The US Healthcare System: A Critical Discussion of Underlying Issues using Economic Perspectives

Today, more than ever before, questions are being raised about what type of healthcare reform will ensue in the US. Traditionally, the American political elite and policy makers has been known to muddle through the healthcare policy, hence the current state of affairs (Helms 5).

While experts are of the opinion that the health sector is desirous of radical transformation, this has never been the case in recent American history. President Barrack Obama has been pushing for a bill that will radically transform the health sector ever since he ascended to the White House a year ago, but has met stiff resistance from conservative republicans who do not want to change the status quo.

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Indeed, the question on how to reform US healthcare has often been discussed with rage in Washington D.C, in the print and electronic media, and in different neighborhoods and communities across the country (Graves & Earl 10). But is the current US healthcare system economically viable? Does it exist to serve the public or the private good? Does it strive to offer efficiency or equity? This paper aims to critically discuss these questions with a view of discerning the economic prospects of the US healthcare system.

On the question of economic viability, it is imperative to review comparative data of the US healthcare in contrast to other developed countries. It is also imperative to note that the ongoing healthcare debate boils down to issues of the right to healthcare, equality, sustainability, and access to quality healthcare services commensurate to the huge sums of taxpayers’ money spent (Luft 19).

Currently, few Americans, if any, can inarguably agree to the proposition that the quality of healthcare offered is commensurate to the huge sums of money used to offer the services.

Indeed, the US is in a class of its own as the only developed country in the world that does not make provisions for universal health care system to cater for the health needs of its citizens (Luft 18). In 2006, the number of its citizens lacking health insurance coverage stood at 16% of the total population, equivalent to an estimated 47 million citizens (Luft 19).

From the above scenarios, it is safe to argue that the US healthcare system is currently economically unviable. Indeed, experts have warned that the long-term fiscal balance of the country could be predominantly decided by the rate of growth of costs directly related to healthcare.

According to Orszag & Ellis, “if costs per enrollee in Medicare and Medicaid continues to grow at the same rate as they have over the past four decades, federal spending … would increase from about 5% of the gross domestic product today to about 20% by 2050 – roughly the share of the economy now accounted for by the entire federal budget” (para. 1). When costs accumulated by the government, citizens, and the private sector are taken into consideration, the US spends an estimated $1.9 trillion yearly on healthcare expenses.

Consecutive studies have also revealed that the US spends in excess of “44 percent more per capita than Switzerland, the country with the second highest expenditures, and 134 percent more than the median for member states of the organization for Economic Cooperation and Development” (Teslik &Johnson para. 1). In this perspective, the notion that US healthcare system is economically viable does not hold water.

Confusion abounds on whether the US health system exists to serve either the public or the private good. In 1965, the Congress took decisive steps to launch two huge public programmes – Medicare and Medicaid – to take care of the health needs of Americans (Helms 6-7).

The former programme deals with the aged and disabled, while the latter concerns itself with low-income individuals in need of care. Nonetheless, unlike in other countries such as the UK and Canada, these public entities “are mostly financing programmes that pay for care delivered in the private sector” (p.7).

Consequently, whilst Medicare, Medicaid, and some employers operate programmes to support managed-care programs across the country, both public and private sectors of health in the US are still massively controlled by fee-for-service payment techniques. This has led to intrinsic inefficiency, increased expenses and lack of access to healthcare, especially to low-end Americans. In this regard, it can vehemently be said that the American healthcare system exists to satisfy the private good.

Currently, private health insurance companies have become the hottest critics against the proposed healthcare reforms since they know their interests are at stake (Graves & Earl 10).

In 2002, during the Clinton administration, it was the private sector which shot down some of the proposed strategies for efficient healthcare system being recommended today, whereby the power to administer funds from Medicaid and Medicare is wrestled from these private health insurance companies and given back to the doctors and the public (Graves & Earl 10). It is only under such a strategy that Americans can enjoy universal coverage in healthcare, and the healthcare sector to exist for the good of the public.

Consequently, any health reform in the US must factor in the need for the public to take control over the system as a viable substitute to private insurance if the public are to increase access to quality healthcare while rationally managing costs. This function cannot be adequately covered by the private sector since they are in business for profit.

Economically, the supply and demand for healthcare in the US is at stake due to the externalities arising from private insurance schemes (Tuft 25). Many Americans, especially low-end individuals, are in constant need of healthcare services but denied access by inflexible and often bureaucratic nature of the paying agents – health insurances firms. It is therefore safe to argue that the existing public healthcare programs, namely Medicaid and Medicare, together with contributions remitted by large employers have been privatized.

In the light of this, the market equilibrium of healthcare provision in the US has been destabilized since all programmes and strategies have been set to favor private practice rather than the public in need of care. In such a scenario, it is prudent to say that the US healthcare system exist to serve the private good.

Issues of efficiency, sustainability, and equity have been at the core of US healthcare debate for a couple of years. What is resoundingly clear is that the system has failed to offer equity in accessing healthcare needs as over 47 million Americans live without health insurance coverage.

Majority of these individuals are from low-end communities hence encounters difficulties in assessing care (Helms 11). In as much as the Obama administration is willing to reform the healthcare sector, overbearing insights points to the fact that the system strives to offer efficiency, not to the poor members of society, but to individuals who can dictate what treatment procedures should be carried out on them and which drugs are to be prescribed (Graves & Earl 10).

As such, it can be inarguably said that the current American healthcare sector strives to offer efficiency to those who can afford to take care of their own medical needs, leaving out millions of people who have a condition but cant access quality care. Equity is therefore not guaranteed.

It is the function of health economics to come up with the best promising manner of achieving the outcome of equity in the US health sector at the least expense. It is the desire of nearly all Americans to be universally covered by the healthcare scheme, but not when the private sector is calling the shots (Luft 20).

Indeed, to achieve equity, all stakeholders, including communities, must intercede to attain broad-based healthcare coverage in the smallest amount of cost, and the fairest approach possible. The Government’s involvement must therefore be present to achieve equity in healthcare markets. This, coupled with the market failure of the US healthcare industry offer’s enough justification for government’s intervention in the sector.

All in all, there exist volumes of paperwork on “healthcare legislation now pending in Congress and just as many arguments, facts, fiction, and outright misrepresentations for each of those elements” (Graves & Earl 10). However, it is time the government and other interested stakeholders stopped to procrastinate the desire of millions of Americans to have a new healthcare dispensation – the universal coverage.

In the 21st century, it is awful for a developed country to have a healthcare system that has no regard to cost-effectiveness and cost-benefit analysis, thereby sucking trillions of dollars of taxpayer’s money into the drain. However, it is unexplainable for citizens of a super power such as the US to have inadequate or lack of access to quality healthcare.

Works Cited

Graves, J., & Earl, G. Healthcare Reform is Up to All of Us. Black Enterprise, 40. 4 (2009): 10

Helms, R.B. Health Reform in the US: What will Shape the Future Debate? Pharmocoeconomics, 18. 2 (2006): 5-14

Luft, H.S. What Works and What Doesn’t Work Well in the US Healthcare System. Pharmocoeconomics, 18. 2 (2006): 15-28

Orszag, P.R., & Ellis, P. Addressing Rising Healthcare Costs – A View from the Congressional Budget Office. The New England Journal of Medicine, 357.19 (2007): 1885-1887. Retrieved 10 Jan. 2010

Teslik, L.H., & Johnson, T. Healthcare Costs and US Competitiveness. 2009. Retrieved 10 Jan. 2009


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