National Health Insurance System: Advantages and Costs

Advantages of a National Health Insurance System

A national health insurance system (NHIS) provides insurance to everyone through payments by the Government for the stipulated health costs of the people. Such a program grants the benefit of providing access for the people to any health professional who is working on a fee-for-service system under the NHIS that they want (Degrazia, p. 29). This invariably allows the American public the continued luxury of having choices; which is important for them to be able to enjoy their perceived independence (Menzel, p. 35). Therefore, no person will be restricted from enjoying the services of the best professionals available in the country because of not having enough income, or because of the race they belong to.

If the NHIS were to be instituted through the ‘Universal Insurance Competition with a Public Opinion’ (UICPO) system proposed by Menzel, 35, the previously stated advantage of the continued luxury of choices is extended through the introduction of the Government as one of the many competitors in the insurance industry. This means that the intense support for a market-respecting model is ensured, and the stigma attached to the socialization of health care is removed; for if buyers perceive the UICPO to be more advantageous, they would buy their package instead of from the private companies, whilst allowing the consumers the option of ‘choosing’ their insurance package (Menzel, p. 35).

Health Care Costs in an NHIS

An NHIS means instituting a plan that covers the entire population of the United States of America; a task that would significantly increase the required spending on health for the government – which means a corresponding increase in the tax rates for the people. The breakdown of these costs includes the increase in health care usage by the previously uninsured by $34-$69 billion per year (Chua, p. 4). The range represents the difference between whether the package offered to everyone includes private insurance level or public insurance level benefits, whilst assuming no significant change in the structure of health care, or scope of the benefits offered under the package.

As in any government-controlled plan, the theoretical decrease in costs by instituting a price ceiling on doctors’ fees would be eliminated by the simple practice of extending the number of required visits by the patients so that the overall payment is higher than the ceiling (McConnell, p. 439). This will increase the waiting list of patients who want to see that doctor, which would cause additional burdens on the potential success of the system, apart from the economic costs that are associated with it.

Part of the reason for rising health care is also attached to the incentives attached to providing quality health care (Volpp, p. 2126). With most of the benefits of the health service sector linked to the frequency of visits by patients to their offices, there is a disincentive for the providers to improve the level of health care provided: the better they take care of patients at the initial level, the less likely they are to come back for the more expensive and profitable treatments. As a consequence, with an NHIS the provider would be inclined to increase profitability through providing lower-quality health care, causing patients to increase the frequency of their visits, thus costing them more. Eventually, though, the higher costs incurred for the patient have to be paid through the Government coffers under an NHIS, thus increasing health care costs significantly whilst also decreasing the quality of the health care provided.

Works Cited

  1. McConnell, C. R. & Brue, S. L. & R, C. R. Microeconomics: principles, problems, and policies. McGraw-Hill Professional. (2004).
  2. Chua, K. P. “The Case for Universal Health Care.” AMSA. (2008): 1-9.
  3. DeGrazia, D. “Single Payer Meets Managed Competition: The Case for Public Funding and Private Delivery.” Hastings Center Report 38, no.1. (2008): 23-33.
  4. Menzel, P. T. “A Path to Universal Access.” Hastings Center Report 38, no.1. (2008): 34-36.
  5. Volpp, K.G. “Designing a model health care system.” American Journal of Public Health 97(12). (2007): 2126-2128.
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