Healthcare Economics: Health Insurance

Controversies surrounding the development of health insurance and the government’s role in providing, financing, and regulating health insurance and health services.

The development of health insurance in the United States encountered a multitude of controversies. One of the primary sources of controversies comes from the regulation of managed care organizations also known as MCOs. Their original purpose was to provide high-quality care at the lowest possible cost. The critics of these organizations claim that their goal of providing low-cost care can lead to a lower quality of care through MCOs denying or restricting costly treatments despite their necessity. As a response, many states created various regulations that can influence the decisions of MCOs. These regulations include anti-gag rules that would allow doctors to discuss treatment options not covered under the plan, as well as an ability to criticize the plan. This point is controversial because a physician under a gag rule would not be able to provide the most appropriate treatment to the patient in some cases. Another type of regulation includes limits on financial incentives. They would prevent MCOs from incentivizing a less effective but lower cost treatment above a more effective one. Continuity of care is also a controversial topic that was addressed by politicians. The connection between patient and physician is often seen as essential. Therefore a possible change of physicians due to the change of medical plan could be harmful to the patient. Lastly, the rights of medical professionals were given additional attention. Many medical professionals see MCOs as too restrictive of their autonomy due to the market pressure and managed care plans (Santerre, & Neun, 2010).

Regulation is not the only role that government plays in health care. United States government provides healthcare through two major programs: Medicare and Medicaid. These programs provide medical care for disadvantaged groups such as seniors and people with disabilities. Medicaid is focused on providing healthcare for people with low incomes. The costs of the program are shared between the state and federal governments, with the state government having the majority say in determining eligibility and benefits to the people. The Medicare program is designed to broaden the access to insurance for seniors by reducing their medical spending. This program provides multiple options ranging from hospital services to ability to join private insurance plans. Both programs are financed through taxation, with lower income states getting a larger subsidy from the federal government. However, due to the costs and voluntary nature of some of the options, Medicare is funded through multiple venues. Specifically, it is partially funded through premium payments for enrollees (Santerre, & Neun, 2010).

The changing nature of health and medical care and the implications for medical practice, medical education and research, and health policy

Technological advancement was always the driving force behind the changing nature of health and medical care. This change is evident especially in the last 17 years as the effects of various breakthroughs have had an effect on many fields of medical care. For instance, the recent advances in 3D printing have made prosthetic limbs, teeth, and other types of prosthetics cheaper to produce, and added the greater potential for personalization for the patient. These advancements have proven to have a positive effect on population resulting in longer life expectancy for people after the age of 80, and a general increase in life-expectancy. Pharmaceutical industry especially saw a great improvement due to technological advancements (Santerre, & Neun, 2010).

This technological dependency, however, brings a variety of implications for medical practice, education, research, and policy. For medical practice, it has both positive and negative implications. Technology provides more effective treatments and improves older ones through new tools and pharmaceuticals. On the other hand, it increases the costs of training, as well as the cost of treatment. Despite the possible decrease in price long-term, the implementation of new technologies is a costly process that is not guaranteed to pay-off before it becomes obsolete (Santerre, & Neun, 2010).

Medical education can greatly benefit from these changes. The proliferation of the Internet enabled new innovative solutions for medical education. Many new models of education have been proposed to take advantage of the changes including competency-based, and learner-centered solutions. These innovations can be achieved through collaborative projects between multiple medical schools focused on the creation of open online courses on a massive scale. These models still require further examination and planning, but the possibilities are very promising in comparison to traditional medical education (Mehta, Hull, Young, & Stoller, 2013).

Medical research as well has seen great benefits from technological advancement. The previously mentioned 3D printing technology was instrumental in increasing the speed of prosthetic research due to the ability to create prototypes quickly (Gross, Erkal, Lockwood, Chen, & Spence, 2014). The Internet has played a big part in medical research as it enabled researchers to use the processing power of internet users to solve problems that would require massive super-computers. For instance, projects focused on folding proteins, and the human genome project received wide attention from internet users volunteering their time and processing power for the benefit of research (Ranard et al., 2013).

However, the changing nature of healthcare resulted in a rise in costs for medical programs. This ignited a vigorous debate in the government that has still not been resolved. Healthcare reform was one of the most controversial topics in the previous election. The evidence for this can be seen in the recent repeal of the Affordable Care Act that provided 25 million of Americans with healthcare, despite the lack of a proper replacement bill (Zhao, Okoro, Dhingra, Xu, & Zack, 2017). The issue stems from the required increase in taxes and the fear of lowering of healthcare quality due to its larger availability.


Gross, B., Erkal, J., Lockwood, S., Chen, C., & Spence, D. (2014). Evaluation of 3D printing and its potential impact on biotechnology and the chemical sciences. Analytical Chemistry, 86(7), 3240-3253.

Mehta, N., Hull, A., Young, J., & Stoller, J. (2013). Just imagine: New paradigms for medical education. Academic Medicine, 88(10), 1418-1423.

Ranard, B., Ha, Y., Meisel, Z., Asch, D., Hill, S., Becker, L., … Merchant, R. (2013). Crowdsourcing—harnessing the masses to advance health and medicine, a systematic review. Journal of General Internal Medicine, 29(1), 187-203.

Santerre, R., & Neun, S. (2010). Health economics: Theory, insights and industry studies. Mason, OH: South-Western Cengage Learning.

Zhao, G., Okoro, C., Dhingra, S., Xu, F., & Zack, M. (2017). Trends of lack of health insurance among US adults aged 18–64 years: findings from the Behavioral Risk Factor Surveillance System, 1993–2014. Public Health, 146(1), 108-117.

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