically sick persons with complex health needs (Singh, 2015). This is continuing in all territories and provinces through a multipronged approach. For instance, physicians are expected to employ electronic medical records while also caring for patients through multidisciplinary teams. Federal funding has also been reconfigured to ensure equity in all provinces. Generic prices are sold within the confines or price caps while every province consistently develops its own reform agenda relative to primary care systems (Singh, 2015). In comparison to the U.S. the reform agenda in Canada has advances at a faster rate given the level of political support to ensure qualified and affordable care to high risk persons like the chronically ill.

References

Bernell, S. (2016).  Health economics: Core concepts and essential tools. Chicago, IL: HAP/AUPHA/Health Administration Press.

Carlton, R., Mallick, R., Campbell, C., Raju, A., O’Donnell, T., & Eaddy, M. (2015). Evaluating the expected costs and budget impact of interventional therapies for the treatment of chronic venous disease. American health & drug benefits, 8(7), 366.

Frean, M., Gruber, J., & Sommers, B. D. (2017). Premium subsidies, the mandate, and Medicaid expansion: Coverage effects of the Affordable Care Act. Journal of Health Economics, 53, 72-86.

Kassler, W. J., Howerton, M., Thompson, A., Cope, E., Alley, D. E., & Sanghavi, D. (2017). Population health measurement at Centers for Medicare & Medicaid Services: Bridging the gap between public health and clinical quality. Population health management, 20(3), 173-180.

Lábaj, M., Silanič, P., Weiss, C., & Yontcheva, B. (2018). Market structure and competition in the healthcare industry. The European Journal of Health Economics, 1-24.

Rosen, G. (2015). A history of public health. Baltimore, MD: JHU Press.

Sengupta, K. (2016). Determinants of health status in India. New Delhi: Springer India.

Singh, D. A. (2015). Essentials of the US health care system. Burlington, MA: Jones & Bartlett Publishers.

Sloan, F. A., & Hsieh, C. R. (2017). Health economics. Cambridge, MA: MIT Press.

Snavely, T. M. (2016). A brief economic analysis of the looming nursing shortage in the United States. Nursing Economics, 34(2), 98.

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