Macroeconomics of the health care policy in United States - Essay Example

?Macroeconomics of the health care policy in United s The economic growth of a country, recession, the unemployment rate prevailing in the economy and the rate of inflation in the economy are the main concerns of Macroeconomics. The essential and the central idea of this field of economics is that the resource availability of an economy is scarce and people need to made optimum use of those resources so that every sector of the economy are benefited so as to benefit the total economy of the country. The economic variable that is of most important value for the study of Macro economics is the Gross Domestic product (GDP) of a country. The total value of goods and services produced within an economy at a particular period of time is the GDP of the country at that period. A country is said to be experiencing economic growth if there is a continuous upward shift in the GDP of the country. The measurement of the GDP consists of the production and the return from every sectors of the economy and thus changes in the production or output of any sector will affect the total Gross domestic product of the country and hence the total economic growth. Thus, in other words it can be said that all sectors of the economy are interdependent. (Taylor, 2006 pp. 459-460: Mankiw, 2008, pp. 3-4) Among the service sectors of the economy, the health care system has a clear significance and every year a considerable amount of the total national income and government revenue of the country are spent on the public health. With the advent of the twenty first century, many experts of the health care policies believed that the era will experience fundamental reforms in the health care system of the United States of America and thus reform was expected to take place in the health care policy issues of the country. Prior to 1990s people never talked about health care issues as it was considered exclusively for the upper middle class of the society. Over the years of development of the economy, the policies of health care included the middle and lower income class of the society. In the span of 50 years, United States has transferred the health care system into a billion dollar industry. The stocks and the companies associated with this system of health care experienced huge gains and rapid growth during the time span. The general health care was viewed important by each and every Americans and they took pride in the development of the system within the country, the increasing use of modern updated technologies and the growth of modernized hospitals dispersed in different areas of the country. People of the country started believing that health care system of the country has been one of the contributing factors behind the enormous growth of the country. However, it appeared to be just a myth when in the twenty first century several researchers and analysts within the health care system concluded that the health care system of the country was in a position of providing proper health care to only 60% of the chronically ill of the country. Series of statistical facts regarding the health care system of the country reveal that the system is collapsing. The main reason that was viewed behind the collapse of the system was that about 15.8% of the population of the country was not provided with health insurance despite the country being the highest in its expenditure behind the health care system of the country. The country’s expenditure of the health care sector in the year 1990 was 12 % of the total GDP of the country of that particular year which increased to 13.1 % in the year 2000. The other industrialized countries of the world mainly Canada, West Germany, and Japan spent much less on the health care of the country but still they were able to cover most of their total population much more comprehensively than the United States of America. (Kronenfeld, 2002, pp. 1-9: Patel, Rushefsky, 2006, pp34-35: Shi, Singh, 2005, p144) Use of the most advanced techniques for improving health care thus did not imply that the populations of the country were healthy. The main problem with the health care system of the country that had been identified was the existence of more than one health care system. According to the study made by Torrens in the year, 1988 there were four different health care systems in the country. The first system covered the middle and the high-income group of the country those were regularly employed and possessed comprehensive health insurance policies. The second system covered the poor population those without any insurance coverage. The third and the fourth system of health insurance covered the working military personnels and their dependents and the retired military people respectively. The health care system of US followed the model of private health care with most of the population covered by private insurance and the government providing insurance mainly for the backward section of the society. Therefore, to overcome the loopholes of the system of health care of the country and to cover up the problems relating to the presence of more than one health care system in the country. The option is to choose a nationalized health care system with the government of the country acting as the single player of the health care system. The total spending of the system of health care would be done from the government budget. Hence the government would be solely responsible in deciding what, how and for who the service is being produced. However, that leaves no choice on the part of the private individual regarding the amount and the type of the services they desire that was otherwise available under privatized health care system. (Musgrave, 2006, pp.3-11: Shi, Singh, 2005, p.146: Dewar, 2009, p 146) According to the indicators of Macroeconomics, a market-based system is the better option to cover up the drawbacks of the other two. The market acts as the link between the consumers and the suppliers of the product by connecting the decision of the suppliers and the preference of the consumers at the price they are willing to pay for the preferred health policies. Markets operating at competitive level could provide the best products through optimum and most desired allocation of resources. A competitive form of market allows the producers to produce the desired commodity for the consumers at the lowest possible cost with profit remaining for the producers. Thus, the country, by spending the maximum percentage of their gross domestic product on health care system will be able to receive more health care as compared to the other industrialized countries of the world. However, the government of the country needs to be entitled with the role of providing insurance coverage to the population of the country covering most of them with special tax incentive systems to the lower income group of the society. Certain features of the health care system are unique in respect to the macro economic factors like the role of the government, initiatives taken by the market economy and the role of the institution in the country’s economy. They are asymmetry of information, the nature of the health care system as public good, the inverse relationship that existed between the share of the health care services in the GDP of the country and the public spending, the heavy regulations maintained in the industry of health care and the influence of a third party. For a competitive market to perform optimally there is a need of full information regarding the product on the part of both the producers and the consumers. However in the market of health care there exists asymmetry of information, hence the market cannot function optimally. The price of the products hence will not be in accordance to the consumer’s preference since the producers have more information regarding the medical service provided and other medical products. These market imperfections have always been a cause of concern of the health care system of the country. Moreover according to the data published by OECD in the year 2003 there exists an inverse relationship between the public spending on health care and the contribution of the latter in the total GDP of the country. The data reveals that with increasing public spending the sector’s share in the GDP reduces. Regulations on the health care system reduce competitiveness among the different providers and hence it results in a reduction of their efficiency. Moreover a majority of the hospitals of the country are generally financed by parties other than the buyer of the health care policies and its suppliers. It results in an inflationary effect on the health care industry and thus affecting the total economy. (Musgrave, 2006, pp.3-11: Shi, Singh, 2005, p.146: Dewar, 2009, p 146) Thus, proper macro-economic policies to regulate these loopholes in the health care system of the country are to be taken so as to ensure a proper functioning of the system with the society being optimally benefited. Government should encourage people to increase their propensity to save such that those resources come to help in times of need for buying proper and required medical and health services. With high rate of savings, highly deductible medical insurance with low premiums can be provided by the government that will appear beneficial both from individual and social point of view. References Dewar, D. M. (2009), Essentials of Health Economics, Jones and Bartlett learning Taylor, J. (2006), Principles of economics, Cengage Learning Mankiw, G. (2008), Principles of Macroeconomics, Cengage Learning Kronenfeld, J. J. (2002), Health Care Policy, Greenwood publishing group Patel, K & M. E. Rushefsky, (2006), Health care politics and policies in America, M.E. Sharpe Musgrave, F. W (2006), The economics of US health care policy, M.E.Sharpe Shi, L & D. A. Singh (2005), Essentials of the united health care system, Jones and Bartlett learning Read More