Cost of Healthcare in the United States

Healthcare Economics
Student’s Name
Institutional Affiliation
Healthcare Economics
The cost of healthcare in the U.S. remains a matter of debate in multiple factions, bearing its impacts on the national expenditure and citizens’ health. The U.S. leads by a wide margin in the race for the most expensive healthcare. Naturally, high costs should be accompanied by high-quality services to justify the high costs. Unfortunately, the U.S. does not rank the highest when it comes to the quality of healthcare to citizens. That discrepancy triggers questions on why healthcare is so expensive in the U.S. At the onset of his administration, President Obama showed a commitment to instilling accessibility and affordability of healthcare services through policy changes. While the policy had changed, little can be said about healthcare costs that have consistently increased. This paper will employ the case of McAllen, Hidalgo County, Texas, to explore various economic factors that influence the cost of healthcare. The case of McAllen will be vital in exploring the inputs of economic factors such as demand inducement, practice variation, and insurance moral hazard in scaling the cost of healthcare and the different strategies that should be employed to manage the healthcare costs in Hidalgo, and probably the entirety of the U.S.
How McAllen Became the Most Expensive
The case highlights multiple prospects that could combine to fuel the escalation of healthcare costs in McAllen. Superficially, one would argue that McAllen has a high index for some illnesses. There is a 38% obesity rate, which is one of the highest in the country. With high obesity rates comes comorbid conditions such as heart disease, kidney illnesses, and high blood pressure. All such conditions can fuel the demand for healthcare services. The basic laws of economics imply that the demand and supply curves dictate the market prices. While that could be the case, the occurrences in McAllen indicate that the high costs of healthcare services are attributable to other indirect factors that occur beyond the simple confines of demand and supply. Gawande (2009) indicates that in 1990, McAllen showed the same index of healthcare cost as the rest of the nation. The statistics later changed, and McAllen grew in healthcare costs to overcome the national average by more than 50%. Such a drastic change must be attributable to specific prospects that indirectly fuel the increase in healthcare costs. The escalation in healthcare costs in McAllen is attributable to the factors discussed below
Overutilization
The current healthcare is becoming dependent on specific financial policies that have triggered overutilization in such facilities. Overutilization is the provision of healthcare services in quantities and qualities that are deemed unnecessary (Carroll et al., 2018). It bounds on the overuse of healthcare services with the motivation to extort patients. In the case of McAllen, few factors are attributable to the cases of overutilization. Primary among the factors is the reimbursement strategy. In McAllen and most of the U.S., fee-for-service (FFS) is the primary reimbursement strategy. In this strategy, healthcare services are unbundled, and they are paid for sepa...