Question

Describe the types of government intervention present in the healthcare industry in the United States. How did the Affordable Care Act change this? Describe the potential economic benefits and disadvantages of each type of intervention.

Answer 1

Types of Government intervention in the healthcare industry in the United States

Healthcare sector is characterized by continual, and, significant price inflation. Healthcare costs have increased due to increased medical prices. Aggregate health care expenditure was 10.6% of GDP in 1985, in comparison to 5.2% in 1960. Reduction in quality can come about due to growing competition among healthcare providers. Higher medical prices dismay influential groups.

Interventions

• Support for reducing infant mortality
• Government intervention for containment of healthcare costs - Government financing reduces administrative overheads

Impact of Affordable Care Act on Government Intervention

• Better healthcare is available to a larger number of people. It adds to the Government efforts for reducing infant mortality, and, containing healthcare costs. The costs reduce for those getting insurance but the total cost of healthcare has not reduced.
• Healthcare improves the macroeconomic environment for improved GDP growth in the future.

Potential economic benefits, and, disadvantages of each

• Healthcare costs are even higher if Government controls a greater share of the healthcare costs. Government financing does not lead to lower health care spending. Insurance provided by employers, and, by insurers at lower costs makes quality services available at lower costs but the cost of healthcare does not reduce. Benefits reach a larger a number of people.
• In case of infant mortality, the Government creates an environment that allows the nation's macroeconomy to function properly. Favourable socio-economic conditions reduce infant mortality.