Question

Identify and describe the current state of the health care industry or a particular segment of the healthcare industry using the Microeconomic concepts and tools we have studied this semester. You will find an overview of the economics of health care in chapter 30 and a discussion of Medicare in Chapter 5. For this week, you will want to supplement this reading with research from a newspaper or newsmagazine or from a reputable online source that deals with U.S. Healthcare.

For this week your post should:

1. List the pros and cons related to the current system in place in the United States along with a short explanation of health insurance and how it relates to this debate.
2. Apply either supply and demand analysis (week 2 material) or elasticity analysis (week 3 material) or the examination of market structures (weeks 4-5 material).
3. Develop your own solution to this social issue, but you must understand and explain the economic costs of your decision.

Answer 1

Pros: 1) We can make a lot of money in the healthcare industry i.e, encourages and promotes entrepreneurship.

2) We can have access to latest and most advance medical innovation available.

3) We can generally choose our own provider depending on our insurance.

4) In United States, health care has lead to a reduction in the number of illness affecting the general public.

5) Universal health system helps all unlimited access cover to all illnesses as most people end up bankrupt because of medical bills, even those with health insurance policies. So we can say it stops medical bankruptcy.

Cons: 1) Most people get insurance through their jobs in US if we lose our jobs we may lose our coverage.

2) Due to easy access to health care, some people seek medical facilities that don't require medical attention. For instance, a person who has mild headache or cold they get admitted to hospital. Such kind of people burden the system unnecessarily.

3) Health care industry in the US is the most expensive industry in the world.

4) There is lack of price transparency in US medical costs as the same procedure has a different price in each institution.

5) Doctors or physicians don't offer quality services to their patients.

Health insurance is basically the type of insurance coverage that pays for surgical, medical and dental expenses incurred by the insured. It protects us from unexpected high medical costs.

Health care industry comes under monopolistic competition market in which many health insurers compete with one another. There is uncertainty about quality of medical related services that promotes product differentiation (marketing of similar products with minor variations which are used by consumers), especially when consumers do not bear the full cost of care. There is lack of perfect knowledge about price. Insurers inefficiently invest to expand capacity which increases the fixed costs due to which they must hike prices to pay for their excessive investment in fixed costs. Hence, the outcome is high prices.