Health Care Reform – Health System Example

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"Health Care Reform" is an outstanding example of a paper on the health system. Governments often look for ways on how to improve the effectiveness, efficiency, responsiveness, and most of all equity in health systems. The primary benefit of the new health insurance is that it is cheap and available to everyone. The Government of the United States has subsidized health insurance making it cheap and accessible by many. In essence, the new heal insurance will allow both the young and the old to save. According to Mezel (2008), the older will save 31% while the young will save 14% on their insurance premiums by 2016.

Needless to say, the low-income people will benefit from the subsidies thus blunting the premium costs. Additionally, the new health insurance law requires that insurers cover everyone (Mirmirani, 2010). This will offer those with pre-existing conditions a chance to insure themselves, even with a foreseeable or anticipated risk.   It would be senseless to buy motor insurance after crushing the car or buy homeowner’ s insurance after the house has already burned down. However, when it comes to health coverage, many more people think that it would be perfect to get health insurance after falling sick (Volpp, 2007).

Mirmirani (2010) acknowledges that the amendments made on the health insurance by the U. S government have made the health insurance look nothing closer to the actual insurance. In principle, insurance aims at pooling risks in order to protect individuals against indeterminate loss (Volpp, 2007). For instance, if 200 individuals pool their risks together and the car of one costing $100, 000 is stolen, each ends up paying $500: $100, 000 divided by 200.

However, there is a twist. Assume that one of the car owners lives in an insecure neighborhood, with a den of ex-convicts and another one lives next to a police station. Should these two individuals pay similarly for their insurance? The second car owner would refer to this as a bad deal for him/her, and would ordinarily refuse to be part of it, not if the insurance premiums were modified so that he/she would pay less. In actual insurance, the premiums paid are based on the risks of the policyholder (Volpp, 2007).

This is referred to as insurance underwriting. In all forms of insurance, underwriting is practiced since it would be more expensive to some people. If it were that the low-risk people pay high premiums, then they would lay back, and the high-risk individuals would be the ones to buy insurance. Therefore, it is imperative for insurers to check that high-risk individuals pay high premiums. This is referred to as adverse selection.   However, the healthcare insurance does not consider the adverse selection, and it is because of this reason that majority of the youth are not insured (Mezel, 2008).

It is because of this that many of the young and healthy people choose to stay uninsured since it is too far expensive for them, relative to their current health status. It is only fair to the older Americans who are much subsidized by the premiums paid by the young people. Controlling costs in the healthcare insurance system has been hampered by some ill-advised policies adopted by the government such as the community rating policy, benefits mandates, and the “ any willing provider” policy (Mirmirani, 2010).   The community rating allows insurers to charge the older only three times what they charge the young people.

In this case, the young end up paying 75% more for health insurance. The benefits mandates system compels the insurers to cover substance abuse and smoking cessation, which increases the cost of insurance by 4%. Mirmirani (2010) determined that 106 novel insurance mandates were passed in 2011.    Since some of these mandates require the insured to pay 60% and the rest covered by the insurer, premiums have gone up in order to cover the insurers.

Additionally, any willing provider policy limits the capability of insurers to omit some hospitals and doctors from their networks. If the insurers have to cooperate with everyone, they miss out on some of their negotiating leverage with healthcare centers to keep the prices down (Mezel, 2008).  

References

Mezel, P. (2008, Jan/Feb.). A path to universal access. The Hastings Center Report, 38(1), 34-37.

Mirmirani, S. (2010, Jan.). Obama Health Care Reform Proposal From An International Perspective. Journal of Business & Economics Research, 8(1), 15-24.

Volpp, K.G. (2007, Dec.). Designing a model health care system. American Journal of Public Health. 97(12), 2126-2128.

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