Economic Forces and Impact on Healthcare

Economic Forces and Health Care

Evaluation of Economic Forces and Impact on Health Care

This paper examines the impact of economic forces on the health care industry and health care management. According to Economy Watch, the health care industry plays an important part in the country's economy. The health care industry determines the gross domestic product (GDP), exports status, employment, capital investment etc. The industry is likely to be dominated by continued expansion of demands in the market, increasing prices, and increasing awareness among customers, likely triggering a change in the industry for the better (Health Care Industry, 2011).

Industry analysts point to the healthcare industry as the one bright spot in an otherwise sluggish economy. According to the healthcare Financial Management Association (HFMA), the health care industry is creating new jobs, companies and markets. Job growth as the result of health care demands increased by 65% from 1990 to 2009, as indicated by a report by PwC's Health Research Institute. Healthcare spending is expected to account for nearly 20% of the U.S. economy in 2019 in new industries such as technology, telecommunications, and retail (Healthcare Industry Proves, 2011).

A report by CNN offers a similar perspective. The health care field is one of few industries that sustained steady growth, even during the recession, adding jobs every month for the last eight years. That growth is expected to continue, due to an aging population and health reform. "Health care jobs are driven by demand. An aging population simply needs more medical care," comments Sophia Koropeckyj, managing director with Moody's Economy.com. She notes that the leading edge of baby boomers are now turning 65, with the bulk following by about 10 years (Kavilanz, 2011).

Dr. Loeppke and colleagues discuss the impact of an aging workforce on societal policies and the nation's economy in a report prepared by the Special Committee on Health, Productivity, and Disability Management of the American College of Occupational and Environmental Medicine (ACOEM). The report argues that the health of the U.S. workforce is vital to the health of the economy. They discuss how the U.S. health care system faces a crisis due to the makeup of the current workforce. Aging and retiring baby boomers bring with them an increased burden of chronic disease across all age groups, posing a threat to the U.S. pipeline of healthy, productive workers. The balance that formerly existed between economic net contributors to social programs, i.e. workers, and those who are dependent on government programs, i.e. Social Security retirement and disability programs, Medicare, and Medicaid, is shifting radically (ACOEM Special Committee, 2008).

The very real challenge that an aging workforce, weakened by chronic disease, poses for the U.S. is the question of how to meet its obligations to programs such as Medicare, Medicaid, and Social Security. Providing insurance for everyone in the U.S. does not solve the problem, nor does spending more money on the traditional model of "sick-care" and late stage interventions (ACOEM Special Committee, 2008). ACOEM argues that the impending budgetary squeeze, along with the current health crisis and the workplace are all inextricably bound together. Because the workforce is the engine that drives the economy and supports the financial structure of health care in the U.S., the working age population is the key to assuring the availability of health care in the future. The Committee reasons that it is possible to promote sound fiscal policy through strategic investment in the health and productivity of the working age population using a new preventive-based paradigm focused in the workplace (ACOEM Special Committee, 2008).

The Committee further argues that studies have shown the value of preventive intervention. The article quotes two studies indicating that well-designed, integrated and supported health promotion programs not only reduce health care costs, but they yield a return on investment somewhere between $1.50 and $3.00 for every dollar invested. Data such as this reinforce ACOEM's argument that more attention and resources should be devoted to health-related services that protect the employability of the working-age population in order to maximize workforce participation and productivity (ACOEM Special Committee, 2008).

ACOEM advocates four fundamental principles that it believes are critical in addressing the growing health care and budgetary crisis. They argue that keeping the workforce healthy and productive is essential to keeping the economy strong. They also advocate that public investment in better health and better health care should advance beneficial societal outcomes, in particular workforce health and productivity. The workforce will become healthier and more productive through prioritized investment in evidence-based prevention strategies. Finally, ACOEM contends that these strategies will succeed only if spending on prevention is ranked as a non-discretionary priority and only if health care industry incentives are realigned (ACOEM Special Committee, 2008).