HEALTHCARE ECONOMICS 2

Healthcare Economics

All human beings crave to live long and healthy lives. Everyone wishes to avoid hospital
admissions and visits. However, good health does not come easy. The attainment of good health
requires one to dedicate their resources towards achieving this objective. To this end, health is an
economic problem. Individuals have to spend a significant amount of their income on purchasing
drugs and regular health checkups. The healthcare system is also shaped by economic forces. A
standard market is governed by forces of demand and supply. However, the healthcare market
deviates from these rules. Governments have to come up with policies that ensure that healthcare
resources are allocated in an efficient manner. In spite of government interventions, healthcare
disparities still characterize the healthcare market. Evidently, wealthier individuals get access to
better healthcare services compared to poorer individuals.
Most societies are characterized by high levels of income inequality. The income
inequality is expressed in how people make their consumption decisions. In any market, it is
generally assumed that consumers have a perfect knowledge of the quality of goods and services
that are on offer. However, healthcare is different (Malehi, Pourmotahari, & Angali, 2015).
Consumers fail to have a perfect knowledge of the goods and services that are on offer. The
inability of consumers to actively monitor the quality of healthcare services on offer results in
strict government regulations. Healthcare regulations are aimed at enforcing the concept of
equity and justice. Consumers should be able to obtain the best healthcare services from any
healthcare provider (Malehi, Pourmotahari, & Angali, 2015). The government does this by
requiring all healthcare providers to get licenses. Licenses standardize the healthcare practice by
ensuring that the services and drugs offered by healthcare providers are safe.

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The healthcare market is also dominated by healthcare insurance. Healthcare spending is
generally unpredictable. The uncertainty surrounding healthcare spending makes it necessary for
insurance companies to play a pivotal role (Keegan et al., 2013). Any individual facing a risk
pays an insurance premium. The payment of the insurance premium is hinged on the insurance
company accepting the risk. Insurance companies help in reducing healthcare-related risks. One
problem is the fact that most poor people can not afford to pay for healthcare insurance. The
implication is that when the poor get sick, they may not be able to afford the large hospital bills.
The uninsured population has been a huge problem in the United States with successive
governments seeking to ensure that they reduce the number of people who are uninsured
(Casalino et al., 2007). The rich can afford to pay high premiums while the poor cannot pay even
the smallest premiums. Evidently, the rich can thus afford to acquire quality healthcare services
while the poor cannot afford. The principle of equity and justice is thus interfered with by the
economic forces that characterize the market.
Healthcare is a right, and this means that the government needs to ensure that everyone
has access to healthcare services. In an ideal situation, an individual from a low-income
household should not be denied treatment. The central principle of healthcare being a right
should help define healthcare economics (Pollack & Armstrong, 2011). To a large extent,
healthcare is like food. Society needs to ensure that everyone gets food. Over time the healthcare
costs have risen rapidly while the income has risen slowly. The cost of state-of-the-art healthcare
has been rising rapidly, and this has created a problem for most middle- and low-income earners.
The rising healthcare costs have made it necessary for governments to be involved (Benatar,
1998). The government has, however, not managed to make healthcare affordable to all. Many
poor income households still remain uninsured, and this means that they cannot keep up with

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rising healthcare costs. Enforcing justice and equity in the healthcare sector has become overly
difficult. Policies like Medicaid and Medicare have failed to guarantee equity, and this means
that the poor have been left out.
Economic inequality is linked to healthcare-related disparities. The disparities have been
growing over time. Life expectancy is closely linked to the existing income disparities. Since the
year 2001, life expectancy for the top five percent of income distribution has grown by close to
three years (Pollack & Armstrong, 2011). Individuals in the top five percent in the income
distribution live close to fifteen years longer compared to individuals in the bottom one percent
(Benatar, 1998). Low-income Americans are at higher risk of getting chronic conditions such as
diabetes, heart disease, and stroke. The disparities can be transmitted to future generations, and
this complicates the situation. Children brought up in poor households are likely to suffer from
adverse conditions associated with nutrition and environmental exposures. Low-income
Americans face various barriers associated with accessing medical care. Low-income Americans
are less likely to access new drugs and fail to have ready access to primary and special care.
Low-income Americans are likely to be employed in places of work that do not offer health
benefits (Lence & Capozza, 2015). The implication is that most low-income earners work in
organizations that do not guarantee them healthcare insurance. Individuals that do not have
medical insurance are likely to forego getting regular checkups due to the cost implications.
Equity and justice are thus not guaranteed since the rich get access to quality services while the
poor cannot afford to pay for quality healthcare services.
There are certain behavioral factors that are associated with poor health outcomes. Low
income Americans are likely to engage in risky behaviors such as obesity, substance abuse, and
physical inactivity. Poor neighborhoods have a high density of tobacco retailers. Tobacco

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retailers have focused on low-income earners. Low-income earners cannot afford to pay for
rehabilitation programs. The level of drug and substance addiction is thus high in poor
neighborhoods (Pollack & Armstrong, 2011). Poor people cannot afford counselling services and
are thus more likely to suffer from mental and psychological disorders. Structural challenges in
low income households contribute to high disease burdens. On the other hand, the rich can afford
counselling and gym subscriptions. They are hence likely to lead healthy lives, and this results in
lower disease burdens.
Overall, an analysis of healthcare economics reveals that the principles of equality and
justice do not prevail. Poor people are exposed to various environmental risks that result in poor
health outcomes. Poverty makes it impossible for a person to purchase healthcare insurance.
Although the government has put in various measures that aim at ensuring that every individual
gets access to healthcare insurance, a large population of Americans remain uninsured. It is
important for the government to develop policies aimed at addressing the healthcare problems
that result from income inequalities.

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References

Benatar, S. R. (1998). Global disparities in health and human rights: a critical
commentary. American Journal of Public Health, 88(2), 295-300.
Casalino, L. P., Elster, A., Eisenberg, A., Lewis, E., Montgomery, J., & Ramos, D. (2007). Will
Pay-For-Performance And Quality Reporting Affect Health Care Disparities? These
rapidly proliferating programs do not appear to be devoting much attention to the
possible impact on disparities in health care. Health affairs, 26(Suppl2), w405-w414.
Keegan, C., Thomas, S., Normand, C., & Portela, C. (2013). Measuring recession severity and its
impact on healthcare expenditure. International journal of health care finance and
economics, 13(2), 139-155.
Lence, C. T., & Capozza, K. (2015, January). Health information in bits and bytes:
Considerations and challenges of digital health communication. In Meeting Health
Information Needs Outside of Healthcare (pp. 291-319). Chandos Publishing.
Malehi, A. S., Pourmotahari, F., & Angali, K. A. (2015). Statistical models for the analysis of
skewed healthcare cost data: a simulation study. Health economics review, 5(1), 11.
Pollack, C. E., & Armstrong, K. (2011). Accountable care organizations and health care
disparities. Jama, 305(16), 1706-1707.