Healthcare Quality and Health Insurance

Health Insurance and Healthcare Quality

Health insurance plays a significant role in determining the number of healthcare services performed. When a consumer has insurance, they can often access medical procedures and treatments at a lower cost, as the insurance company covers a portion of the expense. However, this can also lead to excessive use of healthcare services, as the consumer may be less concerned with the cost of the procedure. In this essay, we will consider the effects of health insurance on the demand for healthcare services, the relationship between demand and cost, and the potential for excessive use of healthcare services. We will also discuss policies that might be implemented to prevent this excessive use.

The consumer demand for healthcare services would likely be lower if the consumer had to pay the full $200 for the medical procedure. This is because the procedure cost would be significantly higher for the consumer without insurance, making it less affordable and, therefore, less appealing. Consumers generally base their purchasing decisions on cost, so if the cost of a healthcare procedure is too high, they may be less likely to seek out that service. On the other hand, if the consumer has health insurance and only has to pay $25 for the same procedure, they may be more willing to consider it due to the lower cost. In this case, the demand for healthcare services would be higher (National Academies of Sciences, Engineering, and Medicine…., 2018).

If there is high demand for a healthcare procedure, the cost of the procedure will likely go up (Thuong, Huy, Tai, and Kien, 2020). This can be due to the basic principle of supply and demand. When there is high demand for a product or service, the price of that product or service tends to increase (National Academies of Sciences, Engineering, and Medicine…., 2018). Another reason can be the overall increase in healthcare costs, which have been rising in recent years. This can be attributed to several factors, such as shortages of healthcare resources, equipment, and supplies and rising labor costs in the healthcare industry. These cost increases may be passed down to consumers through higher healthcare premiums or out-of-pocket expenses. In addition, there may be a significant demand for healthcare services due to the COVID-19 pandemic, with patients seeking to catch up on procedures they postponed or delayed during the early days of the pandemic. This increased demand, coupled with the rising costs, could further contribute to the cost of healthcare procedures (Kaplan, 2022).

Economists sometimes consider the use of healthcare services excessive because insurance companies often cover a large portion of the cost. This can lead to a situation where the consumer is less concerned with the cost of the procedure, as they are only paying a small portion out of pocket. This can result in the overuse of healthcare services, as the consumer may be more willing to seek additional procedures or treatments that may not necessarily be needed. For example, suppose a consumer has a minor ailment and knows that their insurance will cover most of the cost of a visit to the doctor. In that case, they may be more likely to seek medical attention for that ailment rather than trying home remedies or over-the-counter remedies (Thuong, Huy, Tai, and Kien, 2020).