Healthcare Spending and Financing Resources | Free Essay Example

Healthcare Spending and Financing Resources

Words: 679
Topic: Health & Medicine

Public Health and Economic Principles

Health care is closely connected with economic principles and depends on them heavily. In the health sector, the economic evaluation is performed in order to explore the cost of a study of various infectious, long-term or chronic diseases. The costs and benefits of the applied interventions are also evaluated. Regression models that help to predict and evaluate the effectiveness of new developments in the health sector are constantly developed (Glied & Smith, 2013). Health economics assesses the financial implications of a new intervention in terms of national, regional, and local budgets. The concepts such as cost analysis, economic evaluation, decision and transmission modeling, regulatory impact analysis, budget impact analysis, and health impact assessment are the leading ones in public health economics.

Factors Influencing National Health Care Spending

National health care spending is affected by various factors. The most important aspects include the cost of technology, medical costs, market power, insurance coverage, and demographic background. The need to use technology that is more advanced has the most significant effect on the growth of expenditures in comparison with the rise in prices and service costs (Glied & Smith, 2013). The level of health care and rising prices can be also held accountable for the high costs in this sector. In addition, the degree of market power results in increased costs; the organizations should cooperate with each other in order to gain more power in the market. Also, patient demographics, the aging of the population, and baby boom could potentially make a significant difference in the costs.

The Role of Government and Other Third-party Payers

Over the past decades, health care spending grew at a high rate in the US. Third-party payment has consistently led to higher prices in health care and, in general, to the suppression of the functioning of the market system in the medical industry. The government is trying to use regulation to resolve the problems (Forde, 2014). However, the free-market approach would improve the situation considerably. Third-party payments contributed to the increase in demand and it, accordingly, led to higher prices.

Mechanisms for Public Health Financing

Financing of the health care system affects the way and degree of people’s access to services; as a consequence, it determines the amount of money people will have to spend for services not covered by their insurance, or other conditions (Penner, 2013). The mechanisms of financing of the healthcare industry include total revenue, social health and private insurance, community financing, external aid, and out-of-pocket expenses. At present, the health care systems utilize several mechanisms to ensure health care provision.

Implications of Health Care Rationing

Rationing in health care raises the question of costs’ control policy, of resource reallocation decisions, and achieving higher savings in the health care, sometimes without considering the coverage or quality of service (Forde, 2014). However, there are methods developed to facilitate better access of people to health care services such as Healthy People 2020 or primary intervention approach. They are to eliminate the existing barriers to the provision of care.

Levels of Prevention

Levels of prevention are an important issue that directly relates to public health economics. They are concerned with planning the activities and programs aimed at preserving and strengthening the health of the members of the society, as well as at the prevention of diseases and injuries. Needless to say that this approach can positively affect the activities for the social security, the pension system, and the economic costs of health care (Stanhope & Lancaster, 2015). To be more precise, the first level is concerned with averting illnesses prior to their appearance. It is implemented with the help of legislation and raising health literacy in adults, children and the elderly. The secondary prevention is concerned with the effects of the incurred illness or trauma and its consequences. It is carried out through, for instance, timely testing of patients (Stanhope & Lancaster, 2015). The tertiary prevention strives for mitigating the influence of the ongoing disease or trauma, which is implemented through various rehabilitation methods. Thus, this approach facilitates costs reductions in perspective.


Forde, R. (2014). Fair resource allocation and rationing at the bedside. Oxford, UK: Oxford University Press.

Glied, S., & Smith, P. (2013). The Oxford handbook of health economics. New York, NY: OUP Oxford.

Penner, S. (2013). Economics and financial management for nurses and nurse leaders. New York, NY: Springer.

Stanhope, M., & Lancaster, J. (2015). Public health nursing. Philadelphia, PA: Elsevier.