Economics according to Baker, Bloom and Davis (2013) deals with scarce resources allocation among different but competing uses which are insatiable. Every industry produces goods and services from specific resources. These resources are usually limited and thus, the managers, in conjunction with the stakeholder need to make rational decisions on the last alternative where the company can generate maximum utility. This applies to the healthcare setting too in the United States. Healthcare sector in the U.S is very complicated, and allocation of resources is dependent on some of factors such as demands and supply (Dewar et al., 2015). There are many models which can be used to understand the healthcare resource allocation in this country. This is the primary focus of this article. It seeks to identify and explain models which elaborate how resource allocation in the US is carried out in the healthcare sector.
Economic model
The first economic model which is applicable in the U.S healthcare sector is the primary demand and supply model. It is one of the simplest models which most sectors, healthcare included, applies. For example, The U.S government and other health agencies allocate healthcare equipment and other medical resources to hospital based on the demand of such institutions. On the other hand, the private sectors also avail such resources to the consumers of the patients based on their ability to purchase these services. Unfortunately, there are some factors which affect the distribution and allocations of healthcare resources in U.S. Politics is one of such factors which has been frustrating the healthcare resource allocations.
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Private hospitals and other insurance schemes are all profit oriented. Their primary intent is to have the healthcare resources allocated in a manner which will cover the cost and also generate some benefit for the firms. This means that the simple demand and supply carve applies in the case of private sectors too as asserted by Santerre and Neun (2012). The diagram below is an illustration of this aspect.
SS
P Equilibrium Price, E
DD
Q Quantity
From the diagram, the equilibrium will act as the determinant factor of services which will be allocated by the producers of health products. For the private dealers in healthcare, they will always allocate more resources in areas where there are more customers with the capability of paying for these healthcare services. This is the sole reason why states such as Maryland may have a more private hospital as compared to such states like Mississippi.
The next model which also applies to the healthcare resource allocation in the U.S is the Grossman model. This model has it that healthcare is demanded and produced by individual citizens in a country. The utility which comes with healthcare for the citizens is a subject of time since unhealthy citizens or individuals have reduced happiness with less of the wealth that is earned from other sectors (GUPTA, 2014). This is an indication that the health sectors players have an obligation of ensuring that the health status of people in the country is a matter of significance for them to participate in other sectors too actively. It is the mandate of the government to ensure that the public gets enough supply of the resources. The government thus need to ensure that the model they use to allocate services and product to the public has equitability as the priority so that these resources reach as many people as possible to make them stable and healthy for them to continue providing services on other sectors of economy according to Dewar cited in Kastler (2013).
Conclusion
In conclusion, healthcare is faced with a scarcity of resource as many other sectors; this makes it paramount for rational decision in resource allocations. Both Grossman and supply and demand models are some of the models which can apply to resource allocation and distribution in the healthcare sector in the U.S.
References
Baker, S. R., Bloom, N., & Davis, S. J. (2013). Measuring economic policy uncertainty. Chicago Booth research paper, (13-02).
Dewar, D. M., Bloom, M. S., Choi, H., Gensburg, L., & Hosler, A. (2015). The Integrated First Year Experience in the Master of Public Health Program. American journal of public health, 105(S1), S97-S98.
GUPTA, H. (2014). Public expenditure and economic growth. Pearson.
Kaestner, R. (2013). The Grossman model after 40 years: a reply to Peter Zweifel. The European Journal of Health Economics, 14(2), 357-360.
Santerre, R., & Neun, S. (2012). Health economics . Cengage Learning.
