Health insurance is a prepayment plan that provides cash or service indemnities in times of illness. Not everyone in U.S has equal access to health care services and insurance in the United States. Low health access, can increase the rate of death from preventable diseases and also leads to overall poor health outcomes. According to the latest population survey, there were 49.9 million uninsured people in the U.S. they account for ~16% of the country’s population. The rate of people who were uninsured, are higher among the Hispanics, followed by African American. A better understanding of the reason for this scenario, will help policy makers to devise suitable measures to reach out to all the people. ("Overview of the Uninsured in the United States: A Summary of the 2011 Current Population Survey", 2015)
More than 50% of the U.S population are covered by employee sponsored insurance. Low household income could be one reason for people to opt out of insurance. The health insurance cost of a family of four members works out to ~$ 20,000 per year. The insurance cannot be afforded by a family that has an average annual income of $15,000 per year. A majority in the underprivileged category of health care access, have low annual income. Poverty and low income are important reasons, why people cannot afford health insurance. (Gruber, 2010)
People who cannot afford insurance and health care cost, seek health care services from charity hospitals that work independently or in partnership with private hospitals. Medicaid provides health care services to elderly people and people with disability. Pregnant women and children are also benefited by this scheme. Medicaid has led to significant improvements in health outcomes for children, women, people with disability and elders. However, the other adults who are uncovered by this program need to be taken care of. Previously, Medicaid was set to cover adults who are earning less than $2700 per year. However, the prevalence of poverty is higher and many adults do not qualify for this salary limitation placed on adult health care.
Medicaid expansion is a part of the Affordable Care Act. Though Affordable Care Act encourages insurance providers to offer insurance coverage to people who are earning 133% of the poverty line, the current coverage is limited to $2700/ year. To effectively reach out to adults in the poor community, it was necessary to raise the Medicaid bar to people earning less than $30,000 per year. Following the Supreme court ruling, the choice of upper salary limit was left to the discretion of the individuals States. ("Health Reform's Medicaid Expansion | Center on Budget and Policy Priorities", 2016)
Expanding health insurance coverage, can expand the health care access. This will benefit a number of adults who are employed, but could not afford the health insurance. Workers in industries like restaurants, food services, construction, grocery store, nursing homes, hotels, motels, schools or hospitals, who earn less than $30,000 dollars per annum, can be benefited by this scheme. Expanding Medicaid insurance will also increase employment of people in this sector, in addition to providing health care benefits to the population. Expanding health care insurance will encourage more people to adopt preventive health care measures and will help to reduce the number of people who seek emergency health care facilities. Lack of health insurance, prevents people from seeking health care, unless the situation becomes worse. Reducing emergency care visits in this manner, can also help save the cost spend on health care. While each new Medicaid insurance may cost the state ~$250 per year, it can be saved by reducing the cost spent on health care. ("Health Reform's Medicaid Expansion | Center on Budget and Policy Priorities", 2016)
Economic implications of health care reforms: One of the economic implication of expanding healthcare insurance is the healthcare cost and its containment. Health reforms have led to increase in health care expenditures. The Council of Economic Advisers (CEA) has recommended for the gradual implementation of healthcare insurance expansion, as it will help to balance the expenditure with the high returns obtained from the implementation of the health re-forms. For example, U.S spends several times more money in treating diseases that are caused by tobacco, when compared to the money spend in providing Medicaid insurance. Raising taxes for tobacco and other products that harm health, can help to pay for the cost spend on expansion of insurance coverage. This measure will also help to bring down smoking rates in the population and the harm caused by smoking. Studies have identified that the death rates among Medicaid users is less, when compared to those who are uninsured. Thus a ~250 dollar per year for a human is worth the expenditure. In addition, the CEA has also recommended for the slow increase in health care cost, as this will help prevent Federal government fund deficits. Health care reforms can improve labor supply, increase productivity and GDP. Expansion of health care reforms is expected to improve GDP by $ 100billion, which is 2/3 of the current GDP. In 2010, the country spent 18% of its GDP on Healthcare. In the long run, the benefits of health insurance expansion is likely to balance the expenditure arising from the implementation of the same.
Presently the American health care system is replete with many deficiencies and failures in its marketing services. The high administrative cost of hospitals and wastage of health care resources, are major concerns that contribute to high health care cost. The Affordable Care Act of 2010, was enacted with the goal of increasing access of health to all Americans. It has brought changes to the way in which health insurance market operated. Identifying barriers that prevent the effective implementation of this Act, will help to overcome these barriers and help in achieving the goal of providing quality health care service to all Americans. (Glied & Miller, 2015; "The Economic Case for Health Care Reform", 2016)
Lowering healthcare reimbursement can adversely affect the income of health care providers. A better alternative to reduce federal expenditure on health care, would be by reducing infection and diseases and by adopting prevention strategies. The States can set fair, simple and accurate criteria for eligibility for Medicaid. Health care reforms should involve the expansion of health promoting activities and diseases prevention activities in the population. If the number of accidents and diseases are reduced, then the cost spend on healthcare services can also come down. (Benstetter, 2002; Getzen, 2015)
In my own state of Puerto Rico, health care expansion has led to the improvement of healthcare. As a result of insurance expansion, 60% of the population are now covered by Medicare and Medicaid insurance. The income limits for Medicare has been raised to 138% FPL. The federal government has allotted 925 million dollars to Puerto Rico, to fund its Medicare program. 1,671,657 people in the state were enrolled into the Medicaid program. Puerto Rico now has 100% managed care and people can seek health care services in the region they reside. The insurance expansion has benefitted Puerto Rico, as half of its population lives in poverty. ("Puerto Rico | Medicaid.gov", 2016)
The primary economic concern in adopting health insurance expansion in the states is the decision about who will fund the insurance. While federal funds are used in some states, in others, public health insurance is funded by the state. According to the Supreme court decision in 2012, Kaiser Commission on Medicaid and the Uninsured (KCMU) analysis, will decide the executive activity of the state and based on this decision, states will adopt Medicaid expansion. ("The Economic Case for Health Care Reform", 2016)
Conclusion: Most of the planning of health care sector is based on the health needs of the people, rather than on the demands. While needs are set by healthcare sectors, demands are made by the consumers of health. Demand refers to the amount and quality of health care required by consumers for promoting health. Health insurance expansion practices in U.S are currently based on needs (Benstetter, 2002). On the other hand, planning, insurance expansion based on demand will ensure proper utilization of resources.
References
Benstetter, F. (2002). Health care economics. Frankfurt am Main: Peter Lang.
Getzen, T. (2015). Health economics for the healthcare administrator. NewYork: Wiley.
Glied, S. & Miller, E. (2015). Economics and Health Reform: Academic Research and Public Policy. Medical Care Research And Review, 72(4), 379-394. http://dx.doi.org/10.1177/1077558715579866
Puerto Rico | Medicaid.gov. (2016). Medicaid.gov. Retrieved 9 July 2016, from https://www.medicaid.gov/medicaid-chip-program-information/by-state/puerto-rico.html
Gruber, J. (2010). The Cost Implications of Health Care Reform. New England Journal of Medicine, 362(22), 2050-2051. http://dx.doi.org/10.1056/nejmp1005117
Health Reform's Medicaid Expansion | Center on Budget and Policy Priorities. (2016). Cbpp.org. Retrieved 5 July 2016, from http://www.cbpp.org/health-reforms-medicaid-expansion
Overview of the Uninsured in the United States: A Summary of the 2011 Current Population Survey. (2015). ASPE. Retrieved 5 July 2016, from https://aspe.hhs.gov/basic-report/overview-uninsured-united-states-summary-2011-current-population-survey
The Economic Case for Health Care Reform. (2016). The White House. Retrieved 5 July 2016, from https://www.whitehouse.gov/administration/eop/cea/TheEconomicCaseforHealthCareReform/
