Healthcare reform and economic impacts

Health Care Reform and Economics

Over the last several years, the underlying costs for health care have been rising dramatically. Part of the reason for this, is due to the fact that 70 million Baby Boomers (largest population demographic) are becoming older. ("The Boomer Stats ") for the health care system, this means that there are increasing amounts of stress placed organizations. As costs begin to rise dramatically and the overall burden on individuals / families becomes even more strained. Evidence of this can be seen by looking at statistics that were compiled by the White House. They found that small businesses are paying 18% more for health insurance in comparison with large corporations. This sector of the economy accounts for the largest portion of economic growth and innovation that is taking place. As nearly 25% of the job growth since 1992 was from the contributions that small businesses were making. This is troubling because, many of these organizations have begun to reduce offering any kind of health insurance coverage to their employees. With the total number of firms providing these benefits to their staff declining from: 58% to 49%. When you combine this with the severe loss of jobs in the economy over the last several years and the elimination of health insurance coverage (at some employers), this can make an individual's financial situation become even worse. ("The Economic Effects of Health Care Reform") at which point, many people will be forced to file for bankruptcy, in an effort to address the mounting costs that they are facing. (Amadeo) This has forced proponents for health care reform, to argue that the government needs to take a more active role in the system. As they believe, that they can help alleviate the challenges facing: individuals, families and businesses. However, there have been many opponents who claim that allowing the government to become involved in addressing these issues is: the equivalent of socialized medicine. As these kinds of actions will reduce: the overall quality of care and innovation. At which point, many businesses will feel added pressures in the form of higher taxes that they must pay, resulting in a reduction in economic growth. (Francis) to fully understand the overall impact that the health care system is having on the economy requires looking at: the underlying challenges that it is facing and how they are contributing to the problems. Together, these different elements will provide the greatest insights as to how health care reform; can address the underlying economic issues the country is wrestling with.

The Challenges and How they are Contributing to the Problem

Currently, the United States has some of the highest health care costs in the developed world. Evidence of this can be seen by looking at the total amount of GDP spending that takes place in relation to health care services. As this number is accounting for $2.5 trillion in economic activity or 18% of the total GDP output. (Amadeo) This is challenging, because these rising costs are having an adverse impact on employer sponsored health insurance programs. As this means that they will be shifted to: the employee or the business could begin to engage in various measures to account for these costs (such as layoffs). This is having an adverse impact upon economic activity, by increasing the unemployment rate and reducing innovation. At the same time, 25% of Americans do not have any kind of health insurance coverage or not enough to pay for all of their expenses. (Amadeo) This can have an impact upon their financial well being, as a person must spend money that they do not have, to treat different conditions that could be life threatening. Once this begins to occur, is when the total number of bankruptcies will begin to rise sharply. As nearly half of all the filings that are made are: medical related, due to the overwhelming costs and the inability to pay them. (Amadeo) These different challenges are creating sudden shift in the economy that are: having short- and long-term impacts upon economic growth.

What is happening is rising health care costs are beginning to become a hidden tax on: businesses and consumers. As they are slowly eating away at any kind of added investments that can take place for: businesses and the disposable income of many individuals. This is problematic, because it means that the more health costs begin to rise, the lower amounts of money that will be spent in the economy. At the same time, various government programs (such as Medicare) are facing increasing amounts of pressure from rising health care costs. The reason why, is because these costs have begun to outstrip the total amounts of funding for these programs. They also are facing added strains from: Baby Boomers and senior citizens (who are using this to help offset their rising health care costs). As a result, these programs are expected to beginning to face the possibility of becoming insolvent in the future. This is problematic, because it means that unless health care costs are addressed, they will reduce the total amount of economic output. While bankrupting, millions of individuals and possibly various social programs such as: Medicare. Therefore, some kind of drastic action must be taken and adjustments need to be made over the course of time to deal with these problems. (Amadeo) (Francis)