Economic Factors Affecting the Health Sector


Reduced government budgets, low family financial position and increased costs of drugs from pharmaceutical firms are the economic factors that affect healthcare in America. The quality of life is strongly dependent on the quality healthcare. In most countries, quality healthcare has become a major political issue as much as it is an economic issue. One thing can must be expected in the healthcare sector is change. The demand and supply of healthcare services is influenced by factors such as funding, affordability, accessibility, and quality. Unlike other countries, US healthcare system has no uniformity and no single universal health care coverage. Rather it can be described as hybrid system since a greater percentage of care is delivered privately. Compared to other high-income countries such as Sweden, Germany, Japan, UK, and Canada, US spend the greatest amount on health services yet with worse health outcomes such as reduced life expectancy and prevalence of chronic conditions. This has been attributed to extensive use of medical technology and higher healthcare prices. Such high spending on health have long-term impact on US economy since it contributes to personal bankruptcy, budget deficits, wage stagnation and competitive disadvantage relative to other high-income countries. This paper seeks to explore the five major economic issues that are currently affecting the US healthcare system with extensive focus on their future trends on the quality of care. These issues include rising costs for average family, decreased funding, staff shortage, increased number of uninsured families, and


Healthcare Costs for the Average Family

People often value health more than any other aspect of life and are always ready to pay a greater deal of cash to get cures. They are willing to spend a greater percentage of their income to save their lives or those of their loved ones. As a result, many people become personally bankrupt due to medical expenses because they prefer being bankrupt that risk their health. The rising costs of providing and receiving health care services have been felt by both individuals, local, state, and federal agencies. Evidently, costs are becoming major impediments to provision of quality healthcare.

Even though it is believed that quality health care is a right, the high number of uninsured persons is a setback to access of healthcare. Secondly, the number of insured Americans has also dropped in the past six years. As a result, most families have to use out-of the pocket cash to cover for their health needs. This has significantly increased the costs of health care on average family. Data indicates that the healthcare cost for families has doubled in the last ten years and is anticipated to triple in coming years. With the ever increasing unemployment rate, many US citizens are at stake with regard to accessing quality healthcare.

Drug prices are other factors that are adding to the increasing cost of healthcare. Data from federal health officials indicates a rise in drug prices by 12.4% in 2014. The report further outlines that there is a projection of 7.3% annual rise till 2018. Millions of patients have had their drug prescriptions double in price. The rise in prices has nothing to do with the cost of research and development. Most of the prescription drugs are purchased by federal and state governments. This implies that the government uses citizens tax dollars are paying for high prescription drugs. For example, Humira an injectable drug that is used for treating chronic conditions such as rheumatoid arthritis and ulcerative colitis has its purchase escalated in the last years. In 2014, patients spend a hooping 6.5 billion dollars on its prescription. Comparing the cost of the same drug in UK and Sweden, there is a huge difference in the expense. While UK spends $1362 and Sweden spend $822, USs expense on Humira drug stood at an average of $2669. It is the same product and US citizens pay more yet no outstanding health gain. In addition, the cost of normal and C-section deliveries are doubled in US as compared to Australia or Switzerland.

Generally, Americans spend more on health than any other countries elsewhere not because they frequently visits physicians but because of the high prices. While other countries have specific bodies that regulate for hospitals, pharmaceuticals, and drug manufacturers, US lack such regulatory agency. Every insurance company negotiates their own prices with the pharmaceuticals and manufacturers. As a result, the pharmaceuticals and health care providers take advantage of public because of the fragmented health system. The independent approach to prices set makes the cost of drugs to be irregular and costly to the people. The implication is that the country does not get bulk discount and citizens have to pay more for every type of care they receive. This has been a major problem in the past decades and will continue to impact the nations unless radical measures are taken to avert it. Employers have also resorted into shifting much of the costs to insurers and the employees.

To address this problem, the stakeholder has put in place six principles that would guide drug pricing for Americans. First, the Medicare should use their bargaining powers to negotiate for better prices with the pharmaceutical companies. This requires amendment in the law which currently prohibits such involvement. Secondly, Americans (wholesalers, pharmacists, and individuals) should be allowed to safe and affordable drugs from Canadian pharmacies. Third, anti-competitive deals to keeps off generic drugs from the market should be done away with. The federal and state governments should work on restoring discounts for low income seniors. The fourth principle entails enactment of penalties for fraud. Lastly, the companies should be obliged to publicly provide details of factors that are affecting drug pricing.

Decreased Funding

The high cost of healthcare in US is seriously straining the countrys economy since the high costs have not ensured improved health. The costs of healthcare still remain high due in America despite government input. Health care is paid for by individuals, insurance plans and government programs. US spend about $8300 on healthcare for every person. The government spends in terms of costly equipment and procedures and administrative costs. The health care providers are paid by citizens (out-of-pocket), private insurers, and the government. Currently, the hospitals are experiencing a shortage in the money supply from all these sources. Therefore, administrators have invented new ways of meeting costs which eventually impacts negatively on the general public. These include charging patients directly to buy drugs and cater for other essentials. The nurses and doctors are overworked and exhausted because of understaffing and inadequate facilities. Patients have had to wait for longer to get diagnosis and surgery.

The problem of decreased funding has been partly addressed by the affordable health act which offers cover for all citizens. Since its enactment in 2010, the Affordable Health Act has had considerable changes in the health sector. However, a lot still needs to be done for full realization of its benefits. These would include adoption of National Health Service, national health insurance system, and all-payer health system. The increasing cost of health is what has prompted reduced funding for health sector. Other methods than can be adopted to address the high costs include funding the costs with regard to income and not medical history, negotiation of pricing of prescription drugs.

Income Levels of Families

The amount of money that is at disposal in a family affects the type and quality of health care that they can access. Families in America exist in three income levels namely, poor, average and the wealth. Families that have low income or finances will definitely be limited in the choice of healthcare whenever need arises. Further, poverty can also be a reflection of lack of education which limits a persons access to well-paying jobs. The American elderly individuals can sometimes live in low income brackets due to their disadvantaged status. The availability of money primarily determines the type of hospitals that one can go to when ill.

The family income in America determines many things that have a connection to ones health. For instance, those who have money can access medical checkups more frequently than those who live with limited financial abilities. Frequent medical checkups help one to keep check of any infection long before they turn catastrophic. Regular checkups are only possible when a family has stable financial position. Further, the family income determines the nutrition that a family can access. It is obvious that nutrition is closely tied to health. A family that eats balanced foods is not likely to suffer from disease compared to those who have challenges in accessing quality food. American families that have financial stability are more likely to have sufficient food and hence stay healthy compared to places where money is scarce. Further, family income affects the ease with which one can get health insurance. Those Americans who have regular employment have stable income which translates into consistent health insurance cover. Families that have low income can only afford basic insurance that is always limited in its coverage of chronic health cases. Some people have had to stay at home when sick just because they could not afford medication.

Our features

300 words per page instead of 280

Discount System

Vip Services

Revision within 2 days (on demand)

Affiliate Program

Plagiarism-free papers

The American government needs to continue supporting an all-inclusive health insurance that benefits the whole public. The American health care sector has instituted an all-inclusive healthcare fund which is referred to as the Obama-care. In such an arrangement, those who have stable incomes pay some mandatory insurance subscription which overlaps to those in low income groups. Even though this type of insurance has been criticized by the wealthy, it actually has a national benefit. This means that even those in low income groups get insurance cover. It is vital that even the low income group pay some minimum amount of money towards their incurrence costs. Further, the public and the private sector should work hand in hand to increase the number of jobs to the Americans. The best way to deal with poverty and low income in families is to create jobs that would in turn bring money to as many households as possible. Once families have sufficient money, they can have food to keep them healthy. Further, a family with sufficient funds can conveniently pay insurance subscription to enable them access healthcare whenever need arises.

The government has the powers to develop policies to govern the health insurance sector. The Obama-care is an example of a health policy that brought huge benefits to all Americans on issues of health. It is possible for the government to draft more laws that would help all households to access healthcare. Further, the government can work to expand the economy so as to avail more jobs. The provision of jobs is a clear answer to low family incomes. Further, the health insurance sector can come up with low premium health covers that can benefit even the low income families. The public and the private sectors can effectively team up to ensure that all American have access to health care irrespective of their income positions.

Lack of Sufficient Staff in Medicare

America has shortage of staff working in the healthcare industry. The staffs presently working in the hospitals and other health sectors need to be added to guarantee quality health care. The number of doctors and nurses need to be increased to bridge the huge gap when compared to patients. Recent reports indicate a huge nurse to patient disparity yet hospitals are not keen to address the issue. One nurse complained of taking care of more than five patients alone in the night. Matters get worse when the patients need urgent attention all at the same time.

Understaffing in America has resulted into increased workload for the nurses and other care givers on duty. It is evident that an overworked nurse cannot be effective in delivering services. The Lancet report indicated that the chances of a patient dying are increased by 7 % when the care givers are few and overworked. Further, understaffing means that the few care givers must work for long shifts without adequate rest. A tired care giver can easily give a wrong prognosis and diagnosis. Errors in the medical field in America are increasing in alarming rate but the hospital administration is shy to admit. In California, health issues like post-surgery infection helps to ascertain the staffing ration. This means that an increase in the infection reflects on the deficiency of care givers. Understaffing also results into lack of personal and specialized attention to patients by the doctors and nurses and this results into poor healthcare. Understaffing occurs when money is not sufficient to employ enough doctors, nurses and other health workers.

The understaffing crisis can be addressed through setting aside enough money in the government budget to employ health workers. It is the duty of the government to employ health workers. The national and county governments should work hand in increase the number of health workers in hospitals. The government can also address understaffing in some hospitals through assessing the needs of patients in various regions of the country. It is likely that some regions have more health workers than others. This means that one region might be overstaffed while another region lacks the care givers. Regional staff balancing should be given a priority so as to give adequate supply of health workers. Further, a motivating remuneration should be availed to the health workers to reduce high staff turnovers in health facilities. The private and the public sectors can address the issue of understaffing through coordinated approaches. Many private facilities employ few care givers in bid to reduce costs. The private health care centers need to employ more care givers so as to bridge the deficiency and in turn deliver quality health care.

Economic Impact of Drug Companies on the Health Sector

The health care sector is so dependent on the medicine industry that the doctors diagnosis will be useless if drugs were absent. Because of this, pharmaceutical firms are exerting a lot of control on the health sector that the government needs to intervene. The cost of drugs has been increasing so much so that some Americans cannot buy all the drugs prescribed to them. While it is true that many researchers have yielded better forms of medication Americans still feel the burden of expensive medical care. Further, many clones and generic drugs have flooded the market and this further reduces the efficiency of treatment. A generic drug can appear cheap but fail to treat the infection. The influxes of these drugs which have low efficiency have significantly increased the cost of treatment in America. Each drug company sets a price which is normally high and expensive to the people. Greed in the pharmaceutical firms has further seen the costs of drugs escalate to levels that are not affordable to many households.

The high cost of accessing medicines can be checked if the government work to control pharmaceutical firms to significant levels. This can be implemented through laws that put standards and measures that are agreeable to all stakeholders. The drug firms that set high prices should be controlled. It is also important to include the costs of medicine under insurance coverage. Patients prefer to have all their medical costs catered for in the insurance than leave some aspects for out of pocket settlement. Further, the state governments should make efforts to streamline the cost of drugs across the board. Presently, some states have high costs than others and this disadvantage the residents. It is also vital that counterfeit drugs be eliminated from America. Fake drugs have significantly increased the cost of medication to many households. Most of the generic drugs have also been set at high prices that are not always affordable. The private and the public healthcare organizations can agree to make adjustments that shall see reduction in the costs of medicine. The government can propose laws that can be followed to help maintain the cost of drugs to levels that are safe both to the patients and the drug firms.


The healthcare costs have significantly increased so much so that the average American struggles to afford healthcare. This cost challenge is further worsened by the low income in many American households. Further, the low government funding to the health sector has long lasting impact to the citizens. It is vital that the national health insurance be made robust to cater for health care costs that presently burden the citizens on America. Close coordination is needed between the national and state governments to ensure that the cost of medicines is kept at manageable levels. Close coordination between major stakeholders in healthcare is needed to realize lost medication costs to the citizens of America.