Question

Explain the need for health insurance in the United States from an economic perspective and address the benefits and limitations of privatized and public provision of health insurance. In doing so explain how each approach deals with the concepts of risk mitigation, adverse selection, and moral hazard

Answer 1

The Health Insurance coverage in US nation are assisted by the both private and public schemes. Most of the working people have medical insurance coverage under employers insurance policy. In order to cover medical insurance for all set of people, US Fed government has categorized the medical insurance coverage into different types ranging by the age, economic status of each citizens in the country. The Fed backs up the insurance coverage for both economical weaker sections under the category of medicaid policy and also for Elderly people under the category of medicare policy. Amidst such favorable policies which benefits the people through an economic perspective, the negative factors like risk mitigation, adverse selection and moral hazard constitute the black side of the insurance coverage in the US country, Let us discuss how it approaches such hazardous factors hinders the medical treatment of all individuals in the US nation.

The cost of producing medicines and medical inputs as well as instruments are rising day-by-day correspondingly with the increase in the money value. It was estimated that the cost of medical hospital management have crossed $2.6 trillion. Though Affordable Care Act (ACA) was introduced by the Fed to minimize the complications of different cost for indifferent set of people with different diagnosis. The direct-fee system also prompts to pay the insurers the additional cost for their treatment apart from the insured amount. So the rate of coverage for the insured people are decreased to the considerable effect. In this situation, it is obviously proved that 16% of people and 8 million children are not able to covered under common public insurance due to inconsistent affordability of paying high cost of medical treatment.

There is lot of huge cost is involved when the patients who are undergoing cancer treatment. When the patients are having the Cancer in the stage of advanced stage, insurance coverage supports very less payment for them. Balance amount they need to pay from their own mode of expenses. This situation poses serious threat to the insured people who have both public and private schemed insurance. This was the proved fact of adverse selection and also nearly 45,000 people die because of evil effects of cancer. Even patients in the initial stage of the cancer are not able to pay huge compensation for their treatment and they are forced to discontinue their treatment and thus leads to giving less guarantee to their life. This was the case applies to all types of critical diseases like cancer. But the worst affected patients was the cancer patients who were adversely affected by the poor medical insurance conditions. All above points are the comparative examples for the moral hazards prevailing in the health insurance policy in the US nation.