Current Legislative Trends that Influence the Demand and Supply for Healthcare Services
Differences in demand curves for healthcare services and automobiles
Although price, substitutes, complements, and income influence the demand for healthcare services, there are exceptions where these factors do not influence the demand for services. According to Folland, Goodman & Stano (2017), patients may ignore the impact of increased prices for healthcare services because health is an investment rather than an expense.
In this sense, people are willing to pay for services regardless of their prices when the need arises. This factor renders healthcare services inelastic, meaning the demand curve would not shift to the left even after increasing the price of services. Conversely, the automobile industry is highly elastic, meaning customers make trade-offs and consider options following upsurging prices that make the demand curve shift to the left.
Supply for Healthcare Services vs. Supply for Automobiles
Supply refers to the number of goods and the nature of services available to customers at a given price for a particular time. Healthcare providers such as drug manufacturers and caregivers determine supplies depending on various factors, including technological change, inputs price, industry size, insurance coverage, and prices of production-related goods (Folland, Goodman & Stano, 2019, p. 61).
On the other hand, technological changes, input prices, and production-related goods determine the supply of automobiles. Although these industries share factors that influence the supply of goods and services, the healthcare sector contains additional aspects, including coinsurance and indemnity insurance that reduce out-of-pocket expenses, affecting the subsequent supplies.
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.
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 ser
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