Health Care and Economics

Health Care and Economics

Abstract

Discussing the Health care debate in the United States is indeed a sensitive subject and one that is constantly evolving. Considering the economic impact of health care policy changes, this paper will investigate key economic concepts and how they effect the health care market.

Economic concepts that will be reviewed involve efficiency, moral hazard, assymetrical information and elasticity of demand, while considering how each of these will effect the markets for health care moving forward.

Health Care

The impact of health care spending in an economy such as the United States such plays such an enormous role that considering policy changes without first looking into the economic impact would be irresponsible. Currently in the United States, health care spending topped 2.5 trillion dollars on annual basis, accounting for 17.6 percent of gross domestic product, which is close to twice the share of GDP in 1980 (Sisko, Truffer, Keehan, Poisal, & Clements, 2010).

Several questions come to mind when consiering the effect of changes to the current system in place. There appears to be near unanimous feelings around the fact that changes need to be implemented, as the current rate of spending as a percentage of GDP is not sustainable. Additionally, many future projections show the actual spending number and percentage of GDP continuing to increase in the future (Sisko et al, 2010). Uncovering possible opportunities as well as pitfalls based on lessons learned through key economic principles will allow for a more concise approach to understanding the problem and uncovering a solution.

Efficiency within a system is essential to getting the most out of each dollar spent on health care. Unfortunately, a thorough review of health care usage and administration will show several inefficiencies and the result has been catastrophic in regards to overall costs for consumers. Inefficiencies exist in many areas; however,...