ECONOMIC TERMS AND HEALTHCARE HISTORY: POLICIES TO ENHANCE ACCESS TO HEALTHCARE

INTRODUCTION

Healthcare is essential in every society since it influences the physical wellness of the population. The provision of medical services is determined by the availability of financial resources which are always scarce. Consequently, the government and the private sector have used different policies to enhance access to healthcare. This has led to the evolution of healthcare economics as the costs for accessing medication shift from one sector of the economy to the other. The evolution of healthcare economics is attributed to improvements in technology, medical research and socio-political factors.

SUPPLY AND DEMAND FOR HEALTHCARE

Supply refers to the amount of goods and services that sellers are willing to bring to the market at a given price. Demand refers to the amount of goods and services that buyers are willing and able to buy.

In the past centuries, the provision/ supply of healthcare services was limited by lack of proper technology that would enable physicians to treat various illnesses. Thus the American Medical Association was formed in 1884 to promote medical research with the aim of developing new methods of treatment. The association was also responsible for formulating the standards that were to be used by all medical practitioners.

Technological advancement in the 19th century and 20th century led to the development of new treatment methods and the manufacture of various medicinal drugs. Consequently, there has been a great increase in the supply of medical services. There was low demand during the great depression as well as during the Second World War. Majority of citizens were not able to access healthcare due to lack of financial resources.

ELASTICITY AND INELASTICITY

The demand for a particular product is said to be elastic if it is affected by variables such as prices. The demand is said to be inelastic if it does not change as prices change. The demand for healthcare or medical services is price elastic.

The elasticity was greater in the previous century when citizens paid for a better part of their medical bills out of their pockets. The elasticity is set to reduce due to the adoption of the healthcare reform proposal. This is because the citizens will not pay for the services directly. Thus they will not feel the economic impact of an increase in prices of medical services.

GROSS DOMESTIC PRODUCT (GDP)

Gross domestic product is the amount of goods and services produced in a country within a given year. The country’s GDP determines the availability of funds used to provide healthcare or medical services. The country realised the lowest GDP during the great recession and this limited its ability to provide medical services.

Consequently, the physical wellness of the population was adversely affected and this led to a reduction in the country’s productivity. Increases in the country’s GDP in the 19th century and 20th century did not help in solving the healthcare problems. Even though the government spent as much as 17.5% of its GDP on healthcare, the services were still expensive to the majority of Americans. The new healthcare reform proposal was thus adopted due to the rising costs of healthcare.