economics

Healthcare and economics
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Healthcare economics description.
Healthcare economics is an economic branch which deals with the application of the economic theory in determining the phenomena and the problems which are associated with healthcare. It entails the issues which are related to the efficiency, value, behavior and the effectiveness in the necessary production and consumption of the health and healthcare (Jackson, 2017). Economics involves the use of the scarce resources which are necessary for meeting the human needs and wants effectively. Healthcare economics, therefore, focuses on the allocation of the resources within an economy’s health system including the healthcare market functioning. It is mainly concerned with the formal analysis of management, costs, benefits and the final consequences of healthcare.
The healthcare economics has made significant leaps and bounds in between 1901 and 1940s.Even with the proposal of by then United States President Truman to have a national healthcare plan, the plan never succeeded as both the Congress and AMA later rejected it. The evolution of healthcare took a different step in the 1960s through the popping up of the health insurance companies. Through this, the hospitals started being more critical than before leading to the signing of law Medicaid and implementation of Social Security. In the 1970s, the healthcare costs increased radically thus spiraling out of control something that has been experienced in the last fifty years.

It is due to the increased costs that the Affordable Care Act was signed into law in 2010 to reduce the expenses incurred in the healthcare sector (Jackson, 2017). Currently, healthcare economics through Health Economics Research Institute has been able to explore and test various better ways which have ensured improved patient care through organizing and financing the system.
The goal of healthcare economics is to improve medical services delivery, be able to fund the innovative and the cost-effective medical procedures by cutting the costs of the health insurance and raising the healthcare that is consistent with the rest of the globe (Folland et al., 2016). This, therefore, predicts the future of the healthcare economics which will be to ensure that there are affordable healthcare services mainly by alienating many problems in the healthcare sector.
Demand and supply in healthcare industry
Just like in other markets, the law of demand applies to the healthcare. An increase in the price of healthcare leads to its less demand. The supply of the health care is determined by the use of production function which involves the use of capital; intermediate inputs and labor. Labor includes technicians, doctors, nurses and administrative staff. The hospital’s buildings involve the capital stock with intermediate inputs which include pharmaceutical products and dressings of the wound (Folland et al., 2016). The demand and supply, therefore, help in determining the efficiency and effectiveness of the healthcare.
There are influential factors which affect demand and supply in the healthcare industry. One of the significant factors includes the technological progress in the healthcare domain. Even with the tremendous technological advances, technology plays a significant role in the demand and supply in the healthcare industry. An improvement in technical level increases innovation rates increases the types of the services and even goods which are available to both households and doctors. With improved services, the price of the healthcare reduces leading to increased demand. There is also increased supply in the advanced machinery, and other techniques used healthcare industry.
Health capital is mainly described by the number of clinics, nursing homes, hospitals among others. Some of the hospitals, clinics, and even nursing homes are privately owned while others are publicly owned. The federal government funds public healthcare facilities thus their costs are lower compared to the private healthcare facilities. Availability of the health capital is, therefore, a determinant in the healthcare demand and supply (Klonschinski, 2016). Increased health capital means there is easy access to the facilities thus reducing the costs which eventually increases the demand. Increased funding also leads to the increased supply of the health capital in the healthcare industry. The balance in both all the factors leads to market efficiencies since there is no discrimination in the healthcare industry.
Health insurance also plays a significant role in determining the costs in the healthcare industry. Household’s marginal private cost is less than the marginal social cost under the health insurance contracts. The attention therefore, has a different provision Due to the subsidies provided by the insurance companies, individuals with health insurance purchase much health-care services due to the incentives they possess (Folland et al., 2016). Health insurance, therefore, reduces the cost of healthcare thus leading to increased demand for the healthcare services as households can be able to purchase the services.
Relationship of economics and healthcare evolution
In 2010, there was the need to revolutionize the healthcare industry. There was the need to cut down the insurance fraud aiming to make everyone be in a position to get insurance and medical services. The main aim was to bring down health care costs. With the scarce resources in the healthcare, economics had to be applied to ensure that while increasing to increase the medical services, there was the need to lower the health care costs (Klonschinski, 2016). The application of the relationship between economics and healthcare has currently enhanced the service provision in the healthcare industry while at the same time lowering the costs in the healthcare.
Health insurance markets have been characterized by the high competition since the collapse of the healthcare reform efforts in the 1990s.The markets have been significantly determined by the technology and the procedures which have influenced their operations. The state health departments have played some roles in ensuring that there is balance in the health insurance market. With many individuals being uninsured during the 1990s, there has been an increased rate of the insured who use the health insurance (Folland et al., 2016). Many households are currently opting for the health insurance due to the increased risks in life.
In the late 1990s, most of the individuals turned to safety-net providers since there was a high rate of the uninsured. The safety-net providers had the mandate to deliver a significant amount of care to the vulnerable populations and the uninsured. There were increased barriers which were raised by lack of the health insurance. The safety-net providers also faced threats due to work overload. The increased population and risks in the individuals’ lives led to households shifting to obtain health insurance coverage. It led to the underinsured that opted for some partly insurance coverage due to inability to cater for all the insurance coverage plans (Klonschinski, 2016). Currently, there has been an increased number of the insured with various households being underinsured. The insurance companies mainly had the indemnity and free-for service plans which allowed them to pay all or part of the bill for an individual. Currently, there are increased insurance plans and carriers which suit different needs depending on the need of the insured or underinsured. The health coverage insurance has been increased currently with every individual choosing the plan that he or she feels is appropriate.

References
Folland, S., Goodman, A. C., & Stano, M. (2016). The economics of health and health care. Abingdon, Oxon; New York, NY: Routledge. Retrieved from: https://2012books.lardbucket.org/books/theory-and-applications-of-economics/s20-01-supply-and-demand-in-health-ca.html
Jackson, D. (2017). Healthcare economics made easy. Banbury, Oxfordshire: Scion Publishing. Retrieved from: https://www.healthcare-administration-degree.net/faq/healthcare-economics/
Klonschinski, A. (2016). The economics of resource allocation in healthcare: Cost-utility, social value, and fairness. Abingdon, Oxon; New York, NY Routledge. Retrieved from: https://www.ncbi.nlm.nih.gov/books/NBK221227/