Current State of Healthcare Industry
Essentially, the healthcare industry of the US has evoked mixed opinions in regard to its sustainability and service to the citizens. Importantly, questions have been posed relating to the issue of the health insurance and its suitability. In this regard, therefore, this paper seeks to underscore some of the critical economic aspects of the industry and develop a solution to it.
In essence, the health care industry in the US is currently characterized by increasing cost to the citizens and to the nation. In this case, about 18 percent of the country’s GDP is used to cater for healthcare (Blumenthal Para. 1). This is a very high percentage as compared to the 6 percent used for national defence. Whereas the cost is very high such that the country is known to use twice as much as most of other developed countries, it ranks as the 39th nation in regard to health status (Blumenthal Para. 1).
In addition, the health insurance in the US has been designed in such a manner that it could be seen as patchwork. In this regard, the system has allowed partial privatization of the industry while part of it is controlled by the government through Medicaid and Medicare (Flynn Para. 2). This system has both pros and cons associated with it. To start with, the inclusion of private sector factors in the essence of competition which subsequently leads to improvement of services as the individual companies seek to endear themselves to customers. On the other hand, however, this may lead to a case in which the free market system leads to shooting of the prices. This increment in pricing is steered by the dynamics of free market which is driven by the forces of demand and supply. This implies that the forces can affect the prices without the regulatory frameworks coming in. As such, it becomes essentially dangerous to the sustainability of the industry especially when it comes to cost effectiveness and citizen’s welfare.
In conclusion, therefore, in order to ensure sustainability of the health industry and tame the insurance industry, the government should ensure that Medicaid and Medicare are cost effective such that they launch competition against the private sector. Importantly, the cost effectiveness and efficiency will lead to reduction of the overall national percentage of GDP used in this sector.
Works Cited
Blumenthal, Susan. "Healing America's Health Care System." The Huffington Post. TheHuffingtonPost.com, 2012. Web. 08 May 2016. <http://www.huffingtonpost.com/susan-blumenthal/affordable-care-act_b_1737731.html>.
Flynn, Heather. "Privatizing Health Insurance in the United States." GU Journal of Health Sciences. N.p., 2013. Web. 08 May 2016. <https://blogs.commons.georgetown.edu/journal-of-health-sciences/2013/01/20/privatizing-health-insurance-in-the-united-states/>.
