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Economic Impact of Current Healthcare Reform

Impact of Current Healthcare Reform: Economic, Physician and the Private Sector


The United States healthcare reform program will greatly influence the private entity in economic terms because they have greatly been aimed at reducing the cost of medical coverage in the country. In addition, the physicians will also be affected by the impact of the new regulations and requirements in the reforms. Healthcare coverage and the efficiency of the system are major issues to consider in the advent of high exposure to diseases and illnesses characterized by rising cases of diseases such as HIV/Aids, throat and chests infections, cancers, and ulcers among others. Healthcare system must provide a degree of security as pertaining access to medication to reduce deaths and levels of mortality. The impact of healthcare reforms, whatsoever, must focus on the reduction of the costs of medication, increased population coverage-whether by private practitioners or by public system, as well as boosting the efficiency of the system. In fact, quality has been a concern in the services provided, in addition to the issues of high cost of coverage and high number of people not covered. The seriousness of the matter can be indicated by the fact that in 2007, 20% of the American population-representing 59 million people went without or delayed medical care (Cunningham & Felland, 2008). These difficulties indicate how necessary the healthcare system is to the health status of the American people. Entry of the private sector into the insurance business was viewed as a cause for increased costs. There have been proposals for reform challenging the place of the private sector in the business. There have been debate whether the private sector in the insurance should receive a tighter regulation, or whether there should be established a public system to compete with the private sector (Curfman, Stephen, Debra, and Jeffrey, 2009). 

United States’ healthcare system has been faced with so many challenges among them rising medical insurance coverage costs, and there have been conflicting points of views on how these challenges should be approached. Although one of the most challenging issues in the healthcare concern has been raising costs incurred for the healthcare, there are other issues such as low coverage of citizens with healthcare insurance. One clear thing is that many of the resulting problems about coverage have arisen because of the rising cost of coverage. There have been attempts in history aimed at alleviating these healthcare challenges including such innovative ideas such as managed care. Other proposed attempts have focused on single-payer systems instead of the current system which has much coverage and payment options-one of the issues considered as leading to high costs of healthcare. In this paper, I look into the proposed reforms in the healthcare sector, their possible effects on the healthcare system and especially the private practice sector, as well as their impacts on the physicians. It would be expected that the urban people have more options available to them between the public and private coverage options than the rural people and therefore influence of these options would impact on them differently.

Healthcare Reform Components

The American healthcare system is considered as a complex one because of shortcomings in coverage and costs. The healthcare system has had both private and the public players in the market. The healthcare reform agenda has focused on issues of reducing the costs of medication and the healthcare coverage or expenditure in general, and the number of people that needs to be covered. Efforts have been geared towards achieving coverage for all Americans, and a system that empowers them to access low medical costs especially in the rural areas as compared to the urban places. This is because urban areas are better in terms of the amount of health facilities located there than in the rural areas. Historical reforms in the healthcare system have had impacts on the private practice as well as the physicians in terms of regulations governing the latter, and the financial benefits of the former. Decline in private practices was recorded in the 1988-1989 following a diversification of practice settings which has been described as dramatic (Kalman and Goldstein, 1998). Thus, there is need to ensure that reforms should not negatively impact on the private sector such as to lead in denial of coverage for many more Americans as well as eliminating the competition that makes prices come down and the level of the quality of services offered is higher. CBO analyzed the possible resultant effects of the healthcare insurance premiums as a result of the reforms. It was posited by the institution that it was difficult to disentangle the factors affecting the premiums because the factors were complex and interrelated (Green, 2009). The impacts would also be greatly influenced by increasing of healthcare insurance demands as a result of expansion of the healthcare insurance. CBO proposed a minimal (as much as possible) impacts on the premium as a result of reforms. The private sector, according to CBO, would incur an increase of 10-13% in the premiums before any governmental subsidies. The new non-group policies featured in the healthcare reforms would lead to an increase of 10-13% in average premium per person in 2016, if the law was implemented. It was estimated that the reforms would result in average premium per policy of roughly $5500 for single policies and $13,100 for family policies in the same year, for the non group market. This would represent an increase of $300 and $2100 the law before the reforms. The change in the premiums per person as would have resulted in the proposed law, would introduce an increase in the premiums for the group coverage in the same year (1% increased to 2% reduction) (Green, 2009).  

The reforms introduced in the previous system that allowed single as well as market payer, would see the intermediation of the private with the public plan through the Health Insurance Exchange. Individuals would acquire a qualification to any private option if they attained a certain financial status, whereas those who did not remained covered through the public option of the Health Insurance Exchange. The healthcare reforms were proposed this year were set to become law through the adoption of the Patient Protection and Affordable Care Act. The proposals would lead to minimal costs but with possible damaging effects such as denial of expanded coverage of healthcare insurance since it limits the practice of the private sector.

The proposed law allowed the continuation of individuals to purchase insurance coverage from the employer, a major conservation from the current practice. Those who were uninsured or self-employed could purchase insurance through the Health Insurance Exchange (Levin, 2009). The reforms has been criticized for failing to focus on the improving on the current malpractice laws and tort that have for a long time affected the delivery of services and impacted on physician practice. The reform agenda has visualized in the reduction of the overall costs of healthcare. Although there have been feelings that the private sector’s role in the healthcare system needed be controlled through stringent legal provisions, there has been proposal that the public and the private providers needed to work together in order to deliver an efficient healthcare plan (Novelli, 2009). This is in consideration with the important role played by both in the healthcare reforms. Furthermore, the consideration of the role played by physicians in the delivery of service is necessary to reducing medical errors, work burden, fatigue amidst shortage of professionals such as the nurses. The idea of balancing between the public and the private sectors’ roles in the healthcare system is very important. Yet this seems to have been ignored in the current reforms mainly aimed at reducing the cost of coverage and increasing the number of those covered.

Impacts of Reforms on the Private Sector

Reforms have focused mainly on the reduction of the costs of insurance in terms of the premiums in the public option domain, so that the private sector would also lower the cost to remain competitive. There have been contrasting arguments whether the current reforms in the healthcare sector are favorable to the private sector. Considering the role of the private sector in the provision of healthcare services such as insurance in the midst of low public sector role n history, it is important to make sure that every reform results in the good of public. One way of ensuring that the transition is smooth, is making sure that the needs of the private sector are put into consideration, rather than viewing the sector as undeserved. Increasing costs of healthcare has rendered the private sector less competitive in the global market place. Because the current reforms of the healthcare have focused on the domination and improvement of a public option to healthcare coverage, possible results of these reforms would be to depopulate the private insurance firms. However, there has been an argument that this could result in poorer healthcare as a result of loss of competition in the system and the resulting high population in the public healthcare sector. The private sector is dominant in the urban than in the rural areas and therefore would suffer more by deteriorating private coverage. The government would also choose to capitalize on the rural areas which have lower numbers of people with insurance coverage. 

There is evidence that although the reform could help in coverage issues, it fell short in falling to actually reduce costs of healthcare. In addition, because the private and the public sectors advance in various interests in some case, the whole system would be damaged by the oppression of the private sector through legal provisions. Introduction of reforms that seek to limit competition of the public with the private sector will reduce the extent to which medical interventions are provided or reduce the number of healthcare facilities that is useful to providing health for more and more Americans. It has been posited that the public sector seeks to concentrate on understanding diseases rather than health, more than the private sector which concentrates on understanding of health (Novelli, 2009). Private firms have played a very important role in the research and development because they are privately funded. They have been able to supplement the public sector, especially through focusing on interventions rather than prevention. While the government seems suited n the provision of the prevention medicine, the private sector can play a vital role in the healthcare system by investing in provision of short-term interventions. This is because they are geared towards the realization of profit. There has been an argument that low-premiums offered by the government would likely cause other plans out of the market because of lack of competitiveness. This would impact the healthcare sector because the number of facilities would need to be compensated for. Owing to the monopolistic nature in the market as a result of this development, the private sector would loose competitiveness in terms of fixing reimbursement rates and the quality of services provided would deteriorate. Another possible alternative strategy for the private players would be to reduce the payment to providers as they are forced to reduce their premiums. It should be considered that introducing a favorable option to coverage may influence the services in that the companies offering employer-based insurance cover may end up choosing the public option, and this would reduce the available options to the public as the private companies pull out. Limited options to the public would influence the provisions of the services on a latter date as a result of the aforementioned monopolistic effects. In addition, the private sector will lose in terms of the total amount of incomes resulting to the premiums because it would be left with fewer people.   

The burden of the healthcare has manifested partly from the arising bad debts as patients sometimes choosing the private options are unable to pay. In fact the problem of bad debts is less or more comparable to the problem of lack of coverage. Thus having a system that is more favorable towards a public cheaper option will reduce the overall costs incurred in terms of bad debts as those not able to pay for the private option will go for the cheaper public option. The private sector will benefit in terms of reduction of the responsibilities to take care for the people who cannot afford it.

Impacts on Physicians

The quality of services that have for a longtime formed a debate in healthcare sector seems not yet resolvable through the current reforms. Quality of healthcare services provided to patients by physicians is of paramount importance to minimizing death rates and cases of complications. Low attendance has already been reported in scenarios of less number of nurses and increasing demand for healthcare services as the number of cases of illnesses and diseases and the population continue to rise. Evidence exists that reform in the healthcare sector would result in several people choosing the public insurance care option because of the low premiums, and this could result in overcrowding of the public insurance sector. Thus quality of services offered in this case would decrease as the role of the private sector in serving the masses continue to depreciate. The physician therefore will have more burden than before therefore increasing the amount of such risks as quitting the profession as a result of failure to cope with possible new challenges at workplace, such as more additional time to work. Attending more patients leads to increased exposure to diseases such as communicable diseases, back injuries and fatigue. Therefore, the impact of eliminating or decreasing the role of the private sector will partly manifest in terms of the increasing burden to the physicians to attend to the ever increasing demand for healthcare services. The impact would mainly be felt in the rural areas because the government would shift focus of the public coverage more on the rural masses that have lower coverage for insurance. Thus deterioration of the services of the public healthcare insurance coverage would influence more on the rural areas than the urban areas.    

Impact of physicians following the adoption of the current reforms has been negative as well as positive. Another area of interest on reforms that has emerged is the lack of the reform agenda to capture on a number of issues. Shortcomings within the reforms therefore will not be understood in the benefits and disadvantages of the proposed changes, but also on the basis of the resultant of the failure to include some aspects of the reforms that would be desirable. The need to utilize physicians as the major components of reform agenda has been focused. Reforms in the healthcare would impact on the practice of physicians either directly and indirectly. Physicians have largely supported the current reforms in the healthcare system but have expressed concerns which could reveal their discontent with these reforms. Tort law malpractice law reform has not been captured yet in the reforms, and this could have resulted in speeding treatment, cutting down defensive medicine as well as reducing malpractice costs.

The improvement on the amount of time available for physicians to attend to their patients has resulted from the fact that lesser time will be spent in unnecessary bureaucracies and procedures. Further reform however could result in improved access to physicians, improved supply of primary care among others. There are advantages that would accrue by favorable public option that offers very low premiums. Forcing the private sector to pull out would in part help by reducing the amount of administrative paper work that the physicians would handle. This would improve the efficiency of the system in that the same number of staff would serve more customers than before. The physicians would be influenced to reject patients in cases where the cost of care is more than the payment. This is as a result of low reimbursements being offered to physicians in the public insurance plan.


The importance of the healthcare system amidst increasing risk of diseases and illnesses cannot be ignored. However, many people have chosen to remain without insurance coverage as a result of lack of affordability. This has increased the risk of death and complication of cases of diseases and illnesses. About 59 million people stayed without or delayed medical care in 2007. The healthcare system in the United States has been faced with several criticisms regarding the number of people it has not provided insurance coverage, quality of services provided and the cost of medication. These three issues have led to implementation of changes aimed at alleviating them. There have been a number of attempts in this focus. Solutions proposed and implemented include managed care. Options and reforms have been met with a number of challenges and many have been faulted on various basis. The current reforms in the healthcare sector have focused on offering a cheaper public option of coverage in order to alleviate a number of problems. This would influence the private insurance sector to reduce their premiums in order to remain competitive. There has been expressed discontentment as well as contentment over these reforms. One, the reforms may lead to the slow death of the public insurance sector as they struggle to remain competitive by lowering their premiums and loose customers. The private sector has been known to play a very important role in the healthcare sector: they tend to invest in interventions rather than prevention mechanisms and substitute the public sector in serving the public. Reducing the role of the private sector would result in overburdening of the public sector and therefore the physicians. The issues that were on focus, such as the need for providing quality healthcare services would therefore manifest. There has already been reported low quality of services as a result of shortage of profession in the healthcare sector. This has been as a result of increase in demand for the healthcare services as population grows, amidst decreasing number of professions. Professions have had to quit because of the increasing challenge in the healthcare, and therefore the problem would worsen as the private sector which would have substituted by offering healthcare services deteriorate. In addition, high populations of the number choosing the public insurance option would increase bureaucracy and decrease the time required for physicians to attend to the patients. Further, the role of the private sector in ensuring the public has insurance and healthcare option would be compromised. The public sector may end up assuming a monopolistic player role in the market and this would compromise on the quality of health provided and reduction of the total number of people covered by insurance.  

However, the reduced costs of healthcare insurance coverage would result in minimization of the burdens encountered by the private sector in terms of bad debts because some people are unable to pay. A good healthcare system will be a resultant of focus of the importance of both the public and the private sector. The importance of the two sectors in ensuring quality services (via competition) must not be ignored.