20110624-Government in Health Care

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Running head: GOVERNMENT IN HEALTH CARE 1

Government in Health Care

Jemyr Gonzlez-Cordero

University of Phoenix

Health Care Economics

DHA/721

Dr. William Greaf

June 27, 2011


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Government in Health Care

In most countries, the government plays a major role in the provision of health services.

According to Morris, Devlin and Parkin (2007) the government might therefore become involved

directly in the provision of health care in order to ensure greater access for certain population

groups, for example low income groups and children, who might otherwise not receive the health

care they need (Morris, Devlin, & Parkin, 2007). Government is grappling with accelerating

health care costs, increasing service demands generated by an aging and more chronically ill

society, and accumulating evidence that American health outcomes are not commensurate with

the resources invested (Perlin & Baggett, 2010). Governments are deeply involved in producing

as well as financing health care services regulate the health care industries, and governments are

at the center of most contemporary health care issues (Folland, Goodman, & Stano, 2010). These

include major policy issues, such as national health insurance and initiatives intended to control

costs and increase access to care (Folland et al., 2010). As a member of the senior management

team at the Patton-Fuller Community Hospital our mission is to approach on the economic

aspects relating to health insurance coverage, prescription drug coverage and improving lifestyle

choices at a popular level.

Health Insurance Coverage

One of the issues found in the Patton-Fuller Community Hospital (PFCH) is the health

care Insurance Coverage. According to Morris, et al., (2007) some population groups might find

it difficult to buy health insurance. Low-income groups may not be able to afford health

insurance, even if it is charged at the fair premium rate and there may be incomplete coverage for

high-risk groups (Morris et al., 2007). The provision of health care and of health insurance is

also the major means used to redistribute income to lower income groups from higher-income


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population, and the increasing cost of manufacturing specialist drugs. According to Truffer,

Keehan, Smith, Cylus, Sisko, Poisal, Lizonitz, and Clemens (2010) the economic recession and

rising unemploymentplus changing demographics and baby boomers aging into Medicare

are among the factors expected to influence health spending during 20092019 (Truffer et al.,

2010). In 2009, the health share of gross domestic product (GDP) is expected to have increased

1.1 percentage points to 17.3 percentthe largest single-year increase since 1960 (Truffer et al.,

2010). The average public spending growth rates for hospital, physician and clinical services,

and prescription drugs are expected to exceed private spending growth in the first four years of

the projections (Truffer et al., 2010). As a result, Truffer et al., (2010) explains public spending

is projected to account for more than half of all U.S. health care spending by 2012 (Truffer et al.,

2010). The drug industrys profit margins have raised considerable attention. Pharmaceutical

manufacturing was the most profitable industry in the U.S. from 1995 to 2002, and in 2008 it

ranked third with profits after taxes of about 19 percent (Fortune 500, 2008). According to Rhee

(2009) Fortune magazine has reported that in 2008, the pharmaceutical industry continued to be

in the top three most profitable industries in the United States for the past two decades. It is a

lucrative industry that utilizes different strategies to gain revenue (Rhee, 2009). Rhee (2009)

adds after FDA approval, these drugs are patented which can last up to 20 years. This allows

them to keep exclusive rights to selling these brand name drugs (Rhee, 2009). It is only after

these patents expire that other drug companies can use the formulas to be manufactured as

generic drugs (Rhee, 2009). This allows the drugs to be bought at greatly discounted rates in

comparison to the brand name drugs (Rhee, 2009). A company makes the majority of profits

during the times they hold this drug patent (Rhee, 2009). Money and time are invested into


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marketing these medications from many different angles (Rhee, 2009). Large percentages of a

companys budget are allocated for this because these strategies work (Rhee, 2009).

Improving Lifestyle Choices at a Population Level

Improving lifestyle choices at a population level is the third issue to evaluate. Making

bad lifestyle choices can mean the differences between longer life and shorter life, and health

care costs. According to Reindl (2011) there are some factors that contribute to double digit cost

increases and offers potential savings. For example, Reindl (2011) explains an employee cost

share that did not encourage efficient utilization of medical services. If its free, or nearly so,

they have no reason to care what it costs (Reindl, 2011). Employees tended to overuse high cost

services, such as the emergency room and brand name drugs, rather than more economical and

medically appropriate services and medications (Reindl, 2011).

Statistics shows more than 20% of employees did not use their benefits, even for

preventive care (Reindl, 2011). A review of the results for employees who voluntarily took the

online health risk assessment showed that more than 2,100 had health risks either because of

family history or lifestyle choices that claim data had not previously identified (Reindl, 2011).

Disease is the real enemy and early detection is critical to improving overall health and reducing

cost (Reindl, 2011). More than 17% of employees were being treated for a chronic condition

(Reindl, 2011). With a plan, which provide disease management programs for heart disease,

diabetes, asthma, low back pain and chronic obstructive pulmonary disease. Is expected cost

reductions.

Conclusion

When government regulates, its own expenditures may be relatively small (Folland et al., 2010).

The economic consequences of its regulation can be very large, however, and corresponding care

must be taken in evaluating the alternative scenarios (Folland et al., 2010).


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References

Folland, S., Goodman, A. C., & Stano, M. (2010). The Economics of Health and Health Care (6

ed.). Upper Saddle River, NJ: Prentice Hall.

Fortune 500. (2008).Fortune 500: Our annual ranking of Americas largest corporations top

industries: most profitable. Retrieved June 24, 2011, from

http://money.cnn.com/magazines/fortune/fortune500/2008/performers/industries/profits/

Morris, S., Devlin, N., & Parkin, D. (2007).Economic Analysis in Health Care. West Sussex,

England: John Wiley & Sons, Ltd.

Perlin, J. B., & Baggett, K. A. (2010). Government, health and system transformation. In W. B.

Rouse & D. A. Cortese (Eds.),Engineering the System of Healthcare Delivery (pp. 415-

434). doi: 10.3233/978-1-60750-533-4-415

Reindl, W. (2011). CDHP Is Curing What Ails Healthcare. Retrieved June 24, 2011, from

http://www.hrmreport.com/article/CDHP-Is-Curing-What-Ails-Healthcare/

Rhee, J. (2009). The Influence of the Pharmaceutical Industry on Healthcare Practitioners

Prescribing Habits. The Internet Journal of Academic Physician Assistants, 7. Retrieved

from

http://www.ispub.com/journal/the_internet_journal_of_academic_physician_assistants/vo

lume_7_number_1_26/article/the-influence-of-the-pharmaceutical-industry-on-

healthcare-practitioners-prescribing-habits.html

Truffer, C. J., Keehan, S., Smith, S., Cylus, J., Sisko, A., Poisal, J. A., Lizonitz, J., & Clemens,

M. K. (2010). Health Spending Projections Through 2019: The Recessions Impact

Continues.Health Affairs. doi: 10.1377/hlthaff.2009.1074

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20110624-Government in Health Care