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Health Economics: Impact on Health Care System

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Running Head: HEALTH CARE AND ECONOMICS

Impact of Economics on Health Care System
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Evaluation of the Impact of Economics on Health Care System In this distressing financial crisis borrowers are finding it harder to access capital for their investments. Due to this factor one of the most important industries in society; health care, is being affected. Economics and economic policies play a significant role in many aspects of everyday life, including the health care system of a nation. Health care systems alone contribute to about 2.5 trillion dollars to the U.S. GDP (Amadeo, 2011). The current credit crisis is affecting hospitals more than any other organization because of the increased amount of uninsured people looking for health care services, staff shortages, and the low reimbursement rates from Medicaid and Medicare. Due to this hospitals are facing an increase in debt and are unable to gain more capital or even refinancing their existing loans because it has become more difficult to obtain credit. Recently, reimbursement rates from Medicaid and Medicare have drastically decreased putting a financial burden on hospitals. There has been a significant rise in underpayments by both Medicaid and Medicare, having made an increase from 3.8 billion in 2000 to 32 billion in 2008 (Kiselev, 2010). As a result of these low reimbursements hospitals are having to ‘cost-shift’ which upshots in an augment in prices of supplies and services. Reimbursements for such programs depend on state budgets, which take a significant amount of time to obtain and are low. As the economy shifts to a decline the amount of people eligible for Medicaid benefits begins to increase. This significant increase results in higher state deficits and lower rates of reimbursements. Another significant factor affecting…...

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