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Health Reform Bill on Drugs in the United States

Introduction: Inequality in perspective

A government-sponsored health insurance program has not been in existence in the United States. As such, access to healthcare depends on the financial status of the patient. The forces of a free market play a major role in regulating drug prices (Gelband, Wiley, and Laschober 2010). These forces are determined by competition between “rival pharmaceuticals, the position of a drug in the market, the number of prevailing drugs in the market and the cost incurred for research and development of new pharmaceutical products which can meet the challenges of emerging and resistant strains of disease-causing microorganisms” (Ginzberg 2008). On the other hand, government-led pricing controls have been used in Europe for a long time. The European pharmaceutical industry is therefore regulated through such government interventions as reference pricing, price setting, and positive and negative listing.

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The forces of demand and supply determine drug prices in the United States. Unfortunately, the demand side of the market plays a bigger role in fixing prices in the pharmaceutical industry. Big pharmaceutical companies purchase large supplies which enable them to control the market price for various pharmaceutical products. They include MCO’s, Medicaid, and Medicare (Jonas, Knick man & Kovner 2008). The government is only compelled to include or exclude pharmaceutical formulations which are too costly to support the national healthcare system. The current healthcare system is such that government negotiates with private pharmaceutical companies for drug prices. Evaluation of the prevailing pharmaceutical market is necessary before determining pricing and reimbursement policies (Hammack, 2000).

On March 23, 2010, President Barrack Obama signed famous health designed to address issues of wealth inequality and the exorbitant cost of healthcare (Almgren, 2007). The government policy focuses on improving access to quality medication for all including the provisions reducing the cost of prescription drugs currently not covered by Medicare and Medicaid. As the President highlighted, this new health law heralds a new season in the United States with the core principle riding on basic security in healthcare. This bill seeks to update and improve on Medicare policy that was established in 1965 (Issel, 2005). Due to the challenges of globalization and economic constraints, most Americans cannot afford decent health services particularly when they lose their jobs, retire, or otherwise are incapacitated by some illness. The new health bill seeks to assist this group of Americans to access health facilities and prescription drugs provided under Medicare and Medicaid apart from other accompanying subsidies stipulated within the health insurance for public citizens.

Health bill in perspective

Under the new bill, Medicare is meant to cover both the employed and unemployed largely by taxing the rich the more in order to fund the program. The tax regime has therefore been updated under the new bill where households whose income surpasses the $1 million mark pay more taxes while those which earn less than $250, 000 are exempted from payroll taxes (Rushefsky & Patel, 2006). In addition to this measure on taxes, private insurers are no longer eligible for Medicare subsidies. As such, the benefits of the passed health reform policy accrue to households whose income per capita amounts to just about $88, 200 for a family of about four members (Conley, 2003). This actually represents the bottom line consisting of households whose income is just slightly above the poverty line.

In brief, Medicare and Medicaid are structured as follows:

  • Medicare. This is a health insurance policy provided by the state to persons over the age of 65 years, which corresponds to about 15% of the population. Medicare has two main segments, one which covers hospital care and post-hospital nursing (Wilsford, 2001). Under this scheme, Medicare reimburses certain hospital costs during the period the old patient is sick in whichever facility. The other segment covers medical outpatient costs which may include laboratory tests, dialysis, medical equipment and cardiac pacemakers (Rodwin, Kimberly & Kervasdoué 2004). However, the cost of buying prescription drugs is not paid under Medicare as well as the regular medical examinations which may be required during illness. Essentially, Medicare covers about 50% of the medical bills for patients that fall under its health insurance scheme. Medigap is a health insurance scheme which supplements areas where Medicare does not cover by reimbursing patient’s affiliated costs apart from the actual medication costs (Bisbee, Berman & Weeks, 2009). Old patients who are unable to subscribe with Medigap in order to purchase prescription drugs affordably are therefore incapacitated from benefitting from Medicare as a whole. Patients in that age group are attributed to approximately 30% of the population’s drug expenditure (Clayton & Byrd, 2002). Market price for prescription drugs is determined by the forces of demand and supply in the pharmaceutical market of which the demand side is higher causing inflation of drug prices (Witteloostuijn 2005). Suggested reforms for the government-sponsored Medicare for seniors include administrative changes, subsidized cost of prescription drugs, high-quality healthcare and greater treatment and preventive care services. Tiered formularies are used to allow the circulation of low-priced drugs into the market while highly-priced pharmaceutical drugs are restricted (Frost, Delaney & Clark, 2002).
  • Medicaid. This is a government insurance plan which is available to people according to their income levels in different states. Medicaid offers an alternative health insurance scheme for people, who cannot afford private insurance policy (Dion, Blake & Blais, 2007). Medicaid supports patients from poor backgrounds as well as disabled persons to access healthcare through a comprehensive coverage for prescription drugs. The fifty states and the District of Columbia operate independent health insurance programs for their people for reimbursement of medical fees and prescription drugs with Federal government approval. Federal government matches state spending based on per capita incomes of the respective states (Barry, 2010).

Healthcare system

According to Salk ever, (2010), Private health insurance, health maintenance organizations (HMO’s) and Federal sponsored health insurance plans (health risks determine the amount of premiums charged on a patient). Health maintenance organizations are popular in the US healthcare market since it combines an insurance policy with particular medical teams as a cost-cutting measure. Patients are required to pay a flat rate of premiums which is an average of high risk and low risk health status (Mooney, Henderson & McGuire 2008). As such, individuals who consider their health status to be significantly lower opt out of the system in order to save on the premiums. A significant proportion of the population cannot afford to pay premiums to HMO’s as well as those charged by private health insurance schemes. Medicare is the alternative healthcare insurance provided by the Federal government whereby each state operates its policy (Medicaid). This serves to assist the very poor of the population to access medication despite of the financial status and the economic situation in the country (Harris & Lin, 2008).

The gap between the financial status of individuals when they are either sick or healthy has widened across different levels of income distribution in the American society. The undersigned health bill seeks to reverse this unfortunate situation by increasing coverage of the health misfortunes of the sick by up to 90 percent (Page & Greenberg, 2003). Apart from helping vulnerable populations afford healthcare, the health reform bill shall also accommodate peculiar situations where the rich lose their insurance. American citizens will therefore adjust their health insurance schemes depending on their economic wellbeing (Will, 2008).

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Conclusion

The Obama administration has therefore made significant stride in cushioning ordinary citizens from the shocks of the economic downturn with regard to their health. Prior to the enactment of this bill, welfare that existed for patients could only be described as complacent and bureaucratic (Kendall, 2001). The expected trickle down effect of such a health policy did not reach the bottom line segment of the economic distribution ladder. As such, people who could not afford private health insurance schemes and did not qualify to benefit from the government infrastructure simply succumbed to disease. Health management organizations are therefore a better alternative for low income Americans based on HMO’s formulary listings of quality and affordable prescription drugs and range of premium prices. Essentially, HMO’s negotiate with pharmacy benefit managers before designing a prescription benefit plan which is affordable to a large group of their clients comprising of Medicaid and Medicare patients, employees, employers and organizations (Kendall, 2005).

References

Almgren, G. R. (2007).Health care Politics, Policy, and Services: a Social Justice Analysis. New York: Springer Publishing Company.

Barry, P. (2010). Wealth and Poverty Considered. Princeton: Longmans, Green & co.

Bisbee, G. E. Berman, H. J. &Weeks, L. E. (2009).Financing of Health care. Baltimore: Taylor & Francis.

Clayton, L. A. &Byrd, M. W. (2002). An American Health Dilemma: Race, medicine, and health care in the United States 1900-2000. New York: Rout ledge.

Conley, D. (2003). Wealth and Poverty in America: a reader. New York: Wiley- Blackwell.

Dion, S. Blake, D. E & Blais, A. (2007).Governments, Parties, and Public Sector Employees: Canada, United States, Britain, and France. California: McGill- Queen’s Press – MQUP.

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Frost, A. C. Delaney, J.T. &Clark, P. F. (2002).Collective bargaining in the Private Sector. London: Cornell University Press.

Gelband, H. Wiley, M. M. & Laschober, M. A. (2010). Hospital Financing in Seven Countries. New York: DIANE Publishing.

Ginzberg, Eli. Tomorrow’s Hospital: A Look to the Twenty-first Century. Miami: Yale University Press, 2008.

Hammack, D. C. (2000).Making the Nonprofit Sector in the United States: A Reader. Brooklyn: Indiana University Press.

Harris, D. R. & Lin, A. C. (2008). The Colors of Poverty: why Racial and Ethnic Disparities Exist.The National Poverty Center Series on Poverty and Public Policy. New York: Russell Sage Foundation.

Issel , W. (2005). Social Change in the United States, 1945-1983. Houston: Schocken Books.

Jonas, S. Knick man, J. & Kovner, A. R. (2008).Jonas and Kovner’s Health care Delivery in the United States. Florida Springer Publishing Company.

Kendall, D. (2011). Sociology in Our Times: The Essentials. London: Cengage Learning.

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Kendall, D. E. (2005). Framing Class: Media Representations of Wealth and Poverty in America. Washington D.C: Rowman & Littlefield.

Mooney, G. Henderson, J. &McGuire, A. (2008).The Economics of Health- care: an Introductory Text. London: Taylor & Francis.

Page, B. I. & Greenberg, E. S. (2003). The Struggle for Democracy. Los Angeles: Longman.

Rodwin, V. Kimberly, J. &Kervasdoué, J. (2004). The End of an Illusion: the Future of Health Policy in Western Industrialized Nations. California: University of California Press.

Rushefsky, M. E. &Patel, K. (2006). Health-care Politics and Policy in America. Armonk, NY: M.E. Sharpe.

Salk ever, D.S. (2010). Hospital-sector Inflation. California: Lexington Books.

Will, R. E. (2008). Poverty in affluence: the social, political and economic dimensions of poverty in the United States. California: Harcourt, Brace & World.

Wilsford, D. (2001). Doctors and the State: the Politics of Healthcare in France and the United States. San Diego: Duke University Press.

Witteloostuijn, A. V. (2005).Market Evolution: Competition and Cooperation. London: Springer.

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StudyCorgi. "Health Reform Bill on Drugs in the United States." January 3, 2022. https://studycorgi.com/health-reform-bill-on-drugs-in-the-united-states/.

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StudyCorgi. 2022. "Health Reform Bill on Drugs in the United States." January 3, 2022. https://studycorgi.com/health-reform-bill-on-drugs-in-the-united-states/.

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StudyCorgi. (2022) 'Health Reform Bill on Drugs in the United States'. 3 January.

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