Similarities and Differences of Supply Curves for Healthcare Services and Automobiles BHA FPX 4112 Assessment 1 Instructions: Health Production Function
Similarities and Differences of Supply Curves for Healthcare Services and Automobiles
Advanced technologies, inputs prices, and production-related goods result in increased supply to maximize profit. An increase in supply makes the supply curve shift to the right and vice versa. Healthcare services are prone to advancing technologies that lead to increased supply and enhanced services. Also, increasing inputs prices in labor and processes prompt health organizations to increase supply to match these developments. Similarly, these trends consistently determine the supply of automobiles.
However, healthcare services are prone to exogenous factors that alter the movement of the supply curve. For instance, coinsurance and indemnity insurance reduce out-of-pocket expenses, increasing the supply, shifting the curve towards the right. Another factor that increases the supply for healthcare services is the improvement of transport and communication systems that allow people to access services and vice versa.
Current Legislative Trends that Influence the Demand and Supply for Healthcare Services
Medicare and Medicaid are the most prominent policies determining the demand and supply for healthcare services in the United States. According to Guth, Garfield & Rudowitz (2020), studies show that Medicaid and Medicare increase access to care, enhance health outcomes, strengthen providers’ capacity, and guarantee financial security by reducing out-of-pocket expenses. As stated earlier, reducing out-of-pocket expenses by subsiding care services through insurance premiums increases demand for quality care while strengthening providers’ capacity to provide quality care.
More significantly, Medicaid expansion policies proposed by the Affordable Care Act (ACA) of 2010 are fundamental in addressing the problem of uninsured and underinsured populations. As a result, these policy priorities consistently increase the supply and demand for quality care services by guaranteeing access to coinsurance and comprehensive coverage for various health services.
Although Medicare and Medicaid legislation increases demand and supply for healthcare services, some states are yet to expand Medicaid, meaning they still grapple with the high rate of uninsured and underinsured populations. According to Shrank et al. (2020), states face various challenges implementing ACA provisions, including high premium rates, stagnant wages, growing national debts, and strained local budgets. These constraints contribute to difficulties when paying for insurance premiums.
Eventually, uninsured people affect demand and supply for healthcare services by increasing uncompensated care. Although the Emergency Medical Treatment and Labor Act (EMTALA) of 1986 requires healthcare organizations to provide emergency care to patients regardless of their insurance status and ability to pay, high rates of uninsured patients lead to increased uncompensated costs that reduce organizational capacity to provide quality care.
Reimbursement Methods that Influence the Supply and Demand for Healthcare Services
In the United States, employers, private insurance companies, national and state governments, and patients are the main payers of healthcare services. In this sense, employers, the national government, and states reimburse healthcare services through various models, including, Beveridge system (national health model), the Bismarck system (social insurance model), and private insurance. On the other hand, uninsured patients pay for healthcare services primarily through the out-of-pocket model (Crowley et al., 2020). These reimbursement models have varied effects on the supply and demand for healthcare services.
The national health insurance model entails a scenario where the government acts as a single-payer to provide universal coverage. This system improves demand and supply for healthcare services by creating affordable premiums that enable people to access quality care. On the other hand, the Bismarck system entails compulsory enrollment insurance plans that cover employees. It contributes to financial security, access to quality care, and high demand for reliable services. Finally, private insurance and out-of-pocket models allow people to purchase insurance premiums from their income. These reimbursement models are expensive and inefficient for people of low income, reducing their demand for healthcare services.
Conclusion
The demand and supply for healthcare services rely massively upon various endogenous and exogenous factors, including government policies, insurance, consumer preferences, income, prices, and the availability of complements and substitutes. Unlike other c