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The paper discusses the historical background of healthcare financing and the roles of the government in allocating resources.
Most developed countries have health sector plans that target public health financing and administration. Some countries have compulsory private healthcare spending and administration like Germany and Japan. Various approaches have been employed while justifying health safety nets for the general population.
In the U.S, by 1965, the U.S congress had already enacted medicare and Medicaid that aimed at poor and elderly Americans. By 1992, the government had spent 14% and 19% on medicare by 2000. The U.S combines both private financing and government spending (Carlstrom, 1994).
Currently, 60% of Americans receive employment-based health coverage which seems to have dropped from 64% in 2006 (Henry, A. 2007). The major reason for declining employer-sponsored health benefits is the double cost due to inflation and earnings (Kaiser Family Foundation, Health Research & Educational Trust, 2007). Apart from the U.S and European countries, developing countries are adversely affected since they do not have the institutional, legal, policy and resource capacities for healthcare. The level of unpreparedness by developing economies excludes vulnerable groups as older, disabled, youth who are mainly from the informal sector of their economies. Both health spending from the government or the private sector ignores them completely. The role of the government comes in to redistribute resources carefully to balance the economic and social welfare of various groups for sustainable development. It has to balance economic forces against welfare forces in a manner that does not kill entrepreneurship from the private sector while not compromising values of vulnerable groups.
Justification for healthcare
Scholars have intimated that healthcare maintains an individual’s normal functioning. The basic rule is that healthcare plans can be affordable if they are limited. At the same time, utilitarians argue that guaranteeing health care services increases the security of the greatest number of people who in turn become more productive in the society at large (Carlstrom,1994).
The roles of the government
Osborne has identified new roles that the government has to play in the healthcare system. He notes, governments provide information to encourage behaviour change to be able to improve health outcomes (Osborne & Gaebler, 1993). If the consumers got enough information about price and quality health services, they would be more empowered to shift their costs or enhance their bargaining power hence reduce the value of the services (Hertzlinger, 1997). Enough information about markets enhances public choices and decision making.
Furthermore, the government develops and enforces policies or regulations that influence public and private sector activities. In most cases, it initiates a healthcare reform policy and law. Health financing requires income redistribution through holding it constant, increasing spending for some groups and reducing costs for uninsured groups (Henry, A. 2007). The government legislates and prohibits insurance companies from discriminating against a person’s current health-related factors. It also provides guidance on capital expenditures on existing facilities and purchase of Medicaid (Carlstrom, C 1994). It enlarges the insurance pool by enhancing the capacities of the private sector. It issues tax incentives for employer-provided healthcare. Finally, the government issues mandates for public and private healthcare providers and administers Medicaid, medicare and veterans affairs (Osborne, D. & Gaebler, T. 1993).
The paper has demonstrated that the government’s traditional roles are necessary even in the laissez-faire economies as opposed to Keynesianism.
Henry, A. (2007). Why Has Healthcare Reform Failed? LA: Los Angeles Times.
Hertzlinger, R.(1997). Market Driven Healthcare: Who Wins, Who Loses in Transfomation of America’s Largets Service. Addison: Wesley Pub.
Kaiser Family Foundation, Health Reaserch & Educational Trust. (2007). Employer Health Benefits: 2007 Annual Survey. Washington: Kaiser Family Foundation, Osborne & Gaebler. (1993). Reinventing Government. New York: Plume.