Economics Essay, Research Paper

Economics and Healthcare Delivery Systems has a direct affect on society;

because health, like any other good or service, is desired because it generates

utility. The Health Production Theory explains the role of the making, or

production, of health and its influence by a variety of factors, including the

amount of medical care consumed. Also, there?s a direct relationship between

healthcare economics and societies access to health insurance.

Rising incomes mean more disposable income for health services, both basic

and optional. Because health insurance continues to offer narrow ranges of

benefits for small monthly fees, many people pay directly for optional health

services. The first to notice this trend are entrepreneurs, both physicians and

businessmen who come from the resource side. These entrepreneurs have led in the

most noticeable physical and organizational restructuring of health care: the

decentralization of hospital and physician services to single-specialty or

single-patient-type "institutes" that offer all services in an

integrated form. Institutes now house women and children’s services, cancer,

orthopedics, eye, diabetes, renal and stroke services, asthma and allergies,

heart and fitness, along the lines of existing infertility institutes. The task

of tying these disparate institutes together falls to the regional health care

system where the links are financial and information systems, not geographic or


Physicians, many of whom prove to be not only surplus under managed care but

whose skills have not kept up with advances in medical science. At the same

time, doctors trained in genetics find they cannot afford to practice

independently, since health plans are reluctant to open the gate to what they

perceive as expensive services that will not prove out for years. Manpower

surplus gives the advantage to health plans, which can pick and choose. IPA?s

are a low-involvement framework for physicians who only want to contract

together. Medical groups can not only contract but enhance the practice

experience, and health plans tend to like them.

Health Insurance: As the country enjoys the "long boom" produced by

the leveraging of knowledge into wealth, there are actually two pathways

emerging in payment:

 One pathway is mediated by insurance, still related to

individuals through work or through government. Mandates have stair-stepped most

employers into mandated coverage, leaving out small rural businesses where no

managed care plan exists, or certain other exceptions. Unfortunately, Congress

has been unable to reduce fully the 17 percent of the population without

insurance, since small business growth, immigration and premium increases offset

any gain. Universal coverage mandates await the political maturation of minority

groups into both elected leadership positions, and voter participation.

 The second pathway is payment arranged outside of insurance.

This is the fastest-growing form at present. Direct consumer payment covers most

self-care, alternative health services, "nutraceuticals," cosmetic

surgery, much nonorganic mental health, non-Medicaid long-term care and physical

therapy past approved limits. For seniors and even families, some health

services are built into housing costs. Foundations and not-for-profits cover

problems not easily handled by insurance, such as migrant worker care or

open-door clinics for the inner city. Health insurance depresses innovation, as

providers tend to give only the care that is, in fact, "covered." It

does so by excluding "experimental" procedures, by underpaying for new

services so providers are reluctant to commit the resources, and by restricting

by underpaying for new services so providers are reluctant to commit the

resources, and by restricting patients’ access on a per-case basis. (Examples:

bone marrow transplants for third-stage breast cancer, testing of family members

at risk for cancer, etc.) Prevention efforts are artificially limited as they

can be paid for only if delivered to covered individuals in their role as

patients, when prevention at the family or community levels may be called for.

 Insurance related to individuals does not work for people who

lack the competence to manage it or their health care. Open-access services,

instead, should be subsidized. Note the untenable economics of emergency rooms,

the safety net for people who are outside the formal system. Insurers,

particularly government plans, could stimulate such innovation by offering

budget subsidies for services that are meant to reach the uninsurable.

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