The Economic Impact of the Uninsured Abusing Health Care

The Economic Impact of the Uninsured Abusing Health Care
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The Economic Impact of the Uninsured Abusing Health Care
Introduction
One of the major policy issues among Americans in the 21s century is that of the high rate of the population that lacks health insurance. While the government has tried to come up with a universal health care for its citizens, there is still a high number of the population that does not have an access to any of the health care policies available. For this reason, the challenge of the uninsured has been a major issue of discussion with some using it as a political campaign tool while others have been genuine in trying to get a lasting solution. In the law four years, the Obama Administration has tried to design a universal health insurance for all people but this has brought in numerous economic challenges for the entire society. This paper examines the economic implications of individuals who are non-insured abusing the healthcare sector.
At the present, there are nearly 47 million Americans who are not covered in any of the available health insurance schemes (Cutler, & Reber, 2014). This group of individuals is inclusive of those with low incomes while a larger group consists of individuals from families that have incomes that are two times below the poverty line. However, not everyone without health insurance is from poor backgrounds as statistics show that close to 20% of those without any form of medical insurance have earnings above $50,000 per year. An even larger percentage of such families are headed by individuals who are fully employed but do not qualify for health insurance or do not find it necessary to have a medical cover. For this reason, the average person without insurance belongs to a group that is commonly known as the “working poor class” i.e. below average income, but not among the poorest in the country. As expected, this high number of uninsured individuals has a big economic impact on the economic especially when it comes to utilizing the healthcare services that do not require one to have health insurance (Cutler, 2004).
Why People are Uninsured
In order to establish the economic implications of being uninsured on the society, it is first important to establish the reasons why most people are uninsured. Ideally, the first world treats medical risks as the medical conditions that would cost an individual a high amount in terms of treatment if that person was taken ill. In an average model with concave utility, are more than willing to pay a good premium to get insurance for any sort of medical risks. This is, however, not true for many Americans at the present. One of the major reasons this is the case is the offering of implicit insurance through uncompensated care. Under the American constitution, any hospital that gets reimbursement from Medicare must offer treatment to people who have emergency cases regardless of whether they are able to meet the cost or not. Hospitals are given an opportunity to try and reclaim the cost of payment but in most case this kind of care ends up being uncompensated. This uncompensated care rose to nearly $30 billion in 2013 (Cutler, & Reber, 2014).
In order to deal with the problem of the uninsured abusing the health care system and to prevent the negative effects that are involved with the practice, it is important to come up with effective measures to address the problem. At the present, the main challenge is not the offering of care to people who are unable to afford health insurance but the problem is rather caused by people who have the ability to pay for insurance but have no willingness to do so. According to the moral hazard theory, people are motivated to utilize something in large quantity if they know that they are not likely to be charged for it. Since insurance is costly, most people fail to take insurance against preexisting conditions since they are assured of health care in the event of an emergency. This creates problems for the health care system in the event that a large number of people are offered such uncompensated care at a particular time. To prevent this from happening, policy makers should come up with effective measures to block people who are out to exploit the health care system due to the availability of uncompensated care (Anderson, & Bruce, 2007).
Many healthy people find it pointless to have any form of health insurance since they are assured of treatment in case of an emergency. However, it is not yet clear whether this effect is a real motivation in making insurance decisions. There are studies that point out that individuals are less likely to get insurance when there is availability of free care. If free care does not prevent people from purchasing insurance it can have a negative effect through undesirable selection as well in the sense that if the healthiest people decide not to take insurance and instead depend on free care, then insurers will be forced to push premiums above actuarially fair prices for the other group of people demanding insurance (Anderson, & Bruce, 2007).
For the last twenty years or so, the issue of a big and rising uninsured population has been at the center of health policy research. Studies have mostly centered on the correlates and likely consequences of uninsurance, together with how the lack of insurance affects health, health care access, use and expenditures. At the basic level, the conclusions are apparent. Lack of insurance brings about limited access to care, which brings about negative health outcomes and costly monetary consequences for uninsured people (Cutler, 2004).
In the current situation where more people are less willing to get insurance since they are assured of compensation in case of an emergency, the problem becomes multifaceted. While it is true that those without insurance will have checkered care and poor outcomes, those with insurance are also affected negatively as the cost of the healthy individuals abusing the system is passed on to them. Naturally, a low demand from a big uninsured population may alter the incentives for insurance companies to offer certain services or alter the services that they offer to the healthy. When the level of uncompensated care goes high, the cost is passed on to the insurers and this spills over to the insured at the provider or market level. This is especially in the multi-payer system where the distribution of insurance affects each level. For this reason, the uninsured population may have a range of spillover effects on the insured members of the society that they live in (Cutler, 2004).
One of the things that happen when uninsured people start abusing the healthcare system, one thing that happens is that insurance companies raise their premium to cover the costs arising from the uncompensated care thus locking even more willing people from accessing the health insurance. For individual people and families, the lack of medical insurance has a direct link to the loss of income. Since most of the health insurance in the United States is offered by private companies, the pressure brought about by the rising cost of insurance as a result of people abusing the healthcare system causes most organizations to cut down on the number of employees to save costs. For the societies where the uninsured people and households inhabit, the absence of health insurance may block the economic and social base of the whole society. An example of this is the scenario where the lack of insurance creates a scenario where each individual is charged extra for health services and health insurance premiums or additional federal and local taxes levied as a way of supporting local hospitals that offer extensive levels of uncompensated care. Although health insurance cannot be used as a solution to all a community’s problems, there is a high chance that its absence can bring about a big difference in as far as the community economic fortunes is concerned. The current health programs such as Medicaid also draw funds from federal or shared federal-state financing lies heavily upon all Americans and can ease some of the financial burdens that lack of insurance on communities that are disproportionately affected (Gruber, & Ebonya, 2012).
The effect of lack of insurance on the financial bond that brings a community together is hard to establish since the economic resources have a high possibility of affecting the uninsured rates as the converse. On top of this, the presumed connection between the uninsured population base and the community resources might work together in a series that augments their adverse effects. For example, the declining economic reliability and capital can cause the community to lose faith in the available public institutions and services. When this happens, the individuals who can afford health insurance start feeling vulnerable and less equipped to split the scarce resources with those who are not working or lack health insurance. Any community that has high numbers of uninsured people are likely to experience economic challenges the moment that insurance firms places new financial burdens on local health service providers who make meaningful contributions to the home economy. This creates a scenario where those societies that have a high need for tax subsidies to be able to access health care end up lacking such aid (Gruber, & Ebonya, 2012).
Rising Health Care Prices and Taxpayer Support
Over the past twenty years or so, the rate of uninsured countrywide has risen slowly but gradually. This has taken place despite the firm labor market that developed employment-based coverage and generated extra tax to increase pub...