Health Care Careers Diagram and Summary

One of the most prominent topics in the society today is health care reform and government plays a large role in regulating managed health care systems. A vast difference between movement along and shift in the demand curve for the different health care systems. For instance, the government funds Medicaid and Medicare to provide services to the indigent and disabled population. However, many factors exist that influence the control of health care spending from an economic standpoint. The objective of this paper is to discuss the role of government and the supply and demand curves concept to show the difference between movement along and shift of the curves in the managed care system. The concept of medical price elasticity to evaluate the manage health care industry is also discussed.

Resource Allocation

Law makers presented several proposals for health care reform and the final bill passed with the intention of providing health care to all Americans. One important issue concerning many consumers about health care reform is the selection of an appropriate managed health care program because one must choose a managed care provider by December 31, 2010. The application of principles to understand the health care systems is challenging because of the complexity of health care as a product or service; however, the fundamental problem addressed by economics is allocation of limited resources among unlimited demand (Scott, Solomon, & McGowan, 2001). Such is the case in the health care industry.

According to Scott, Solomon, & McGowan (2001),

"The market for health care services is considered an imperfect market because-1) Health is and heterogeneous product, as the patient can experience a range of outcomes; 2) patients who are insured have third-party payers covering their direct medical expenses; and 3) A "market price" is lacking..." (p. 283).

The cost for health care varies according to the consumer-patients, health care provider (supplier), and insurance companies (third-party payers) as well as the society. However, the bottom line is obtaining the most from the limited resources available while maintaining quality. Essentially the health care delivery system is a demand-driven industry.

Demand Curve

Clearly, The United States health care system is the largest industry in the United States and even the world. Currently, health care represents approximately 14% of the United States gross domestic product (GDP). Health care expenditures continue to grow; for instance, in 2001 the market grew to $1.5 trillion and the growth expectation is that health care cost will reach nearly $2 trillion dollars by 2007 (Torreblanca, Friend & Oasterom). Currently, the government leads the healthcare market so it is crucial and beneficial to healthcare patients to understand the United States health care systems. Medical care is a finite service for monetary compensation and changes in demand may occur because of the absence or presence of health insurance plans.

Basic health care coverage is expenditures and reimbursement funded by limited third-party payers such as Medicaid, Medicare, and private insurers (Torreblanca, Friend & Oasterom). Until the early 1990s traditional health insurance plans paid for medical services and the bills were sent to the insurers for processing. This became a problem when health care providers opt for the most expensive treatment to make more money. However, drastic changes occurred over the past decade. The change created an overwhelmingly shift toward managed care systems, which seek to reduce unnecessary healthcare costs. Employers trying to reduce insurance costs are quickly switching to managed care plans.

The demand for healthcare expands because of changes in the aging population, increasing incomes, and improvement in medical technology. Elderly people demand more healthcare and healthcare systems must supply the expected quality of healthcare. The improvement of medical technology largely increased treatments to enable people to have a good quality of life. The resource factors such as land, labor, income, capital, goods, and services cause shifts in managed care.

The increase in the health care price reduces people's income and this means that the healthcare price is

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