Government Intervention in Health Care
Government Intervention in Health Care Increases Cost and Decreases Quality
Government intervention is a regulatory action taken by a government in order to affect or interfere with decisions made by individuals, groups, or organizations regarding social and economic matters. Government intervention sometimes is necessary to correct situations where the market fails to allocate resources efficiently or distribute income fairly. The reason why government usually intervenes in the market economy is to provide public goods, correcting externalities, redistributing income, and regulating the marketplace.
Government intervention in health care has been a major debate in the United States. There have been over 90 years of government interference that caused the debate and controversy we have today. Government intervention in the health care system was and still is being blamed for the rapid rise in health care cost. There are a few historical events of government intervention in health care that help understand where we went wrong.
Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011. The graph above is showing how the cost in health care is continually rising from 2002 to 2011.
It started in 1932 when Blue cross was established. The American medical association and the American heart association lobbied for their exemption from insurance regulations and taxes which is an unfair competition. A 3rd party reimbursement procedure was established and that caused inflation in the health care cost. In 1965 Medicare passes. Federal government became the largest single purchaser of health care. Hospital spending doubled. Medicare and Medicaid are constantly spending government dollars. There is an increase in personal health care expenditures. The demand for service increased due to the fact that patients have no incentives to control costs.
In
Government intervention is a regulatory action taken by a government in order to affect or interfere with decisions made by individuals, groups, or organizations regarding social and economic matters. Government intervention sometimes is necessary to correct situations where the market fails to allocate resources efficiently or distribute income fairly. The reason why government usually intervenes in the market economy is to provide public goods, correcting externalities, redistributing income, and regulating the marketplace.
Government intervention in health care has been a major debate in the United States. There have been over 90 years of government interference that caused the debate and controversy we have today. Government intervention in the health care system was and still is being blamed for the rapid rise in health care cost. There are a few historical events of government intervention in health care that help understand where we went wrong.
Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011. The graph above is showing how the cost in health care is continually rising from 2002 to 2011.
It started in 1932 when Blue cross was established. The American medical association and the American heart association lobbied for their exemption from insurance regulations and taxes which is an unfair competition. A 3rd party reimbursement procedure was established and that caused inflation in the health care cost. In 1965 Medicare passes. Federal government became the largest single purchaser of health care. Hospital spending doubled. Medicare and Medicaid are constantly spending government dollars. There is an increase in personal health care expenditures. The demand for service increased due to the fact that patients have no incentives to control costs.
In