Economic Models and Analysis Healthcare

Economic Models and Analysis

Healthcare costs pertains to any fees used in any attempts for technology advancement of medical procedures, the payments for medicinal costs like vitamins supplements, food supplements, and/or life saving drug therapies, or even payments for surgeries and hospitalizations, nursing homes and so many other aspects which sole purpose is to offer any form of health assistance to the people. Other aspects that can be added to this list is the costs acquired in the payment of the professional health providers like the doctors, nurses, anesthesiologists, laboratory technicians among others who, as recent newspapers of news reports reveal, are being deficient in so many countries like the U.S.

The United States spends 14% of the gross domestic product (GDP) on healthcare, more than any other country, yet still one in seven Americans - a total of 45 million people, including 8.4 million children - lack health insurance. The middle classes are the largest group among the newly uninsured. Out-of-pocket healthcare costs for workers rose 50% between 2000 and 2003, and half of all bankruptcies, now at record levels, are attributed to health care costs. Meanwhile, the cost of the ten most-used prescription drugs has increased nearly 9% in 2003, outpacing inflation (U.S.Census Bureau, Current Population Survey 2004).

Just to see the situation of the healthcare systems, affecting not only the adult citizens, but also majority of the children coming from the families with no definite nor good sources of income, here are some significant facts (http://www.epinet.org/content.cfm/press_releases_hardships,2004):

Twenty-nine percent of working families in the United States with one to three children under age 12 do not earn enough income to afford basic necessities like food, housing, health care, and child care, even during a period of national prosperity. And among the problems related to poverty, the leading indicator is not whether a parent works, but whether the family has health insurance.

Nearly one-third of families with incomes below twice the poverty threshold faced at least one critical hardship, like going without food, getting evicted or having to "double up" in housing with another family, or not having access to medical care during an acute illness.

Nearly three-quarters of families below twice the poverty threshold faced at least one serious hardship, like worrying about food, failing to pay rent, using the emergency room as their main source of health care, having the telephone disconnected, or having children in inadequate child care arrangements.

Families at all income levels have a hard time finding day care centers with the adult-to-child ratio recommended by the American Academy of Pediatrics. In 49 states, childcare costs are greater than the tuition to public colleges.

Policies to boost income are only part of a plan to ensure that all American families can afford a safe and decent standard of living. Families that earn enough income to be ineligible for Medicaid, for example, are still often unable to afford private health insurance. These experiences indicate that Americans at all income levels need a stronger social safety net.

Why Healthcare Cost Continue to Rise?

It is clear now that there is a big problem on the equal distribution or availability of healthcare services to all, because of the continuously soaring healthcare costs. But what or who are the culprits of this? Are there things which continuously pushing this cost to rise?

Paul Ginsburg, president of the Center for Studying Health System Change (HSC) in Washington, D.C. revealed some factors affecting healthcare costs. This includes (Francis, 2003).

Drug companies who are spending roughly as much on advertising and promotion - $20 billion a year - as they do on research and development of new drugs.

American pharmaceutical firms employing one sales person for every physician in the country. They also pick up the tab for doctors to attend seminars promoting their products.

New technology - from diagnostic devices to surgical techniques - which usually accounts for more than half the rise in total healthcare spending in the past three years.

Profit margins on healthcare products and services, including health insurance, have been continuously going up - rapidly - rather than down.

How to Solve the Issue

What's to be done about rising medical costs? Here are some suggestions by experts (Francis, 2003).

Provide more information to consumers on what drug works, what procedures are best, which hospitals and physicians have good records. Insurance, for instance, shouldn't cover extra costs if a patient uses a brand-name drug when a cheaper generic does the job.

Cut off expensive treatment if it extends someone's life only a few days or months.

Spend more on prevention of disease by encouraging better lifestyles, improved nutrition, and other steps.

Ban or control the advertising of prescription drugs to consumers. The "hype" in the ads that pepper the evening news and other programs has swelled drug sales and taken up physicians' time, suggests Mr. Caplan. But there is little indication that the extra drug consumption has improved health by much.