Making Health Care Affordable

Article Citation: http://online.wsj.com/article/SB10001424052748703575004575043123039400004.html?mod=WSJ_economy_LeftTopHighlights

Economic Terms:

1. Status Quo – The existing condition or state of affairs.

2. Premium – the excess value of one form of money over another of the same nominal value.

3. Recession - a period of an economic contraction, sometimes limited in scope or duration.

Source Citation: http://www.dictionary.com

People Mentioned:

1. Stephen Zuckerman - a health economist at Washington's Urban Institute think tank.

2. Helen Darling - Helen Darling is President of the National Business Group on Health (formerly Washington Business Group on Health), a non-profit, membership organization devoted to providing practical solutions to its employer-members' most important health-care problems and representing large employers' perspective on national health policy issues. Darling heads the Business Group's Institute on Health Care Costs and Solutions, devoted to finding practical solutions from a business perspective to the nation's growing crisis of rapidly rising costs and affordability of care.

Description:

The economic activity present here is regarding the rise in the cost of health care and the dearth of financial and social capitalism prevalent in this problem that continues to grow. Because of the state of America’s present economy, not much has been done to contain the skyrocketing prices of health care and to maintain insurance coverage for low-income families and individuals. The cost of health care is depleting the savings and already limited incomes of families and individuals alike. President Obama formerly proposed a health care solution to Congress, inclusive of the “public option” which the House-Senate refuted. With his health care recovery plan, health insurance and coverage would have been provided to nearly all Americans and would have dramatically decreased the cost of health care, making it affordable for all. However, people either suggested that this would do to little or too much of one or the other. Now, there seems to be nothing being done in regards to the health reform after this plan died. Nothing being done about this problem will result in fewer people receiving health care because of the exorbitant costs, and fewer employers will provide health benefits for the same reason. The U.S. health-care tab in 2009 was $2.5 trillion, equal to 17.3% of the nation's gross domestic product. In a new forecast, the federal Centers for Medicare and Medicaid Services predict that without some big change, health care will amount to 19.3% of GDP by 2019. Rather than addressing problems now so they will not progress, by not acting rapidly, problems such as this, will continue to swell the already large budget deficit.

Analysis:

This economic activity can be happening for a number of reasons. In theory, there are many probable causes; however, there are particular theories that pertain to our current U.S. recession and health insurance price inflation than others. The primary reason for the high cost of American health care is that most medical services, technologies, and materials and drugs are more expensive than in other industrialized countries. Additionally, government borrowing is out of control and needs to be stabilized and secured before further damaging the economy of America in this current recession. But probably the most common thought on what causes a recession is due to events that have an economy-wide impact. Some examples of these events would be: increase in interest rates or in consumer confidence. In fact the general consensus is that a recession is primarily caused by the actions taken to control the money supply in the economy. These actions have five primary results which dictate our recession and health care instability: oil rise, inflation, housing bubble, dollar collapse, and global economy.

Explanation:

In essence, this economic activity of recession and exorbitant price inflation of American health care insurance coverage is due to the inherent instability in the capitalist system, lack of responsibility on the Federal Reserve, as well as on the government. Because the United States is a highly industrialized country, our services, goods, supplies, drugs, and technology are far more advances. This fact alone tends to increase prices to maintain their supply in compensation for the high demand of these things. The money used for maintenance on these things is being taken away from higher priorities and necessities, such as insuring American individuals and families should something happen to them. The other specified reason is based how much money the government borrows from outside sources. This has affected the long-term viability of the American Economy. The purpose of this is to actually redistribute income, not acquire more wealth. And because the government pays off its bonds or borrowed funds with tax revenues commanded from citizens, it is able to borrow at a much lower interest rate than private sectors, making borrowing excessive and favored. Furthermore, in the United States, financial equations are to be governed and dictated by the Federal Reserve’s. Hence, their lack of ability to maintain all of these different elements is the overarching cause for this economic activity.

Prediction:

As an economic commentator, I think future steps will either be limited to none immediate in the progression of the American health care system and sustaining the budget deficit resulting in recession. I personally believe prices will continue to rise, recession will continue to be the cause of the percentage of job loses, and the rising costs of health care will continue to deplete the savings and incomes of families and individuals. However, I do see a long-term hope for the future of the U.S. economy to come out of recession if a firm and legitimate plan of action is formulated and implemented. I hold these views because of the dearth of recovery I see in the American economy right now. Everything is halted. To me, it appears as though things will have to get worse than they already are to call the attention to the blind eyes of government to render change.