Healthcare industry has emerged as one of the leading sectors in the United States economy. The state and federal government spend a huge amount of dollars to support the healthcare industry through various healthcare insurance programs. The rise in medical expenses and the decline in the gross domestic product and national income have led to the creation of various health care programs to support the healthcare needs of the United States citizens. Currently, the healthcare insurance market plays an integral role towards economic development in the United States. The healthcare insurance industry not only supports the welfare and well-being of individuals but also the economic development of the country.
The Role and Impact of Healthcare Insurance
Healthcare insurance is regarded as a financial agreement that helps to pay health-related cost s and made between individuals and an insurance company. With the ever-rising cost of the healthcare expenditure and the decline in the income of individuals, the health market ensures that all individuals in the United States have access to affordable healthcare programs ( Zelizer, 2017) .
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One major role of the healthcare insurance industry is to facilitate access to health care programs and protect individuals and their families from some of the catastrophic health expenditures. The majority of individuals in the United States is poor and cannot access and afford health care services without the support of the government and healthcare market ( Glied & Altman, 2017) . The rising development in the healthcare market has made it possible for many people to access healthcare services regardless of their economic status.
Another important role of the health care program is that it helps support the health and wellbeing of the individual in the United States. The poor and rich population in the United States is able to enrol in various healthcare programs from both the government and private sector. As a result, the healthcare market has helped improve the lives of the ordinary citizens in the United States. Today, approximately 70 percent of the population in the United States below the age of 65 is enrolled in comprehensive healthcare programs ( Sommers et al., 2017) . This ensures that all citizens have the opportunity to access the affordable healthcare programs at the various regions in the country.
Another important role of the healthcare market is that it has led to the emergence of many health insurance companies. Currently, the United States has many health insurance companies both from the private and public sector. These companies compete with each other in support of various healthcare programs. As a result, there is high competition in the healthcare sector given that there are a number of firms that provide similar products and services to support the well-being of individuals in the country.
The high competition in the healthcare industry implies that the supply of healthcare product is high. In an economic model, prices of goods and services are determined by th e demand and supply of products under perfect competition market. Evidently, the rise of many health insurance companies has to lead to the perfect competition in the healthcare market. As a result, the prices of healthcare insurance products have declined as many plays enter the market. This can be illustrated using the demand and supply curve illustrated below.
S1
Quantity
So
Q1
Qo
D0
P1 Po Price
Figure 1: The figure shows the changes in the prices of healthcare products given the current developments in the healthcare market.
The diagram above shows the changes in the healthcare products as a result of the expansion of the industry. As many insurance companies enter the market, there is a rapid increase in the supply of products. The supply of medical products increased from S0 to S1 and this lead to change in price from Po to P1. Although the demand for healthcare insurance products increased, it is evident that the supply of insurance increased more than the demand for the healthcare services. This is because the government, as well as private healthcare providers, enters the market and this leads to intense competition.
Another significant impact of the healthcare market is that it leads to an increase in the growth of the gross domestic product. The rise in the number of insurance companies has to lead to the increase of the quality healthcare programs to the citizens of the healthcare country (Cawley et al., 2015). As a result, it has led to the increase in the total productivity of labourers in the country and this increases the productivity and national income of the economy. Furthermore, the availability of the affordable and accessible healthcare programs motivates many of the employees and citizens to work hard and contribute to the overall growth of the economy.
Conclusion
It is evident that the healthcare market supports the growth of the overall economy through various development programs. The United States has initiated several healthcare programs to support the welfare of individuals and improve the economic development and growth of the country. Through various healthcare programs, the employees, old generation and the ordinary citizens of the United States can access healthcare products from both the government and private sector. In essence, the expansion and growth in the healthcare market have to lead to a significant reduction in the prices of healthcare products. In summary, the growth in the healthcare market has led to an increase in the level of competition, reduction in prices and improvement of the quality of products provided in the sector.
References
Cawley, J., Moriya, A. S., & Simon, K. (2015). The impact of the macroeconomy on health insurance coverage: Evidence from the great recession. Health economics , 24 (2), 206-223.
Glied, S. A., & Altman, S. H. (2017). Beyond antitrust: health care and health insurance market trends and the future of competition. Health Affairs , 36 (9), 1572-1577.
Sommers, B. D., Gawande, A. A., & Baicker, K. (2017). Health insurance coverage and health—what the recent evidence tells us.
Zelizer, V. A. R. (2017). Morals and markets: The development of life insurance in the United States . Columbia University Press.
