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Economic Issues Impacting the Health Care Sector


Healthcare has always been an essential part of national and international development. The healthcare industry is complicated and comprises different sectors that facilitate the treatment of patients globally. The sectors provide medical services, manufacture medical supplies such as equipment and drugs, provide health insurance services or ease the provision of consultative and treatment medical services to patients (Hensher et al., 2020). The United States leads in economic development, health services, and wealth gap globally. The US dominates the research and development of medical equipment and supplies, drugs, vaccines, and other essential technologies in the health industry (Aleksina et al., 2019). However, the companies involved in the research and development outsource manufacturing technologies in Asia where the costs of production are low, affecting the pricing patterns in the US (Muehlematteret al., 2021). The main economic challenge affecting the US health sector is adverse pricing which trickles down to the patients. As a result, most patients, especially the poor, are not able to avoid basic health services.

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The causes of High Pricing in The Health Sector

The high cost of health services traverses through many levels within the industry. The costs are indirectly determined by researchers and developers of medical equipment, drugs, and vaccines. Manufactures, distributors wholesalers, and retailers directly determine the cost of the aforementioned items. The cost of training medical personnel is influenced by governments policies and institutions of higher learning. As a result, if those involved at the first stages charge products and services at high prices, the impact trickles down the healthcare sector to the patients. Most patients seeking health insurance covers do not interact one-on-one with insurance companies. Instead, they are in direct communication with brokers who inflate the insurance premiums reducing the affordability of the service to the low-income earners. At end of the day, the quality of healthcare services accessible to most people has declined and more Americans are depleting their retirement benefits on healthcare services.

Effects of Adverse Pricing in US Healthcare Sector

Today, Americans spend more on health care than they did several years back. Although the US gross domestic product has grown positively, the imbalance between inflation and income has pushed people to spend more on healthcare than other basic services. The high prices across the healthcare industry have pushed most people to avoid health care, resulting in deaths and poor living conditions, especially among people of color (Shafi et al., 2018). Most people have little or no money to spend on conventional goods and services due to high healthcare pricing. It puts the patients in a tight spot of choosing what to spend on. Although health is more important than most tangible goods, most people do not make the right choices in such cases. At times, people are forced to avoid expensive healthcare products and services and choose to suffer in pain and agony.

Bankruptcy and depleted savings are now common among low-income earners. While the rich can effectively secure better health insurance covers, the poor spend on the little they earn. As a result, they end up not saving, which affects their economic life after retirement. The wealth gap contributes heavily to poor health conditions as the poor work for long hours to keep the wealth of the rich growing. The High cost of healthcare has drawn the attention of divisive politics. It has also seen the development of health insurance policies and bills such as Obamacare. Other healthcare policies include the Healthcare Improvement Act, Medicare, Medicaid, and the Affordable Healthcare Act of 2010. The policies have been formulated and enacted to provide better medical services to low-income earners. While politics plays its role in the formulation of such bills and policies, the goodwill among the leaders has always prevailed, reducing the burden of the high cost of healthcare among the poor.

On a different note, healthcare insurance brokers, manufacturers, distributors, and retailers of medical supplies have amassed wealth with the rise in prices. While the poor continue to suffer, the business communities gain more in their business ventures. An increase in the price of medical equipment from the manufacturer translates to an unbalanced increase at the retailers’ shops. Without the proper regulatory measures, the disproportionate increases affect those at the end of the supply chain most.

Applicable Solutions to High Pricing in Healthcare Industry

The first and most effective way of reducing healthcare costs is through price regulation. Shafi et al.(2018) note that policymakers should take the initial step of regulating the quality and prices of medical products and services. Although America is termed a free world where investors make profits at their will, regulations should be imposed to cushion the poor from oppression. Governments should also provide incentives to research and development institutions to lower the associated costs.

Researchers and developers should work on high-quality and cheaper health products and services that target all people. Premium services should not be made to generate more revenue for investors but to provide better services to the needy (Hu and Hay, 2018). Investors and entrepreneurs, in conjunction with researchers, developers and manufacturers should propose competitive policies. The policies should be intended to discourage monopoly or oppressive business practices. The policies should also provide guidelines on the entry of new players into the industry or target markets.

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Healthcare providers should come up with competitive products and services at affordable rates. When multiple institutions are providing the same services in a given region or target market, the prices tend to go down. At the end of the day, the patient benefits from affordable healthcare prices (Lomas et al., 2018). The healthcare providers should also provide specialized services to their target customers which improve the service quality.

Can The Government And The Private Sector Address The Issue Of High Pricing In The Health Industry?

America is a free world where people are free to create wealth if they can. It implies the investors have the freedom to set product and service prices without following any preordained guidelines. The spirit of competitive investment is well established in the US, and companies come up with more products and services to boot their revenues. As a result, it becomes difficult for consumers to cope with the increase in healthcare products and services.

However, the government is empowered to regulate all secrets including health and economy. As a result, the government can put direct and indirect measures in place to control the rising cost of healthcare. In this way, the government can not force retailers to sell products or services at certain prices due to their freedom of pricing and competition. The entrepreneurs can raise prices to gain more revenue, or lower them to attract more customers.


In conclusion, the government and the private sector can not effectively control the rising prices in the healthcare industry. It is because entrepreneurs are free to determine the prices of their products and services. The divisive politics among the electorate makes it impossible to agree on a common agenda for the national good and for its people. With the impact of external factors such as inflation and unemployment, neither the government nor the private sector can successfully control the high pricing in the healthcare industry.


Aleksina, A., Akulenka, S., & Lublóy, Á. (2019). Success factors of crowdfunding campaigns in medical research: perceptions and reality. Drug discovery today, 24(7), 1413-1420. Web.

Hensher, M., Tisdell, J., Canny, B., & Zimitat, C. (2020). Health care and the future of economic growth: Exploring alternative perspectives. Health Economics, Policy and Law, 15(4), 419-439. Web.

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Hu, X., & Hay, J. W. (2018). First-line pembrolizumab in PD-L1 positive non-small-cell lung cancer: A cost-effectiveness analysis from the UK health care perspective. Lung Cancer, 123, 166-171. Web.

Lomas, J., Claxton, K., Martin, S., & Soares, M. (2018). Resolving the “cost-effective but unaffordable” paradox: estimating the health opportunity costs of nonmarginal budget impacts. Value in Health, 21(3), 266-275. Web.

Muehlematter, U. J., Daniore, P., & Vokinger, K. N. (2021). Approval of artificial intelligence and machine learning-based medical devices in the USA and Europe (2015–20): a comparative analysis. The Lancet Digital Health, 3(3), e195-e203. Web.

Shafi, S., Collinsworth, A. W., Copeland, L. A., Ogola, G. O., Qiu, T., Kouznetsova, M.,… & Masica, A. L. (2018). Association of opioid-related adverse drug events with clinical and cost outcomes among surgical patients in a large integrated health care delivery system. JAMA surgery, 153(8), 757-763. Web.

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