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Addressing a Current Healthcare Problem and a Proposed Policy Solution

The United States faces an urgent issue that cuts across demographic lines: the rising expense and unstable supply of high-quality healthcare. The American Medical Association (AMA), which charts the complex history of the American health care non-system from 1908 to 2008, emphasizes that this problem has longstanding historical roots. The effects of this complicated past are still evident today in the patterns in healthcare spending that the American Medical Association found, with spending hitting an astounding $4.3 trillion in 2021, or $12,914 per person (AMA, 2023). This is an issue of public health and ethical responsibility, so its significance goes far beyond economic considerations. According to a study by Eckelman et al. (2020), there is a pressing need to address systemic issues as healthcare activities are linked to pollution and harm to public health. Additionally, as Shi and Singh (2022) have pointed out, developing workable solutions requires an understanding of the fundamentals of the American healthcare system. This paper explores the intricate field of healthcare economics and finance in light of these difficulties and suggests a legislative solution. Taking cues from the policies described in your course notes and adding knowledge from Khalfin et al. (2023), the goal is to evaluate these suggestions critically. The goal is to thoroughly understand potential solutions to the complex problems surrounding healthcare delivery and financing in the United States by clarifying the advantages and disadvantages of particular policy recommendations based on health economics and finance concepts.

Background History

Examining the historical foundations that have shaped the healthcare landscape is crucial to understanding the complexities of healthcare costs and accessibility in the United States. The American Medical Association (AMA) has provided a historical narrative about the U.S. health care non-system from 1908 to 2008, which outlines the problem’s origins over a century ago. During this long time, a healthcare system marked by complicated regulations slowly emerged, setting the groundwork for today’s intricate problems. Important events and changes in policy can be used to track the development of healthcare costs and access. A chronological summary is provided by the PBS Healthcare timeline (n.d.), which highlights significant dates such as the creation of Medicare and Medicaid in 1965 and the rollout of the Affordable Care Act (ACA) in 2010. Although these initiatives aimed to close coverage gaps, they also added complexity to the system.

A major influence in determining the current state of healthcare is economic factors. The AMA’s (2023) meticulous documentation of healthcare spending trends highlights the issue’s financial magnitude. The severity of the situation is highlighted by the exponential spending growth projected to reach $4.3 trillion in 2021. The study by Eckelman et al. (2020) also highlights the environmental cost of healthcare operations, which adds another dimension to the complex issue. The intricate interactions between societal expectations, economic dynamics, and policy decisions have presented challenges for the U.S. healthcare system. The ongoing issues surrounding the availability and affordability of high-quality healthcare are a clear result of these interactions. To create workable solutions that address the underlying causes of the problem rather than just treating its symptoms, it is essential to comprehend this historical background. Using concepts from health economics and finance, we will examine proposed policies and their effects in the following sections to pave the way for a more just and sustainable healthcare system.

Current State of the Issue

The cost and availability of healthcare in the United States today are complex, with ongoing improvements and enduring difficulties. The AMA (2023) reports that health spending in 2021 amounted to $4.3 trillion, showing a significant slowdown in growth compared to the previous year. Even though this might point to a positive trend, to fully grasp the complexities of the problem, it is imperative to dig deeper into the specifics of this spending. The COVID-19 pandemic’s aftermath is one important aspect affecting the situation. An eight percentage point drop in the growth of total government spending was caused by the decline in pandemic-related expenditures in 2021 (AMA, 2023). The decrease counterbalanced the rise in medical supplies and services, underscoring the intricate relationship between outside influences and patterns in healthcare spending.

Despite this, the total amount spent on health care as a proportion of GDP was 18.3% in 2021, down slightly from 19.7% in 2020 (AMA, 2023). Although this decrease may be viewed as good, it also highlights the ongoing problem of excessive healthcare costs concerning the nation’s GDP. Analyzing the categories of healthcare spending provides information about today’s problems. The primary components of health care costs are hospital care, physician services, clinical services, prescription pharmaceuticals, nursing homes, home health care, and other personal health care expenses (AMA, 2023). Interestingly, while being the second-largest category, medical services have typically grown slower than other components. The federal relief initiatives that caused the 2020 spike in physician service spending to slow down in 2021 highlight the temporary nature of these interventions (AMA, 2023). Demographics, determinants of health, and health inequities are major factors influencing the state of healthcare today. Uneven health outcomes result from disparities in access to healthcare services, influenced by socioeconomic factors. The notes stress how crucial it is to comprehend these factors since they greatly influence how effective healthcare strategies are (Shi & Singh, 2022).

Proposed Policy Solution

The suggested policy options offer a tactical framework designed to address the intricate issues about the price and accessibility of high-quality healthcare in the U.S. These suggestions are based on knowledge from the fields of health economics and finance and show a sophisticated grasp of the healthcare system’s complex network. Given the complexity of the problems at hand, examining the advantages and disadvantages of these policy recommendations is essential to assess them fully. One crucial piece of policy advice is addressing the reduction in government spending associated with the pandemic. The healthcare industry feels the effects of this downturn, as demonstrated by the significant 8 percentage point drop in overall spending growth in 2021 (AMA, 2023). Even if the cut might ease some of the immediate financial strains, it also emphasizes how crucial it is to take a balanced approach. Over-reliance on pandemic-related funding may lead to a temporary fix, underscoring the need for long-term, sustainable solutions beyond short-term crisis management.

Since hospital care accounts for considerable healthcare spending, policy considerations must focus on this area. According to the data, hospital services grew at a rate of 4.5% between 2009 and 2019, which was higher than the growth rates of clinical services (6.6%) and physician services (3.8%) (AMA, 2023). It becomes essential to create rules that maximize the effectiveness of hospital care while guaranteeing cost-effectiveness and wise resource allocation. The possible effects of these measures on total healthcare spending can be assessed by utilizing health economics techniques, such as cost-benefit analysis. Physician services are the second-largest area of health spending, but historically, their growth has lagged behind other components (AMA, 2023). Policies in this area should be created to guarantee fair access to high-quality care while striking a careful balance between expansion. Assessing the benefits and limitations of certain ideas requires considering elements like payment schemes, the smooth incorporation of telehealth, and initiatives to improve preventive care.

Government initiatives, especially those that deal with public health, are crucial in determining how much is spent on healthcare. The necessity of taking a nuanced approach is highlighted by the decrease in government spending on public health initiatives from the historically high levels of 2020 to 2021 (AMA, 2023). Long-term cost reductions and general improvements in public health can be greatly aided by policies that support community-based initiatives, fund health education, and promote preventive measures. Policy initiatives that are focused and multidimensional are needed to address the obesity pandemic and health inequities. The observations highlight the importance of policies that address the socioeconomic factors impacting disparities in health and the relevance of social determinants of health (Shi & Singh, 2022). Policy solutions should smoothly combine health economics ideas to evaluate the possible return on investment in community health initiatives, obesity-focused interventions, and preventive measures to address these concerns effectively. By doing this, legislators can support developing a more egalitarian, robust healthcare system that meets the requirements of a varied populace.

Analysis of Proposed Policies

Examining the suggested ideas in detail requires a thorough economic study to determine how they affect the intricate healthcare system. The policies delineated in the notes comprise a spectrum of interventions, each possessing advantages and possible disadvantages. While resolving current fiscal problems, cutting back on pandemic-related government spending can unintentionally result in less readiness for future public health emergencies. Based on economic principles, this program is similar to a short-term cost-cutting strategy that can jeopardize the healthcare system’s long-term viability. Opportunity cost, or the potential gains given up by selecting one course of action over another, is an economic term that applies here. Hospital care policies prioritize resource distribution, cost-effectiveness, and efficiency. Evaluating these programs systematically is made possible by applying economic principles, such as cost-benefit analysis (PBS, n.d). Finding a balance between cost-effectiveness and upholding care quality is the difficult part. In addition, the economic analysis needs to consider any unexpected consequences, including decreased accessibility in some areas.

The suggested policies strongly emphasize telehealth integration, balanced growth, and reimbursement mechanisms for physician services. Weighing the possible advantages of increased accessibility against the expenses of making and sustaining these adjustments is the economic evaluation. Economic principles such as elasticity of demand become essential, especially when attempting to comprehend the potential effects of payment model changes on provider behavior and the ensuing impact on healthcare costs. Public health-related government initiatives, especially the reduction in funding, should be carefully considered. The application of economic principles of public goods and externalities highlights the advantages that investments in public health infrastructure and preventive measures have for society (Eckelman et al., 2020). A thorough economic perspective is provided by evaluating the return on investment regarding decreased healthcare expenses and disease burden. A detailed economic study is necessary to address the obesity pandemic and health inequities through policy initiatives. The notes’ emphasis on the social determinants of health is consistent with distributive justice and equality in economic theory. The effectiveness of policies addressing these determinants can be evaluated by considering their capacity to mitigate inequalities and the enduring financial advantages of a more robust populace.


Our investigation sheds light on the American healthcare system’s complex issues, especially concerning availability and cost. The historical investigation showed how these problems evolved complexly, influenced by several events, laws, and socioeconomic variables. The budget data for 2021 shows how expensive healthcare is currently, which emphasizes how urgent it is to find long-term solutions. After a comprehensive health economics and financial study, the suggested policy options are a critical first step in resolving these issues. Striking a careful balance between short-term financial prudence and long-term healthcare system resilience becomes crucial as we deal with the fallout from the pandemic-induced economic hardship. Policies focusing on particular categories, such as physician services and hospital care, provide a more sophisticated approach by acknowledging the complexities of maintaining quality while keeping costs down.

However, our research highlights certain policies’ inherent dangers and unforeseen repercussions. For example, decreasing government spending on pandemic-related expenses raises questions about how well-prepared the system is for upcoming emergencies. This emphasizes the necessity of ongoing assessment and modification to ensure that policy actions consider the changing healthcare landscape. Upon contemplation, it becomes clear that reform and innovation in healthcare policy require a collaborative commitment. The importance of our suggested remedies resides not only in their immediate effects but also in the long-term development of a strong, open, and just healthcare system. This paper promotes a continuous conversation and a proactive approach in determining the direction of healthcare in the United States as we negotiate the intricacies of healthcare economics.


AMA. (2023, March 20). Trends in health care spending. American Medical Association.

AMA. (n.d.). The U.S. health care non-system, 1908-2008. Journal of Ethics | American Medical Association.

Eckelman, M. J., Huang, K., Lagasse, R., Senay, E., Dubrow, R., & Sherman, J. D. (2020). Health Care Pollution And Public Health Damage In The United States: An Update: Study examines health care pollution and public health damage in the United States. Health Affairs39(12), 2071-2079.

Khalfin, R. A., Smolnikova, P. S., & Stolkova, A. S. (2023). undefined. National Health Care (Russia)4(2), 40-46.

PBS. (n.d.). PBS- Healthcare crisis: Healthcare timeline. PBS: Public Broadcasting Service.

Shi, L., & Singh, D. A. (2022). Essentials of the U.S. health care system. Jones & Bartlett Learning.


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