Economic Tools and ConceptsJohanna CarrascoHCS/552March 31st, 2014Professor James Hamilton
Running head: ECONOMIC TOOLS AND CONCEPTS
ECONOMIC TOOLS AND CONCEPTS
Economic Tools and ConceptsThe United States spends more money in health care than any other industrialized nation. Care and treatment of patients with chronic diseases have become a cancer for the US economy. Certainly this significant expenditure of money, almost trillions per year has become a burden for this country that could end up in catastrophe. The impact on the economy can be attributed to three major factors; the first and by far the largest excess of costs is due to overuse of medical resources by patients. Overuse is a response from the patient who does not have to pay the entire cost of medical services received. The causes of excess are Medicare, Medicaid and the law that makes employers responsible of providing health insurance to employees. The second is administrative costs that exist because of third-party payers and their failed efforts of controlling costs. The third is the fear of malpractice lawsuits, extra tests and procedures provide some kind of insulation to the physician and hospitals in case of a wrong outcome or a vicious lawsuits (Liebowitz, 1994). Over the last decades health care costs have risen at a faster rate than food, education, defense, and transportation (The High cost of Health care, 2002). In an effort to control costs, President Obama has pushed under the Affordable Care Act, a reliance on preventive care. He based his approach in that preventive care is less than expensive than later treatments or surgeries and that preventive medicine will cause radical cost savings (Steib, 2009). But president Obama has not considered nor taken into consideration the current shortage of primary care physicians and the effect that this law will have on the supply shortage when demand increases. Analysis of some economic terms can explain and help us understand health care economics and how organizations use them to prepare for the future.Supply curveSeveral factors contribute to changes in health care supply. Deep emotional, social and practical issues associated with controlling what kind of health care people can buy and from whom they can buy it, is one of the causes to the supply problems (The Washington Post, 2011). Another factor is the shortage of health care professionals. As the health care law expands, greater enrollment of people in the health insurance pool will make worst the primary care physicians shortage and a supply side crash could happen. The Association of American Medical Colleges projects that by 2015; we will be 63,000 doctors short (NPR, 2012). There are ways to control the supply crisis and health care costs. Supply management is a traditional way of controlling costs by having providers decide what kind of care the patient needs. The purpose is to reduce the supply of health care through utilization management and a...