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Health Care in America The year of 2009 may be a year of huge significance in the history of the United States

of America. This is the year that major health care reform has been seriously pushed and considered by the American government. Many politicians have made health care reform their main platform, and have tried but failed to make significant progress in changing the status quo. Despite America being one of the richest countries in the world, they have run into health care issues with their paradigm of private health care, and there are real human costs to society. It is estimated that 47 million people under 65 (DeNavas-Walt, 2009) remain uninsured in the States, and among the uninsured, an estimate of 22000 people in 2006 died (Dorn, 2008) because they lacked health coverage. It is alarming that the US spends a high percentage of 15.2% of GDP, on health care compared to other countries(Kaiser Family Foundation, 2007). For this paper, we will examine the models of health care in the context of the United States of America. With the election of President Barrack Obama in November 2008 on a platform of change, one of his key policy promises was health care reform, and this year, he has lobbied Congress and the Senate heavily to enact progress. It is said that with a Democratic majority in both houses, he should be able to pass new legislation easily. However, there has been a lot of acrimonious debate from both the Republicans and Democrats, and even disagreement among the three sub factions of the Democratic Party. The Republicans have been advocating improving the current private insurance system. The Democrats on the other hand, have differences among themselves about the policy differences, most contentious of which is the public option. There are thus two main models in this debate. On one side, we have the proponents of keeping the current private health care insurance system in America. They would like to see the current system continue and improved upon, and this is the side advocated mainly by the

The patients who are seeking health care are able to shop for the most affordable insurance plan with perfect information. and is more efficient at providing care to everyone. and is partly tied in to economic theory. . This refers to the economically optimal distribution and allocation of ³scarce´ health care resource to the patients who seek treatment. there are proponents of implementing a government based health care system. better hospital wards.Republicans. On the other side of the aisle. For our analysis. and is able to mostly self-regulate without government intervention. Their main health care model can be thought of as the thinking that ³private insurance health care provides better quality care´. This can be modeled by the thinking that ³government health care provides universal health coverage´. There is the concept of distributive equity behind their belief. and by the insurance lobby. we shall examine the mindset of people who believe in this model. UK and France. with better medical equipment. ³Model A: Private insurance health care provides better quality care´ Firstly. this will be model A. In addition. The more prominent countries which have this form of health care model are Canada. and there is economic choice. and underlying it is that the market is efficient in allocating financial resources to health care. taxes are collected by the government and used to fund a nationalized health care system that provides health care to all. with the medical fees charged to a government board. The main ideals of American thought are highly tied to free enterprise and capitalism. the market mechanism should be able to regulate prices. and considers that the government is better able to control health care costs. in order to attract consumers. and higher quality medical service. Thus. This will be model B. and they believe strongly in the free market mechanism to regulate resource allocation. In this model. health care providers and insurance companies will have an economic incentive to provide the best care to all. and ensure affordable health care costs for all.

they would be less likely to vividly recall cases of successes of the opposing model. and they may view the Fox network as not really biased. In contrast. Next we consider the effect of heuristic availability. cases where the health insurance has failed them will be less likely to be recalled in their mind. they will display a strong confirmation bias towards the information that they receive through the media. Sick and Sicker(Dowlearn. This ties in to the issue of attribution error where people who believe in Model A are more likely to see the failings of people who believe in Model B as due to their internal. because they do not have as much experience with the opposing model B. Alternately due to strong beliefs in the private insurance system. in that they believe the general media to be biased towards them. would apply to them. they may show a perceptual denial of information contrary their model. and are subject to poor quality health care service. and are able to get good medical care. . There is the essence of the hostile media effect. the Model A proponents are likely to be able to recall the information from the media that people living in countries using the opposing Model B are faced with long wait times for medical procedures. The majority in America has health care coverage. and most usually do not face problems with the private insurance system. As such. and have the tendency to think that most other media have a liberal bias. On the other hand. and they will be more likely to recall many situations when it has worked in the past for them.The Model A proponents may tend to align themselves with the conservative platform. They will most likely remember stories that show the shortcomings of the opposing model. Americans have lived with the existing system for many years. 2009). they may tune in to conservative channels like the Fox network. In addition. they show how the Canadian system has failure in long wait times. and would not think that insurance coverage denial due to preexisting conditions or treatment denial due to costs. Instead. In the film.

Hence. Model A proponents show the issue of loss aversion. Consider the angle of agency theory for Model A proponents. and not really interested in providing health care to the population. They would tend to see the government as inefficient compared to insurance companies in dealing with the health care needs of the population. They already pay Medicare taxes under the Federal Insurance Contributions Act. or the big influence of the electorate opinion through the polls. may have influenced them to push for the opposing model. In fact. . of Health & Human Services. Some even liken it to state-sanctioned robbery (Schwartz. they would prefer to avoid the loss due to tax hikes. Some refer to government ³death panels´ who will determine who does or does not receives care. and risk the higher losses that could occur if the private insurance system fails then. 2009).dispositional factors. They may see those proponents of the opposing model as perhaps misguided or liberal in a derogatory sense. Model A proponents may frame the issue of adopting the opposing model as requiring a tax hike to fund the government medical system. Joe Wilson had yelled out ³You Lie!¶ in Congress during Obama¶s speech (ABC News. In contrast. Another issue to consider is the concept of prospect theory. 2009). They tend to see the government as a flawed agent for handling health care. This comment was an outburst arising from an attribution error. the US insurance companies spend millions in dollars annually trying to convince people that they will provide them with quality service. and had characterized President Obama as deceitful. Rep. 2009). and act as the preferred agent with their best interest. Rep. Michael Steel labeled this system as ³socialism (Franken. instead of considering that the external situation of the existence of major health care issues. which covers US citizens or permanent residents who are 65 and older (Dep. The government is seen as a taxing entity who is interested in making you pay more to Uncle Sam. they would likely need to raise the taxes. If the system is extended to everyone. 2008).

they believe the government should act for the people¶s freedom as delivered by Abraham Lincoln in his Gettysburg address. There is some confirmation bias in the Model B proponent¶s selection of information. as evidenced by the selecting of interviews with people for which the US system failed. by the people.´ Thus the government has the responsibility to the people. 2007).Model B: Government health care provides universal health coverage Let us next examine Model B. under God. Although Michael Moore does his fact checking conscientiously. to provide the right of universal health care to everyone. They believe that health care is a fundamental human right. This is tied in to another tenet of the American psyche. and should not be refused medical care because they cannot afford it. ³This nation. as coined in the phrase ³Give me liberty. of freedom and liberty. This is shows the hostile media effect in the minds of model B proponents. like Michael Moore through his film Sicko(Moore. shall not perish from the earth. They believe that everyone is entitled to health care treatment. or give me death!´ as stated by Patrick Henry. and for which other systems succeed. They believe that people should be able to live free and live healthy. and they tend to tie these ideas together. and it¶s ³µfact checking¶ about the president¶s health-care proposal is provided by Karl Rove´. 2009). for the people. shall have a new birth of freedom²and that government: of the people. The Model B proponents would tend to seek . As a result. Model B proponents also see some bias in media. These quotes allude to the perception among model B proponents that conservative media covers the issues with an ³all-pervasive slant´ (Weisberg. and firstly look at the mindset of proponents of having the government provide health coverage for everyone. the film may have some cherry picking on information about the opposing health care models. and tend to consider the Fox Network as conservative biased. Weisberg (2009) said that Fox ³sponsored as much as it covered the anti-Obama µtea parties¶ this summer´.

These are heavier emphasis of attribution of dispositional factors instead of considering that their electoral platform and party restricts them crossing the aisle. they may tend to ascribe certain dispositional characteristics to Model A proponents.information confirming their belief. In contrast. bearded people with axes. swords and shields. (Grayson. and pick up more on the information from speeches provided by the side of the White House. He alludes that the other side engages in fearmongering. They would more likely recall information of people in other countries with their model having less problems. 2009) has a comic depicting the Republican response as composed of a group of angry. barbaric. With regards to making fundamental attribution error. 2009) where people cannot get health insurance who were refused coverage due to pre-existing onditions. or had to pay huge amounts of money for cutting-edge treatments. 2009). or even stories of people in the news who died because they could not afford medical care without insurance. James Bow(Bow. for example. Massimo Pigliucci is aruging whether the other side is vicious or just plain stupid (Pigliucci. ³knuckle-dragging neaderthals´ and stubborn. 2009). 2009). and have lower rates of obesity (Varney. that Canadian life expectancy is longer. Furthermore. Model B proponents may more likely recall incidents of people who had some health care denied by insurance companies. they may more likely reject information from conservative media describing the advantages of the private health care system. With regards to availability heuristic. and Democratic Rep. or totally tune out to programming like the Bill O¶Reily factor on the Fox Network. . Model A proponents will tend to view their the other side as misinformed. and Sicko was one major film that they may watch. provides disinformation and outright lies. they may only watch speeches of Congress. Alter alludes to situations(Alter. Alan Greyson has called them a ³nattering neybobs of negativism´.

even though they pay and hire these insurance companies to provide them with health coverage. actually gives insurers an incentive to deny insurance and medical claims. a sure gain of health care for everyone at all times. but there is a chance that someone does not receive health care. and they do this by reducing capital outflows.Regarding looking at an aspect related to prospect theory. One reason is that subscribers only pay insurance companies for coverage.2% of GDP is high. is better than having the risk of no health care. the market pressure to reduce insurance premiums to compete against other insurers. they do not do any comparison shopping for primary provider medical costs. the concept of overweighting tends to apply for Model B proponents. the problem can be framed in terms of receiving health care as a gain. The aim of these private insurance companies is seen as trying to maximize profit. On the other hand. and not efficient. to keep health care costs down. In terms of agency theory. the cost of health care as mentioned at 15. There are also many people who are not covered because they cannot get health insurance. Model A and Model B Salient Factors Firstly. By refusing to pay medical claims. the private health insurance system is a riskier system where most people receive care. These are the flaws in model A . as they are less interested in the loss in terms of increased taxes compared to Model A proponents. To them. which is the price of cheaper clinics or hospitals. With respect to comparing receiving health care as a gain. the proponents of Model B see the aims of private insurance companies as not aligned with their needs. and when they see doctors. or drop people who are expensive to cover. This results in the failure of the market to regulate the price of primary provider medical costs. their aim of maximizing profit hence runs contrary to providing proper health coverage to their subscribers. In terms of risk aversion with respect to gains.

is to use market forces.that need to be addressed. model B will not be totally suitable for the US. In addition. remove economic advantage from the current practice of picking subscribers and treatments. This distorts the market economics and places consumers without an insurance policy at a competitive disadvantage when performing a direct buy transaction for medical care. a form of a public option derived from Model B is still needed to cover the currently uninsured people in America. Fundamental to the new model. We need to consider measures that use market forces to shape desirable characteristics in the new improved model. We need to reduce primary health care costs and drug development costs. Next. because free market economics does not guide resource allocation. and innovative solutions to fix the problem in American health care. The insurance companies can also implement policies that reward consumers with lower co-pays and premiums for finding medical doctors with cheaper fee structures. One practice that should be disallowed is that of insurance companies getting discounts for health care from primary health care providers. and better leverage at price negotiation. A registry of standard doctor fees could be set up allow the consumer and insurance companies better access to market information. Model C: Improved Model in the American Context For developing our new model. Firstly. as it will be too drastic a change to eliminate private insurers. President Obama¶s proposal of disallowing rejection of claims due to pre-existing . On the other hand. In addition in Model B. essential ideas and issues of Model A and B are considered. remove the bad behavior market incentive in the current Model A. as there less economic market incentive to improve the service. Next the information of primary medical provider costs should be more readily available. improve the economic market efficiency for primary provider medical costs. and improve market competition. patients tend to have longer wait times.

conditions is a good idea that would serve to even out health insurance costs among all subscribers. This will scale back patent protection. Although removing the insurance company discounts at the primary medical care providers should help bring down the . but keep the incentive for research and drug development. We can implement measures to reduce the power of drug patent protection. as is currently the case to reduce costs. Next. Other legislation could be passed to promote cooperative drug development between companies to share patent ownership. Other mechanisms could be compulsory patent licensing with adequate remuneration to allow generic drug makers to enter into market competition on price. and introduce an incentive for early approval. 2001). and limit advertising of certain types of medical drugs by pharmaceutical companies to reduce cost overhead unilaterally. in contrast to willful poison pill sales. and fund stricter review of drug approval to avoid drug complications. Firstly. Concurrently. an investment in the efficiency of the expensive FDA drug approval process will cut drug review time and costs. For example. it should be 17 years from patent application or 14 years from approval. reduce the need for drug promotion by having the FDA provide doctors with information about new drug treatments in bulletins and drug registries. Next. Lowering the costs of drug development is an important step in the new model. Another practice to outlaw would be to disallow insurance companies from overriding doctors¶ prescription for treatment. to avoid having companies paying out enormous financial penalties in court for unforeseen drug complications. Implement liability caps for unpredicted drug related liabilities. the issue of the uninsured patient needs to be addressed. curb direct drug promotion to doctors as this is highly inefficient. if the patent protection time is back to 17 years as in 1989 (Sibbald. whichever is shorter. to mitigate the eventual monopoly power of the patents. even though it would cost the healthier subscribers slightly more in terms of premiums.

Americans can pay a market determined premium to be covered under this new scheme. and most of the money has traditionally been provided by lobbyists and special interests. There is still room for market inefficiency. The poor and elderly will get sliding scale premiums down to a certain low income level. and may need sufficient political will to implement.overall upfront costs seen by the uninsured patient. and needed change may come to the American model of private health care system with time. Obviously. horror stories of people dying for lack of affordable health care. including the insurance lobby. and zero premiums thereafter. there are still many people who cannot afford basic insurance premiums. implementing this model guided by economic thinking has certain limitations. but guided with the correct frame of thought. It is not easy to pass legislation contrary to their interests. There is no instant remedy or big banner to rally in favor of sweeping changes. These two schemes should be combined and extended to provide a universal public option. In addition. . Perhaps one day. In addition. other solutions and measures can be derived from our previous suggestions. The public option derived from model B already exists in the current form is Medicaid for the poor and Medicare for the elderly. The new scheme must be aligned with new insurance practices under the new proposed guidelines. this new model may include requiring years before manifesting true benefits. or instances where the measures fail as insurance companies find ways to get around the newer regulations. even though it is the electorate that votes the politicians into power. and changes will take time to manifest. the current private health care insurance system has a lot of inertia from many years of existence. The politicians have to do a lot fundraising to run their elections before getting into power. will fade to a distant memory of the past. Crafting legislation is also fraught with complexity and difficulty. The lowered premiums and zero premiums will still be funded partially through income taxes.

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