Wiley Swain

Wiley Swain

Project Management

One of the most controversial issues of today is universal healthcare.  America remains the only industrialized nation that does not provide some form of comprehensive health care to its citizenry (Oron, 2002).  Because of this, healthcare costs, both from the individual and company perspectives, are becoming a major influence on economic decisions.  It is estimated that 79 million Americans are either paying off medical debt or have medical bill problems with almost 41 percent of working –age individuals having some form of medical debt  (NCHC, 2008).  The business sector is also starting to suffer tremendous drains on resources do to escalating worker healthcare costs which limit a business’ ability to increase wages or add to the work force.

Facing such cost increases, businesses are forced to not only reduce worker compensation but also reduce investment in areas such as product development and marketing.  This continual increase in healthcare costs has not seen any increase in the quality or quantity of services provided to the customer, however.  As a matter of fact, out-of-pocket expenses for individuals and their families have increased while access to routine and preventive healthcare services has decreased significantly.

Families are forced to do without adequate or any form of health coverage greatly increasing the potential financial burden if any unforeseen medical emergency occurs.  Individuals may delay a visit to a doctor until an issue becomes significant when a little preventive care could have reduced or negated the issue altogether. It has been argued that the health system in place does provide health services to the masses because no one is turned away at emergency rooms and there are regional networks of non-profit and governmental healthcare providers to make sure everyone can have access to needed care.

This system, however, is highly inefficient because consumers who are unable to afford some form of health insurance coverage must access the medical system by the most expensive means available.  They will either go to the emergency room which is one of the most expensive costs to hospitals; or they will go to some non-profit or governmental facility that is subsidized by tax dollars thus putting the burden back on the tax-base.  Another point against universal healthcare is the potential “free-rider” problem that “free” or universal healthcare may cause.  Universal healthcare has the potential to over-burden the medical system if consumers overuse services for minor medical issues.

Right or Resource

Given these concerns, the need for some form of universal healthcare still seems to make good sense if examined from an economic standpoint.  Healthcare, given its nature, is an inelastic service that consumers would willing pay any amount to obtain.  The marketplace is far from perfectly competitive because of the varied and unique skill sets required to fill the various healthcare positions as well as the training time involved in developing a healthcare professional.  Another extremely important influence on the competitiveness of the healthcare marketplace is the fact that there is a large difference in the knowledge base of consumers and providers concerning medical matters.  This gives healthcare providers an undue influence on consumer choice concerning a particular issue.  Given all these facts, there seems to be a need to tilt the market towards equilibrium so as to reduce the growing negative externalities of healthcare costs on consumers.

Comprehensive healthcare would have measured effects on the economic growth of America.  As more workers become insured productivity will increase because workers are able to take advantage of preventive services reducing loss-time.  An increase in preventive healthcare would reduce the need for more expensive and intrusive procedures which would lead to a decrease in average total costs for the industry over the long-term. Furthermore, by reducing the incidence of major procedures it also reduces the need for specialized professional services.  This would allow universities and medical schools to allocate resources to more general areas of health education producing more frontline professionals.  Development of medical specialists requires a disproportionate amount of resources and time so a small decrease in the need for specialists would represent a large increase in the production of more needed workers such as nurses and general practitioners.   A universal healthcare plan would also help reduce developmental delays often experienced by children due to health issues.  The quantitative effect of universal healthcare would be to extend worker life and productivity helping to provide all sectors of the economy a sound employee base thereby reducing long-term market risk.

Conclusion

The “free-rider” concerns should be manageable with the proper structuring of a co-payment system.  Handling hospitals and doctors operating private practices may present a more daunting task, though.  Doctors and hospitals would have to be willing partners in order for any universal healthcare plan to work.  Compensation would have to maintain a level so that future generations will still see the value in entering into the healthcare professions in numbers great enough to allow the industry to provide adequate services.  On the care giving side, doctors and hospitals have to be given a reimbursement plan that incentivizes the care-giver to put the interest of the patient ahead of cost concerns.

Looking at the healthcare issue from an economic standpoint is helpful when dealing with such a hot-button issue.  The issue of healthcare is muddled with societal norms and concerns that are actually separate from the concerns at hand.  This is evidenced by the fact that, in general, Americans see the need for a strong healthcare system that can provide for the needs of all consumers.  The problem comes in when the discussion turns to paying for and administering the system.  By using economics to break the situation down to the costs that are being paid, it becomes apparent that it is not a choice between developing a tax-based subsidy system or not to supplement healthcare, but it is more of a choice of acknowledging the subsidy system already in place and working to make it more efficient.

Bibliography

Simmons, Henry E. and Goldberg, Mark A.  “Cost of Inaction,” National Coalition on Health Care, 2003, p.4.

“The Impact of Rising Health Care Costs on The Economy.” National Coalition on Health Care, November, 2008.

Oron, Ruth.  “Health Care-Based on Good Will, Not Profit.”  Southwest Digest, October-November, 2002.