Question

In the article “The Bitter Pill” it is depicted through many examples that Medicare reimbursements to hospitals differ drastically from the prices hospitals charge uninsured individuals. Explain why these two groups are billed such different prices by hospitals in the US. Consider the role that market structure and imperfect competition play.

Answer 1

Health Insurance system in US poses a serious problem in the US nations as most of the people invests 20% of their income to pay the premium to the Medical Insurance company. So far it was the sad situation reflected in the US nation is that 40% of the people are not satisfied with the services rendered by the Hospitals. It was not a actually the fact of quality service provided by the hospital, But the problem reflects the billing amount of the patients which they need to compensate more than the sum insured by them. And at the same time the insurers also pays the high premium for nearly $500 to all the insurance companies. Paying $500 is the average rate of premium was paid to the registered medical insurance company in US nations.

In order to safeguard the reasonable interest of the common people who undergoing treatment under normal insurance coverage, US nation has framed Affordable Care Act (ACA) in  2010. ACA has the fine objective of subsidizing the medical service price rate for the insured people as well for the uninsured people. From 2010 it was estimated that US National Expenditure may grow 4.7% per person up to succeeding years. The growing need of medical services shoots up with very high rate with the increase in the population rate who are in the position to take avail their own medical need. So growing expenditure may also increase with 8% in the double rate.

With reference to the article of Bitter Pill, it is obviously proved that the non-insured people are facing so many problems in paying the medical bill for the serviced rendered by the hospitals during treatment. Two groups of insured and uninsured individuals pays different prices by the US hospitals. Such discrimination of prices have its origin from the point of all the hospitals playing the imperfect market as well as the indifferent market structure ruling out in the US nation. Medical drugs suppliers fixes very high cost and the Medical equipment suppliers also fixes their own price corresponding to the nature of the demand and the supply. On other side the number of hospitals are very low when it is compared with the size of the population. The ratio of serving of medical hospital per person is very low. So all the medical hospitals are unable to cover the expenses as they need to pay price of the suppliers of medical inputs. So they collect more amount of bill from the uninsured patients rather than insured patients. This is because insured patients are covered at least 50% of the medical bills.