Economic Analysis of Current Issues in the Health Care Industry



Economic Analysis of Current Issues in the Health Care Industry

Introduction

This paper discusses three profound areas of economic analysis pertaining to current issues and problems in the US healthcare industry, including demand in the healthcare sector, health insurance and regulatory policies.

Discussion

Importance of US Health Care Industry

Health Care industry is essentially important for the US economy, as it contributes more than any industry - nearly one-sixth of the US economy. The proportion of US Health Care industry was a mere 5.2% in the 1960's and 13.8% in 200s'; has now grown to a staggering 17.5% of US GDP. This monumental growth has positively affected the overall US society by creating significant employment opportunities, usually in hundreds of thousands. Despite all the positive impacts of the Health Care industry on the US economy, the industry is facing profound and apparently unfixable issues, such as fragmentation of the US Health Care sector; inaccessibility of healthcare, such as insurance; and rising cost to healthcare.

Demand and Supply in the US Economy

Similar to several countries, the impact of aging population has begun to take its root in US. The large number of employees in the generation of baby boomers (born between 1946 and 1966), increased life expectancy and the abolition of retirement age are some of the factors that contribute to an aging labor force in the US. The low fertility rate and the need for higher education have also resulted in an impending shortage of workers in some occupations. Additionally, workers experience more injuries during their work and can be characterized by physical impairments (decreased energy, decreased muscle strength, loss of flexibility), sensory distortions (mainly vision and hearing) and / or cognitive disturbances (decreased ability to concentrate).

Therefore, the growing proportion of aging US population is resulting in significant demand for Health Care services. However, this growing demand is not adequately met by a proportional increase in the number of professionals catering to these patients. A further and up-close investigation of the US Health Care system provides an adequate number of physicians and doctors, but an inadequate number of nurses (Gray et.al 2011).

When considering the costs and benefits of a specific health service it is essential to measure the compliance of different perspectives. When delivering an economic analysis of the Health Care industry it is important to make a distinction between the following basic perspectives:

Patient: for example, financial strain or co-payments; Care provider (doctor, hospital) as compensation for services or cost structure; Health insurance: for example, reimbursement of costs; Society: for example, distributive justice, allocation and maintenance of health and work ability; Employer: e.g. absenteeism or early retirement.

Additionally, it is important to include the direct and indirect costs and benefits and the positive and negative external effects of a health service.

Cost Assessment

Costs in the health sector include the use of monetary resources for one or more medical procedures performed. Costs are, however, not only in connection with funds, and are thus directly related to the ...