Medical services in the United States have been central to public discussions and parliament legislation. The health care system has undergone several modifications ranging from Medicare and Medicaid system enacted in 1960, to The Affordable Care (ACA) of 2010. Prior to 2010, Medicaid and Medicare programs provided medical coverage for elderly patients and persons with disabilities. The affordable care act was implemented to provide a whole medical cover for all Americans. Despite the various modifications, health care costs in America remain the highest compared to other developed countries.
A number of reasons have been put forth to explain the high cost of medical services in America. To put into perspective, a typical hip replacement in United States would cost a patient $1,634 using the Medicare program; the same procedure in Australia, Canada, France, United Kingdom, or Germany would cost 70% lower (Ganguli et al., 2017). Studies have also shown that American patients abuse tobacco and alcohol in lower volumes compared to the above developed countries. Obesity rates in the United States are the highest but this does not necessarily warrant hospital visits. Health insurance charges are also higher in the United States. A typical private insurance company charges $3,996 annually for coverage, which is thrice the amount contributed by Australians towards the comprehensive Medicare program. Private hospital services such as optometry and dental procedures are costlier in the United States too. Typical physician visits in the United States are 61% lower, while hospitalization rates are 24% lower compared to these countries.
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It is worth noting that hospital facilities in the United States are highly equipped with modern machinery. Moreover, medical personnel are in plenty of supply with a maximum nurse to patient ratio of 1:2. The ratio is impressive compared to fellow member countries of Organization for Economic Co-operation and Development (OECD). Some of the funds to facilitate these structures and equipment must be obtained from individual contributions made to insurance firms. This in turn necessitate that insurance companies charge higher premiums for medical procedures. The United States through regulation has tackled the issue of high fees by implementing higher taxation to higher income earners and employers toward health care coverage. The affordable care act stipulates the minimum conditions for insurance firms to comply including the restriction from discriminating medical coverage packages based on pre-existing medical conditions.
The principle of positive economics manifests when weighing the hospitalization fees into price difference factors versus factors caused by better equipment and plenty staffing. Normative economics on the other hand, seeks to unravel whether the improved equipment and staffing is worth the extra costs. Normative economics is concerned with the ethical values that may arise from economical shifts. The higher costs of health care can be bisected by applying these economic models to streamline the health care system. Another key issue is the availability and cost of prescription drugs, and whether they are taken care of by insurance companies. Pharmaceutical companies are likely to price the drugs according to the prevailing market value, rather than follow the ethical angle of normative economics.
The cost of health care in the United States is higher than most developed countries such as Australia and the United Kingdom. This is despite hospital visit rates and chronic disease rates remaining relatively lower compared to these countries. The higher premiums in health care packages is attributed to the improved hospital facilities and sufficient staffing in American hospitals. Management in the health sector is presented with a key challenge of balancing between the value of medical investment versus the cost implications accompanied.
References
Altman D. 2016. The Affordable Care Act's little-noticed success: cutting the uninsured rate. Oct. 12, Kaiser Family Found., Menlo Park, CA
Ganguli I, Souza J, McWilliams JM, Mehrotra A. 2017. Trends in use of the US Medicare annual wellness visit, 2011–2014. JAMA 317:2233–35
