What lessons can we learn from government sponsored programs such as Medicare, Medicaid, and the VA...

What lessons can we learn from government sponsored programs such as Medicare, Medicaid, and the VA System about the problems facing fixed-budget health care systems? Should the healthcare system be operated on a fixed budget?

Expert Solution

A policy of budget-driven health care delivery in the United States is not easily implemented. There is a need to further examine the pros and cons of the global budgeting approach.

ost of these healthcare systems are facing challenges due to the inefficiencies due to the use of fixed budgets by the government. This causes a strain on the human resources, and general management of the healthcare programs.
Explanation:

There has been a shift from expenditure-driven financing of health care to a budget-driven delivery of health care.

Under budget-driven health care delivery, the society sets a prospective budget for health care and the providers must operate within that budget. The budget is based on some arbitrary criterion such as a fixed percentage of GNP or a fixed annual growth rate. However, the application of new medical technologies would be based on the cost-benefit analysis, before making any payment from the fixed budget.

A policy of budget-driven health care delivery in the United States is not easily implemented. This is because there is lacks of institutional framework to successfully establish at the national level. There is a need to further examine the pros and cons of the global budgeting approach.

Research should be done on the institutional changes that are needed so that explicit budgeting becomes more feasible.

Global budgets also increase the time perspective in which resource allocation decisions are made and at the same time, they remove some of the incentive to focus on reimbursement levels. Thus, they may create incentives for hospitals to allocate scarce resources for new technologies. However, they do not remove all distortions.

These government healthcare programs face the challenges of inefficiency due to increased overload of work for the professionals with no enough resources to increase the number of doctors and other medical professionals to help ease the workload. Due to the fixed budget, the programs have to operate under tight budget thus affecting even the resources available for efficient medical services.

The fixed budget also makes it impossible to hire and maintain more professionals thus negatively affecting service delivery. These healthcare programs should not be run by a fixed budget but rather a more flexible budget.

Rahul Sunny answered 2 years ago

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