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Health Care Economics Essay

The economics of United States health care has been through many changes over its history. There are multiple factors to what caused the changes to the health care system over time with changes such as technological advances in medicine and surgical devices, new medical discoveries, and financial laws pertaining to health care. Just as with other businesses, the health care industry’s economy would depend upon supply and demand of their services. Throughout the time that health care has been undergoing these changes, it remains that the economical situation in health care has been the main focal point to how well that health organizations in the United States will perform.

In the early 1900s doctors were just beginning to cease being expected to offer care for free, medical care costs were finally becoming emphasized, and insurances were just getting involved into the health care industry (PBS, 2012). The idea of a national health care policy is first introduced by President Truman in 1945, he would be denied by the American Medical Association campaign against the idea. Eventually in 1960 the American Medical Association would develop a national policy as well that would be signed into law by President Johnson and would become the foundations for Medicare and Medicaid (Rebelo 2007). As of the past two decades, the cost of health care have rapidly been on the rise (PBS, 2012).

As new medical discoveries occurred in health care and technology advanced, physicians became more capable of treating patients for their illnesses. Financing in medical organizations is important so that they may afford to do more research and obtain better technology, at the moment the health care industry is 17% of the United State’s Gross Domestic Product only expecting to rise even more as time continues. Majority of the funding for the health care industry is received through the government through Medicare and Medicaid programs. The rest of the funding is being provided by private investors.

To understand how well that health care industries are doing, researchers evaluate the elasticity or inelasticity of the organization’s products. If it shown to be elastic, the organization is doing well selling the product or service which as the supply to it decreases, the price will rise. Inelasticity is likely showing that it is not performing as well, organizations are either uncertain about raising prices as the supply drops or the population is not willing to pay more for the service. They will also look at the microeconomics and macroeconomics to see how they are affecting the industry’s economic situation. Microeconomic will focus on how smaller or more particular aspects in the economy are affecting price-cost relationships. Macroeconomics will look at the economic situation as the entire country as a whole to examine what effects that may be causing.

The health care industry’s economy continues to be a strong focus in the United States economy as even more focus is being poured into evaluating the health care policy situation within the United States and funding relating to it. The government programs that have been created with the health care industry are still in operation and being reformed to make adjustments that are as suitable as possible to the nation in terms of quality and affordability, attempting to offer the best care and technology possible while making it available to as many as possible without costing the country so much.

Economists in the United States are examining the microeconomic and macroeconomic markets to help determine the performance of the industries and what course of action will be taken, though the spending on health care in the past few years has become a large issue for the United States. Through history with the start of health care economics to the current time, funding has been a large focusing issue in the United States taking a large portion of the nations gross domestic product, far surpassing that of other nations and will continue to be a main focusing issue for economists and political debates.


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