Introduction
Healthcare represents a unique field of economy based on theoretical concepts and principles. It is considered that economics is a values-neutral science in which no judgment or value is placed on the theory or how the system works. Thus, the case of healthcare shows that this statement is not true as judgment is placed on theory and us depended upon the nature of services provided to general public.
Healthcare Theory Overview
The administrative problem of healthcare spending varies with the nature of the program. When the program is for public works which private contractors are to construct, the government must carefully draw up blueprints out of a wide variety of proposals and see that the private contractors carry them out. To be effective the government should maintain a shelf of public works which are planned for prompt execution, or months, if not a year, maybe spent in preparation of desirable plans. When the government itself is to construct the healthcare policies, the administrative problem before it is clearly larger than in either of the previous instances (Porter and Teisberg 2006). The purchase of materials and equipment, the determination of wage rates, and the active supervision of construction are now added to the government’s problem of preparing the blueprints. Nevertheless, the administrative difficulties of supervising the outlay are exactly the same as when the same purpose is carried out through spending. When the healthcare receipts are loaned and invested to expand private investment through the existing banking and financial channels, the problem of administration might be left entirely to the private companies in return for a fee or commission. In healthcare the supervision of income creation by means of taxation is likely to be more difficult than deficit spending. Healthcare is apt to regard any government construction as a threat to private enterprise because the government sphere of activity might be enlarged. In addition there is a small group of businessmen who may find their costs higher than those of their competitors. They too are likely to object to the method of spending and, without discrimination, to oppose the policy in general. Thus the opposition is likely to grow the longer the policy continues (Morris et al 2007).
Healthcare in US
In US healthcare, judgment and value is placed on the theory and determine the main priorities of healthcare development. The purpose of this and the following topic is to discover which policies are applicable to the short run and which to the long run. Since these terms are so vague, let us define them. The short-run problem of policy is concerned with smoothing the shorter cyclical fluctuations. In contrast, the long-run problem is to raise the level in income. The former considers the income level satisfactory but attempts to lessen the deviations, while the latter is not concerned with the fluctuations about a norm but does indicate how to raise the norm itself. The distinction may be made in other terms. If the policy authority is confronted with an underemployment equilibrium, it may define the situation as a temporary cyclical depression or as a secular break in the investment trend. Under the former diagnosis the correct policy is to alleviate the immediate condition. Under the latter diagnosis the policy must be to raise the level in income over time (Morris et al 2007).
Healthcare Policies
Healthcare policy is designed for the short-run problem. Open market operations, changes in rediscount rates, and alterations in reserve requirements, can be achieved quickly. The influence of the instruments of policy upon the member banks is immediate. The reactions of the money markets and of borrowers in particular are slower and more uncertain (Porter and Teisberg 2006). Nevertheless if the situation has been correctly diagnosed as cyclical and temporary, monetary policy vigorously carried out does influence the decisions of borrowers. A restrictionist policy can diminish borrowing in a boom, and an easy money policy does reduce interest rates and improve the liquidity of the member banks in depression, both of which encourage recovery.
Healthcare on the global scale
On the global scale, the appearance or disappearance of a strong innovation wave would alter the previous relation of prosperity and depression. Either the tax collections are excessive, which is hard on the taxpayers, or the government net spending in depression is not accounted for in the subsequent prosperity, and the debt grows.The essence of a policy to smooth out the cycle is that it starts and stops easily or that it can be turned on and off at will. An antitrust policy cannot be manipulated in this way, and its influence upon the business cycle must operate through its effectiveness in achieving a more flexible price structure. The lag of costs behind selling prices in the upswing and the downswing, and the rigid prices of many monopolistic producers, magnify the fluctuations (Porter and Teisberg 2006). The removal of monopolistic price rigidity and bottlenecks in general is unquestionably a step in the right direction and would tend to smooth the cycle. There is likely to be political pressure to relax the policy in prosperity, whereas in depression popular resentment against big business may initiate proceedings. This course would concentrate the deflationary influences of the policy during depression, which is just the wrong time (Morris et al 2007).
Conclusion
In sum, the healthcare depends upon judgment and value which are placed on theory. The reverse policy, of prosecutions in prosperity arid relaxation in depression, would be little better; for the downswing in the absence of an antitrust policy creates its own rigidities and monopolistic restrictions. Hence such a policy must be carried on continually if it is to attempt to smooth the cycle.
References
- Morris, S., Devlin, N., & Parkin, D. (2007). Economic analysis in health care. John Wiley & Sons.
- Porter, M. E., Teisberg, E. O. (2006). Redefining Health Care: Creating Value-Based Competition on Results. Harvard Business School Press; 1 edition.