Introduction will also monitor private insurers by banning


The healthcare system of a country is of great significance since it determines the health of the country’s population. The population’s health is important due to the fact that it directly impacts on the productivity of the country. This means that healthcare should be available to every citizen. Access to healthcare services is determined by the costs associated with their provision. Thus the services should be affordable if they are to be accessed by the majority.

It is for this reason that the US government is committed to reform its healthcare system. This essay analyzes the economic impact of the newly signed US healthcare proposal. Three articles on the healthcare reform proposal will be analyzed.

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In an article titled “healthcare reforms” (New York Times), the new legislation on healthcare came into effect on 23/03/2010 after being signed by president Obama. The new legislation aims at overhauling the country’s healthcare system by enhancing access to healthcare services (New York Times). The reform will require majority of Americans to be covered under health insurance policies. 30 million people are expected to be covered in the proposed system (New York Times).

To achieve this objective the government will subsidize the premiums for private health insurance policies held by low income and middle income earners (New York Times). This means that the government’s expenditure on recurrent costs will increase. On the other hand the citizen’s disposal income will rise as they spend less cash on health insurance premiums and medication. The legislation will also monitor private insurers by banning them from denying sick or costly clients insurance cover (New York Times). Besides, those with per-existing conditions will be insured. This is a risk in the insurance industry since the customers with pre-existing conditions are likely to die or claim payments on regular basis.

The profits will reduce as insurers pay more claims per year. The cost of the new system is $938 billion (New York Times). The federal deficit is expected to reduce by $138 billion under the new system (New York Times). In a second article titled “what is at stake if the healthcare reform passes” (Biheri), the US healthcare system is described as inefficient. The current system is characterized by high costs, inconsistent and complex health covers (Biheri). Consequently, there is low demand for health covers and access to healthcare. Currently, insurers are offering covers only to customers who are less risky in order to reduce cost associated with paying claims (Biheri). Consequently, they are able to maintain their competitiveness.

The proposed system will facilitate access to healthcare through affordable insurance cover (Biheri). Thus the health of the population will improve and this will lead to high productivity in terms of higher GDP. In a third article titled “Obama’s healthcare reform bill and its impact on the healthcare markets” (Sunita), the US healthcare system was ranked at position 37 out of 200 nations that were studied by WHO. The US spends 17.

5% of its GDP on healthcare and this has contributed to the nation’s budget deficit (Sunita). Hence there is a need for a reformed system that promotes cost reduction. The proposed system will reduce the federal deficit by minimizing costs and generating income through tax accruing form the manufacture of medical devices (Sunita). The demand for health insurance is set to rise as more citizens get covered.

The competition in the insurance market will increase as more firms enter the industry to take advantage of the high demand.


The proposed healthcare system should be fully implemented since it will lower the costs of providing healthcare services. An efficient healthcare system will reduce expenditure on health services. The savings made under the new system can be used by the government to develop other sectors of the economy. However, there should be provisions for protecting insurers from the risk associated with providing cover to citizens with pre-existing conditions. This will promote investors’ confidence in the industry.

Works Cited

Bihari, Michael. “What is at stake if the healthcare reform passes?” 16 Apr.

2010. Web. 13 Dec.

2010. New York Times. “Healthcare reforms.” New York Times. 3 Nov. 2010. Web. 13 Dec.

2010. Sunita, Jane. “Obama’s healthcare reform bill and its impact on the US healthcare markets.” The Today News. 10 Oct.

2010. Web. 13 Dec. 2010.


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