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Why do economists tend to think high-deductible health insurance (health insurance that does not cover the insured person's health care expenditures until s/he has spent a large amount, like $3000) will help our society achieve better value for our health spending? And what is one argument against this view?

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Kritika Krishnakumar
Kritika KrishnakumarLv10
28 Sep 2019

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Related textbook solutions

Principles of Economics
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Related questions

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(Please Summerize the work down below, thank you)

Political

Economic

Growing political influences on healthcare advances

Cost of living increases

Global government influence on healthcare cost

Cost of insurance prices

Government control of Medicaid, Medicare funding

Rise of forecasted interest rates

Social/Cultural

Technical or Technology

Increase average age of population

Demand on new medical treatments

Patient expectations increase

Customize treatments

Demographics are in constant change

More advance service facilities

Environmental

Legal

Growing need for green business

Constant change of government drug

Regulations

Environmental agenda and community awareness

Consumer laws

Health and safety regulations

Porters 5 forces of business model

Competitive Rivalry

Growth opportunity for healthcare companies are expected to growing the next few years

Increase in new revolutionary drugs both in and outside of the US

Threat if New Entrants

Strict government regulations

Difficult to keep up due to constant change

Huge startup cost

Substitute Products

Threat of other substituting product and service at lower cost

Bargaining Power of Customers

Generic drugs offered at large discount to consumer

Larger less customized healthcare facility with lower housing costs

Several facilities offering similar services.

Bargaining power of supplier

Medical suppliers have a large pricing power

Bargaining power of physicians and nurses is huge because of large hospital benefits

Swot Analysis

Strengths

Highly trained and capable employees

Market experience

Strong leadership

High level of organizational efficiency

Excellent facilities

Strong commitment to bettering the community

Weaknesses

Increased cost of healthcare could lower our clientele

Limited staff resources

Limited cash flow to hire and train new employees

Lack of resources

Opportunities

Fast growing technology opens new doors for using state of the art equipment to better serve the patients.

Nursing and residential care is one of the fastest growing industries

Aging population

Threats

Uncertainty in political and economic climate causes hesitation for receiving new patients.

Funding constraints

Highly competitive market

Product or Service Analysis

Our services will be used by patients who cannot afford experimental treatments and patients who have been abandoned by the system because hospitals can no longer provide medical assistance. At our facility, we will be able to work with the families and provide them with different payments options, such as low monthly payment plans. Our main goal is to be able to treat the patient at a very affordable cost; however, if any patient does not possess the means to pay for treatment, he or she would not be turned away; our facility will tap into government and private funding to cover treatment cost.

The beauty of this service is that there isn’t a charge of any kind to take part in our program because it is completely funded by government grants. Individuals that would take part would more than likely not have the means to pay a monthly deductible. Due to the nature of the business listed as a non-profit agency, there is no way to make a profit of any kind, as it would jeopardize the business in its entirety.

Some of the market factors that create a demand for our services include the need of medical care after having maximized all resources, the number of low income families, and the number of patients facing health issues needed extended medical care.

Opportunities that may derive from this business is the opportunity to expand and open multiple facilities, while extending a helping hand to many more in need. The risk, however, is the unstable funds deriving from grants. This can pose a huge treat to the business, as grants often times come and go and cannot be counted on as a constant income.

After studying the healthcare system and current policies in place, data shows many individuals facing severe health issues usually go untreated and uncared for due to the outrageous cost of medical care. It is devastating to see how often people, especially the elderly, are sent home and forgotten for the mere reason that hospitals and doctors are not willing to care for patients without financial means. In fact, in 2009 Harvard news reported 45,000 annual deaths due to lack of health coverage in the U.S. alone, which is significantly higher than the 18,000 reported by USA Today in 2002.

Financial Analysis

Clermont will be a nonprofit organization, dedicated to help the most needed. To open the facility fully operational we must take in consideration some fixed expenses like the land acquisition, permits, interest, brokers, administration fees, professionals (facility setup), staff, reports (environmental, occupational, fire, FDA), electricity, water, phone, water & sewer , connections, taxes, insurance, management, security, advertising, accountants, food, lawn mowers, bank fees, etc.

The facility will need have a total value of approximately three million dollars, but if we break the price of the land acquisition in to a thirty (30) year mortgage we can star up the business with an investment of approximately $ 233,944.61 USD to cover the first month of operation including all the startup permits and connections. After the first month the fixed expenses will be $184,444.00 USD with the exception of the months were taxes are due; taxes are around $ 43,000.00 USD paid quarterly will increase the tax month (depending on the facility fiscal year) for $ 10,750.00 USD approximately. We will fund all the costs with private and public funding, fundraiser, events, raffles, and most important with the help of the community.

As we mentioned before, Clermont is a nonprofit organization and we will do everything in our power to give the relief to the families in need. No one will be rejected because they do not have the money or the insurance cannot help. No money will be required from patient and every single dollar received will be spent in the patients, and in improving our facility and our service every day.

We believe our financial even breaking point will be a year after we begin operations, and be profitable soon after. There are many patients in need, and with the government and public grants each person will receive the treatment they need, and we will become the hope of many.

Description
Thinking like an economist can be helpful in your daily life. If you understand basic economic principles such as incentives, opportunities, and risks and rewards, you can make better decisions. Learning to view the world as an economist can also help you make decisions about which credit card to apply for, what loan to take, or which health care plan is the best.

For this assignment, you will participate in a discussion about the two roles of economists in the context of a specific scenario. When responding to the discussion questions, be sure to reference course materials to support your conclusions and opinions. You should do the same whenever you respond to another person’s discussion post. By doing so, you not only make a stronger case, but better support your own learning.

Scenario
Imagine that a group of advisors to the president has suggested providing a tax cut for the middle class in order to stimulate the economy and reduce unemployment. The president has asked for your analysis of this proposed tax cut.


Instructions

In a post to the discussion, respond to the following:

Describe how an economic scientist would approach the tax cut recommended by the advisors in the scenario you just read. What are some economic factors that the economic scientist would consider when crafting his or her statement on the tax cut proposed?

Describe how an economic policy advisor would approach the same tax cut and provide the reasoning behind the position.

Remember to think like an economis, even if it goes against your own opinions about whether a tax cut is a good idea.

What economic principles does the tax cut involve?

What are some of the repercussions of the tax cut on the wealthy and do you think this is a positive or negative outcome? Why?

Do you think tax donations should be tax deductible even when it hurts government revenue?

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