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Custom Economic Analysis of the US Healthcare Law Essay

The debate over the reform for the new bill raged on in congress until it was passed last spring. This was strange as elements of the bill were implemented even before the bill came into action. The debate boiled down to about four questions of pertinent importance. These were, does the bill cater to the benefit of the American people? The democrats argued that the bill would create new jobs while the republicans negated that prediction. The second query was if the law would reduce the deficit or would it increase it. Could the law bring down the ascending costs of medicine in the country or would it alleviate the condition.

Finally, the major debate of the law centered on the promise given by the law that it would give health insurance to at least 30 million Americans. The questions and initial suggestions seem to be quite easy; it is the answers bringing some difficulty, apparently with vast amount of information, and perspectives flying around. For one there are two opposing positions to the deficit debate. The congressional budget office came up with an analysis that favored the bill stating that the bill will alleviate the deficit. The following shows current federal spending on health care.

The republicans beg to differ with an analysis of their own saying the bill will add several billions to the deficit, in fact. Therefore which side should people believe in the end? There is probably no clear answer to that question. The problem has different perspectives and different think tanks may interpret the problem in different ways. The politicians should not be trusted wholly because they would interpret the information to fir their purposes and twist the information in a way that would make people at ease and thus swing them to their side.

The debate was given to the American people when McKinsey & Company commissioned a survey of about a thousand three hundred private sector employees to work out their feelings about health care reform. The survey was on the budget of McKinsey as part of their proprietary research analysis. As part of a market research analysis, it was not to offer predictive economic analysis to the impact of the affordable care act. On the contrary, it was used to capture the attitudes of the workers and in this way, it provided an idea into what could influence decisions on employee health benefits.

On this basis, the company argues that the research does not compare to other analysis done by institutions such as Congressional Budget Office and the urban institute, which employed studies for economic modeling. They state that comparing their surveys with any economic estimates would use two different parameters in comparison. When giving an analysis of health care special attention should also be awarded to the basic unit, which is the hospital. Apparently, this can act as a monopoly.

The reason for this is that hospitals usually have the incentive to grow where services are provided. This may lead to a large hospital growing in an area where there are many small hospitals. The economies of scale and scope may now appear because of the falling unit costs. The average cost of providing treatment falls as the hospital becomes larger for a number of reasons. For one, the institution may be able to make use of people and capital in specialization units and is able to develop highly specialized medical units under the same roof. It will hire highly skilled surgeons and specialized managers as well as particular medical equipment.

The hospital can then manage its affairs more effectively using trained staff. Its sheer size utilizes economies of scale through bulk purchasing of most goods in its storages. It also helps to prevent wasteful use of the facilities, as large hospitals tend to have a specified number of patients within a particular special area at the time of treatment. By concentrating the specific resources within an area, they are able to save. In most cases, it may cost less to provide a number of specialized services within one hospital than it takes to have many facilities that provide one or two services each.

An example in this case is providing surgery, as well as emergency treatment of heart attacks would be more cost effective if there were a large hospital taking care of the volume of patients than two separate ones. These make a vision for economies of scope in this situation. The hospitals now have the advantage over the consumer because they have the tools and specialized equipment as well as the top-notch service from highly trained physicians. Thus, they have the authority to state whatever prices they want because they have the authority to do so.

This free market situation does not automatically lead to the pareto-efficient outcome. Thus if the hospital is looking to maximizing the profits from this situation then it will set the prices above the marginal costs and in this way will give an inefficient outcome. At this rate the hospital may become drunk with power as the lack of competition begins to have an effect on it. The productivity may begin to suffer as a result. All the while, it does not have incentive to reduce the costs because regarding most situations in the country, it is one of the few facilities in the area of its kind.

At this rate of raised medical fees for quality health care, it would seem like good reasoning for one to include such a law for reform to ease the situation. When it comes to health insurance, it provides that the self-employed and the uninsured would be able to purchase insurance through exchanges from the state. The subsidies would be available to families churning an income of about one and a third and four times the poverty level. There would also be separate exchanges for small businesses, although this would become available by the year 2014.

When it comes to subsidies those who are within the bracket of a hundred to four hundred percent above the federal poverty level will be eligible for this package provided they want to purchase their own insurance for state exchanges. The however, cannot receive cover from Medicare, Medicaid or receive coverage from an employer. The bill has the feature of separating the private insurance premium funds from the taxpayer funds. Those seeking to abortions would have to pay to different accounts, as the federal payments would have to be kept separate from the private funds.

There is no health care plan currently in force there to offer coverage for abortion in the first place. Thus, states could and sometimes would pass legislation to choose to opt out of offering abortion coverage through the exchange. This was a controversial issue with anti abortion democrats. They apparently worked out the language with the white house on the executive order such that no federal funds would be disbursed to pay for abortions in the first place except in cases where the mother has been raped, or there is an incest case. It would also be applicable if the health of the mother were in question.

This is not to state that the bill does not have its advantages despite the feelings of republican politicians. Along with the longer-term changes on the reform on health, other changes will take place with an immediate effect. It will offer tax credits to smaller businesses that will make the issue of employee coverage less of an issue. It will also provide rebates of about $ 250 for beneficiaries that hit the donut hole by 2010. This is supposedly effective for the 2010 calendar year (Hancock, 2010).  

It eliminates co payments for the purpose of preventive services and so exempts the preventive services from the deductibles from the Medicare program. It will give some light for the retirees giving a temporary reinsurance program for the offsetting of costs for the expensive health claims for employers that provide health benefits for employees aged between 55 and 64, who are on their way to retirement if not already there. It claims to end recessions which will ban health plans from dropping people at the time they get sick.

Custom Economic Analysis of the US Healthcare Law Essay

Code: Sample20

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