Economic Analysis on the health care bill passed in 2010

Economic Analysis on the health care bill passed in 2010

Health care bill aims at not only offering health care to citizens but also giving them privileges related to health care. For instance, patients should be allowed to choose their preferred doctors. It demands every individual should have health insurance. They should acquire it from the government insurance or their employers. All insurance companies should offer health policies to people regardless to their health condition. This mainly applies to children. The insurance should not discriminate their prior health conditions. They insurance firms should not put limits on how much a person should use in their lifetime. It also applies to even the special cases of terminal diseases. Firms with more than fifty employees should acquire health covers for their employees. A certain amount of money is deducted from the employee to cater for health cover. Health care bill intends to create a pool of more healthy people participating to assist in compensating those who have frequent health issues (Levy et al, 534).

In the context of demand and supply, demand for health care will increase. It is estimated about thirty two million citizens are uninsured. Therefore, the demand is likely to increase from the current eighty five percent to ninety five percent. On the other hand, he supply will be restricted and insurance companies will add costs. This is because of the regulations directed to insurance companies by the bill. However, the insurance costs will not be increased because of a certain factor. Insurance pool will have more healthy people buying policies. It will reduce the insurance costs (Washington Post Company, 67).

Economies of scale have cost advantages. Costs are minimized by large-scale production or buying in large quantities. The health bill may take a perspective of encouraging economies of large scale to insurance companies. This will happen when the uninsured people buy health covers. However, it is not necessarily true; economies of scale will help in minimizing insurance costs. It could happen that more people need compensation than those who are healthy. If this happens, the insurance cost will be increased (Batten, 120).

The additional costs in insurance companies will be difficult for most insured people to pay. This is because most uninsured people are likely to be jobless or low-income earners. Therefore, it would be hard for them to afford high insurance cost. As a result, they will prefer to buy government insurance cover. It is cheaper than having health covers from other companies. Government health covers than does not only benefit individuals but also business people. For instance, government cover is twelve hundred dollars annually. An insurance company charges even thousand dollars per annum. These rates are for self-employed clients. Such a businessperson will prefer a government cover to that of another insurance company (Davis, 63).

A businessperson has a duty of minimizing costs and increasing profitability. It is wise for a business owner to buy government health covers for employees. By doing this, the business will make saving than buying covers from private insurance firms. According to the bill, firms with more than fifty employees should buy health covers for them. After further analysis, even an employer with forty-five employees should consider government health cover. It will enable him economize on costs and gain more profits. The money saved from insurance expenses may be used to establish growth in the business. Competitors may also influence a business to take government health cover. If the competitor using government health covers, the business is also saving on casts. It will be in a better position to perform well than the rival will. For example, use the savings for aggressive marketing or another form of business growth (Families United for Senior Action Foundation, 111).

Health care bill requires all employers to purchase insurance covers for their employees. This action might have a negative impact on the economy of the country. If a business cannot manage additional expenses from insurance costs, the management will take necessary measures. Since it has to buy health covers as per the bill, it will make reductions. For instance, the management might lay off some workers. Alternatively, reduce wages and salaries to meet the cost of insurance. Redundancy of employees increases unemployment. Reduction of salaries and wages will lower the living standards of people. They will have less purchasing power hence low drive of the economy (Batten, 125).

There is a major concern about the health bill after its implementation. The government health covers are much more affordable than those of private insurance firms are. This is an indication that the government will have to increase tax to meet the health care expenses. These taxes are likely to be imposed on high-income earners and investments. This will weaken their purchasing power. It could also discourage investors because of the high tax rates. The biggest challenge for all people is they must get health care yet it is proving to be expensive. The government is faced with a dilemma because it has to offer affordable basic health care to the people. On the other hand, the same people are the financiers so they have to add tax (Families United for Senior Action Foundation, 120).

There is a possibility that health care in USA will experience a chronic shortage. This will happen if the government policies on health care impose further costs on insurances and business people. According to economic principles, a price ceiling may cause permanent shortage of supply if the demanded is higher than supply. This is the main reason why health care in USA has been increasing in costs at a fast pace. Due to this situation, the government intervention may be required again. This time it will have to regulate how much the hospital, pharmacies and doctors will be charging patients. It will also determine what consumers and patients can buy. It will assist in subduing the prices in a place where market forces and discipline have been altered (Washington Post Company, 100).

Examples of countries with chronic health care shortages are Japan, France, Germany, Great Britain and Canada. These countries experience shortage of hospital facilities, technology, staff and drugs. These are the consequences of making health care a right to people whereas it is an economic good. The world is characterized by scarcity of many goods. Health care is one of the scarce economic commodities. The only way to solve this problem is using rations. This can happen in a market where firms try to supply willing clients with a range of health care services. The variety should consist of services of different qualities. Despite the contentious issues surrounding the bill, Americans need to access health care. They should seek the most affordable terms of health covers, like those offered by the government (Levy et al, 540).

Works cited

Batten, Donna. Gale Encyclopedia of American Law. Detroit, Mich: Gale, 2010. Print.

Davis, Jeff C. Living in the USA. New York, NY: Nicholas Brealey Pub, 2010. Print.

Levy, Leonard W, Kenneth L. Karst, and Winkler, Adam. Encyclopedia of the American Constitution. New York: Macmillan Reference USA, 2000. Print.

Families United for Senior Action Foundation. The Republican Health Reform Proposal: A Destructive Alternative. Washington, D.C: Families USA Foundation, 2009. Print.

Washington Post Company. Landmark: The Inside Story of America’s New Health-Care Law and What It Means for Us All. Waterville, Me: Thorndike Press, 2010. Print.

 

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