Economics issues in health services Essay

            In the dawn of the new millennium, the health care industry has become better with the various technological advances introduced in the market. However, these developments would not be appreciated if health services are ineffectively delivered particularly by the government.

            In the Economic Report of the President in 2004, it said that “based on research almost 50 to 70 percent of the growth rate in health expenditures is attributed to technological progress in health care goods and services.” It added that the ‘technological progress in health care has been very beneficial, but has lead to growth in health care expenditures.”

            Although there poses a brighter future for further technological innovations as manifested by the infusion of government money, the American population may be placed in a bad light as medical care or health services – particularly health insurance – have become expensive and inaccessible.

             In one of his papers, Economist Collin Cameron from the Department of Economics of the University of California – Davis stated that about 43.6 million or 15.2% of United States population – mostly full-time working young adults — were not covered by insurance in 2002. This, however, contemplates that roughly half of the United States population believes that money should be consumed only for essential basic human needs such as food, and that investing on health insurances can be set aside.

On the other hand, the Wikipedia website said that the figure “does not boil down to a simple question of affordability.” It said that the uninsured population might include those “young and healthy individuals with low risk of serious illness who don’t believe that health insurance would be cost-effective.”

            However, this uninsured population yet failed to remember that acquiring health insurances also pose greater benefits.

            In an article written by William A. Glase for 2002 Grolier Multimedia Encyclopedia, he stated that “health insurance is a social arrangement to reduce the risk of serious monetary losses through cooperation of many similarly situated persons or organizations. An insurance carrier pools many comparable individuals, calculates the monetary consequence of each type of illness or injury covered, calculates the proportion of members of that class suffering all the various ills each year, and converts that proportion into an average probable monetary loss of each individual subscriber. All subscribers contribute to the fund that covers all costs by paying a fractional share each year.”

            The idea behind these health insurances is to be of assistance to people by covering their financial losses as they access unexpected costly basic health services.

            The health insurance primarily covers disability losses, which are fractional payment of normal incomes by the insurance company to insurers who cannot work anymore due to illnesses or injuries; and medical expense losses, which are payments made by the insurance company to doctors and other health service providers after offering treatment to the insurer or as an reimbursement to the insurer should he had paid the health service given.

            Since the United States medical-care system continues to be private and mostly entrepreneurial by nature, health insurances can be considered a luxury for only a few could afford to have one.

            In the Economic Report of the President, it also stated that one of the salient features of health insurance in the United States is that 60 percent of all individuals mostly acquired it through employers. It also mentioned that health insurance policies tend to cover relatively low-expense items that have a little uncertainty like visiting a doctor for sore throat.

            Meanwhile, it has been said that medical services tend to increase in the outset of technological developments, which in effect causes also an upsurge in the price of health insurances.

            The dilemma with health insurance covering low-expense services is that more and more people would realize that there is no value in obtaining insurances as those services offered could be immediately paid. What matters most importantly to the insurer – in obtaining such insurance — is the guarantee that he could avail of any health services regardless of price anytime should the need arises. It is important to the would-be insurer that health insurances provide a sense of financial security should an unfortunate event occurs. In availing health insurances, the would-be insurer expects to pay only for those substantial services being offered.

            In addition, acquisition of health insurances should not be solely depending on employers. It is but important that an employee – on his own volition – should pursue in purchasing health insurances as unexpected events might occur at any time. Briefly, health insurances provide a certain protection for his well-being.

            Meanwhile, one of the proposals carried by the paper Economic Report of the President to solve the issue regarding low-expense services being offered by health insurance companies is that health insurance markets should be encouraged to enter into contracts that focus on large expenditures that are truly the result of unforeseen circumstances. Moreover, the same paper also suggested that health insurance markets should do away with the traditional employer-based group markets.

            In Glase’s article, it also made mention that “the United States enacted social security but omitted national health insurance. The government enacted only a special social insurance program for the elderly (Medicare) and for the rest of the population, the United States relies on private health insurance and public assistance for the poor (Medicaid).

            The insurance program in the United States is the social security system or commonly referred to as the social insurance. It includes life insurance with annuities, health insurance compulsory sold in group plan by the federal government, other types of health and disability insurance and several forms of special coverage for the very poor.

            Health insurance in the United States can be categorized into two, the Medicare and the Medicaid. Insurance for the elderly, commonly called as the Medicare is partly paid for by a tax added to the Social Security and by voluntary basis through a government trust fund while Medicaid is largely supported by government. Although this has been the allotment, much of the Medicaid allocation – which was to be spent for the poor – has also been spent for the elderly to cover its nursing home care expenses.

            In the same article written by Glase, it said that “the United States has recognized its great problems in health-care finance but cannot solve them. The federal government, avoiding the complicated and insoluble field of overall health finance, focused on controlling costs of its Medicare and Medicaid programs. But such costs could not be controlled without reforming the system.”

            Although the budget allocation is primarily focused in achieving technological advances related the health care industry, it is but much important to apportion some to the immediate needs of the people.  It is true that technological advances help them to be cured of their sickness instantaneously, but still the primacy of well-being is partially set aside. The government should provide for systems to lower the costs of health insurances especially to those who cannot afford to avail of medical services in order to protect its citizens as mandated by the Constitution.

            The government – particularly the legislators — should now be acting upon the problems brought about by these costly health insurances either by proper budget allocation or through legislation. However in legislation, this does not mean that health insurances should be made compulsory by the government. Instead, the government must be able to press upon its people the value of its well-being without employing upon them brute force or as a mandatory requirement for compliance.        It is also important for the government to review its policies in order to know which are to be considered as “top-priorities”.

            However, the paper Economic Report of the President carried its last proposal which is to provide a more standardized tax treatment of all health care expenditures. I believe that unless there is a clear view of what the government priorities are for the health care industry, the population of those uninsured would continue to increase as time passes.

            In an article written by Rita Campbell and W. Glenn Campbell, it said that “it is best to improve and expand the existing systems in health care including public assistance program, which provide services to low income group who cannot afford adequate health care.”

            In conclusion, it is true that lawmakers has the capability of producing and introducing bills to suit the needs of the people especially with the health care industry. However, these pieces of legislation would cease to have its meaning unless those existing are properly and efficiently implemented. There is no need to craft yet another bill to be able to reform the health care industry. What needs to be done is that the government should look into the existing policies being imposed in the industry and detect which ones should be stricken off and those which should be strictly employed. Reforms need not be through legislative work alone for this is tantamount to lip-service and deprivation the people’s rights to affordable medical services. It is but important put these legislative measures in action.


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2.         Campbell, R. ; Campbell, W. (1953). The Economic Issues of Compulsory Health Insurance: Reply. The Quarterly Journal of Economics, 67, 125-135. Retrieved March 8, 2007, from http:// (195302)67%3A1%3C125%3ATEIOCH%3E2.0.CO%3B2-8 –

3.         Collin, C. (2007).   Current Issues in Health Economics: An Economist’s Perspective. Retrieved March 10, 2007, from University of California-Davis, Department of Ecnomics website:

4.         Council of Economic Advisors. (2004). Economic Report of the President. Retrieved March 9, 2007 from

5.         Glase, W. (2002) 2002 Grolier Multimedia Encyclopedia.

6.         Health Insurance (n.d) Retrieved March 10, 2007 from

7.         U.S. Census Bureau News. (2006) Income Climbs, Poverty Stabilizes, Uninsured Rate Increases. Retrieved March 15, 2007 from