Health Economics
The economics of health care include several frameworks; including “topical domains, historically dominant perspectives, and key stakeholder perspectives, along with political and legal analysis,” (Teitelbaum & Wilensky, p. 155). Moreover, utility; supply and demand; public goods; the Courts; and natural law all play an important role in facilitating a focus in formulating a viable health care policy. National healthcare has been sought after for over a century by countless U.S. presidents; including Theodore (T.R.,”Teddy”) Roosevelt, who advocated a national system modeled after Europe’s social insurance system, (Teitelbaum & Wilensky, p. 173). But the economic hurdles encountered every administration precluded any real national initiative from being ratified by Congress. Today, economic policy remains a central pillar in the provision of health care.
Utility.
Utility Analysis displays the dynamics of health; physical, and mental cognition; and “tolerance levels for being unhealthy,” (Teitelbaum & Wilensky, p. 156). One essential aspect is diminishing marginal utility; whereby the “obtaining of additional “units” of a particular good will bring less satisfaction than previous units did. Another component of utility is opportunity costs; whereby inaction results in heightened expenditures over time, (Teitelbaum & Wilensky, p. 157). Thus, utility maximization refers to the “ideal set of health-related goods and services that an individual purchases,” (Teitelbaum & Wilensky, p. 157). This leaves consumers to “maximize their utility by purchasing what they consider to be an ideal bundle of healthcare goods and services,” (Teitelbaum & Wilensky, p. 157). Black’s Law Dictionary defines the word Utility as “[t]he quality of serving some function benefits society,” (Garner, B., p. 1858).
One of the biggest challenges in U.S. healthcare is providing quality care at manageable costs without imposing despotic costs equally across all Americans, or those who do not benefit from the service whatsoever. Hospitals play a significant factor in the formulation of health care policy. But as David Kendall and Darbin Wofford report, “most hospitals [are] part of a chain,” and that “those chains have started to limit competition to a high degree in some areas,” (JSTOR). Kendall and Wofford cite that “[e]leven percent of hospitals are in markets where half or less of the hospitals are uniquely owned . . . [and] charge an average of 276% of Medicare’s prices, which is 5% more than the national average,” (JSTOR). Thus, “Hospital markets with less control by hospital chains have lower prices,” (JSTOR). The free market economy is instrumental in the stewardship of healthcare pricing and affordability.
Supply & Demand.
Positive economics describes the evaluation of consequences regarding health-related choices. Here, “[p]ositive economics identifies, predicts, and evaluates who receives a benefit and who pays for a public policy choice,” (Teitelbaum & Wilensky, p. 158). Black’s Law Dictionary defines the word Supply as, [t]he amount of goods produced or available at a given price,” (Garner, B., p. 1740). Conversely, normative economics discusses what public policy should be implemented based on the decisionmaker’s values,” (Teitelbaum & Wilensky, p. 158). The natural law of economics reveals that “as the price of a good or service increases, demand for that good or service will fall,” (Teitelbaum & Wilensky, p. 158). Complements are also influenced by the cost of their original product, leaving entire markets contingent on the economic decisions made by the manufacturer of the good or product, (Teitelbaum & Wilensky, p. 159). Costs and pricing “are a key factor in determining the level of supply,” (Teitelbaum & Wilensky, p. 161). Costs can be subcategorized as average costs and marginal costs. Specifically, the marginal cost is the “price of producing on more unit of the output;” whereas the average cost is over a period of time, (Teitelbaum & Wilensky, p. 162). Black’s Law Dictionary defines the term Marginal Cost as “[t]he additional cost incurred in producing one or more unit of output,” (Bryan, G., p 436). On a macro level this can be described in two forms; the first as supply elasticity, denoting the “relationship between the quantity of goods supplied and the price of goods;” and the second, demand elasticity, depicting “the percentage change in the quantity resulting from a 1% change in price or income,” (Teitelbaum & Wilensky, p. 160).
Public Goods.
The economics of health care policy must also consider public goods; a tangible, nonrival, and nonexclusive benefit to the public, (Teitelbaum & Wilensky, p. 165). Conversely, “goods provided by local, state, and federal governments . . . are not necessarily public goods in the economic sense,). (Teitelbaum & Wilensky, p. 165). Government should not require health care costs to be distributed equally unto the American populace. The Heritage Foundation notes that “[p]roponents [of Obamacare] claim that government-sponsored plans will charge lower premiums than private insurers. Yet, experience shows that, when competing on a level playing field, they don’t,” (Heritage). But this does not stop the furtherance of exploitation, as “[p]ublic goods also create the free rider problem,” (Teitelbaum & Wilensky, p. 165).
The Courts.
In the case of National Federation of Independent Business et al. v Sebelius, Secretary of Health and Human Services, et al.; the Court’s issue sought to find “whether Congress exceeded its authority in effectively forcing most everyone to carry health insurance,” (Teitelbaum & Wilensky, pp. 192, 193). Secondly, the Court considered “whether the ACA’s Medicaid expansion was structured in a way that effectively and lawfully, coerced states into adopting it,” (Teitelbaum & Wilensky, p. 193). In light of the Affordable Care Act allowance of the HHS secretary to terminate all of a state’s Medicaid funding in the event that any state failed to comply; the Court held that “[t]he Constitution simply does not give Congress the authority to require the States to regulate,” (Teitelbaum & Wilensky, p. 193). Moreover, the Court held that Congress was “not free to . . . penalize States that choose not to participate . . . by taking away their existing Medicaid funding,” (Teitelbaum & Wilensky, p. 193).
Natural Law.
A Biblical model is not well understood in a pluralistic society, yet that should not deter its implementation. As Roger Bern (1940–2007) warns, “[w]ithout an understanding that God, as Creator of all, has established and revealed a law order to which human laws and human administration of justice are to conform, a Biblical model for analysis seems foolishness,” (Bern, R., p. 192). The government is meant to be limited in its jurisdiction, especially in the case of public health. That role is reserved for the states and its localities. Bern further adds that, “[l]imited jurisdiction of Civil Government means, for example, that some moral failings will not be judged by Civil Government,” (p.193). The expansion of authority; or conversely the withdrawal and neglect to fulfill the duties and obligations enlisted to it by the people goes against God’s natural law. Thus, the government cannot exceed its jurisdiction. The authority that supersedes government is reserved only for God.
Bern denotes that, "[a]dditionally, when Civil Government usurps jurisdiction granted to the Individual or to another human institution, it poses a genuine threat of discouraging the latter's authorized exercise of it,” (Bern, R., p. 193). Man is obligated to regulate himself in accordance with God. This includes choosing the necessity and level of personal healthcare, rather than opting into funding the national agenda that excludes the majority. Bern further adds, “[e]ven if Civil Government does not purport to preclude a parallel exercise by the authorized entity, its intrusion into the jurisdiction of another is likely, over time, to have a numbing effect on the latter's sense of duty in that area;” as Bern concludes, “thus reducing the likelihood that such jurisdictional role will be effectively carried out,” (Bern, R., p.193).
In sum, Bern suggests that “confining Civil Government to its important but limited role does not constitute a threat to the well-being of society. Rather, it enhances the prospect of a better society . . . authorized by God,” (Bern, R., p. 193). As the disciple Peter reminds us, healthcare economic policy must steward resources to match the free market demand while providing access to care for those in need who qualify. Peter scribes that men must “[b]e subject for the Lord’s sake to every human institution, whether it be to the emperor as supreme, or to governors as sent by him to punish those who do evil and to praise those who do good,” (1 Peter 2:13-14; ESV). Therefore, health care economy policy ought to focus on utility while remaining cognitive of the market’s demand and access to the necessary supply of resources required to produce a sustaining benefit.
Conclusion
Health care economics is a delicate balance that requires every entity to remain within its designated jurisdiction, and fulfill that role to the fullest extent of its capability. Thus, “citizens can more easily have an impact on decisions by state-level policymakers than by federal legislators,” (Teitelbaum & Wilensky, p. 174). While the economic policy within the U.S. health care system remains complex—the solution is, concisely, a focus on ensuring authority is retained within the states.
Bibliography
Bern, R., (1995) A Biblical Model For Analysis Of Issues Of Law And Public Policy: With Illustrative Applications To Contracts, Antitrust, Remedies And Public Policy Issues. https://www.regent.edu/acad/schlaw/student_life/studentorgs/lawreview/docs/issues/v6/6RegentULRev103.pdf
Garner, B.A. (2021). Black's Law Dictionary, Eleventh Edition. St. Paul, MN: Thomson Reuters.
Heritage. (Accessed on November 20th, 2024). Public Option Health Plans Haven’t Lowered Premiums. The Heritage Foundation. https://www.heritage.org/health-care-reform/commentary/public-option-health-plans-havent-lowered-premiums
JSTOR. (Accessed on November 20th, 2024). Lowering Prices and Six Other Big Challenges for US Hospitals on JSTOR. https://www.jstor.org/stable/resrep64547?searchText=%28economic+health+policy%29+AND+%282024%29&searchUri=%2Faction%2FdoBasicSearch%3FQuery%3Deconomic%2Bhealth%2Bpolicy%26so%3Drel%26prq%3D2024%26swp%3Don&ab_segments=0%2Fbasic_search_gsv2%2Fcontrol&refreqid=fastly-default%3A71f342909c0955cb196d0cf430bb92ae&seq=2.