Research Paper: How Macro and Microeconomic Concepts Impact Healthcare

Pages: 4 (1408 words)  ·  Bibliography Sources: 4  ·  Level: College Senior  ·  Topic: Health: Public Health Issues  ·  Buy This Paper


[. . .] When patients postpone treatments due to cost in the short term, this can create a greater need in the long term.

For-Profit and Nonprofit

The inefficiencies and inequalities inherent to the United States healthcare system are why many advocate an emphasis on not-for-profit versus for-profit healthcare. For-profit institutions are beholden to shareholders to make a profit while not-for-profit institutions are not and operate under the law as charitable organizations. Not-for-profit institutions must invest all profits back into their facilities and have no other financial obligations. “In theory, for-profit hospitals should operate with more zealous attention to business objectives than nonprofits because shareholders have their money on the line” (Cheney, 2016, p.1). However, for-profit institutions must still remain solvent and they still employ providers who depend upon the existence of the organization for their livelihoods.

Theoretically there is also, amongst for-profit institutions, a greater incentive to prioritize more profitable tertiary care and to focus on attracting patients with private insurance plans that offer higher rates of reimbursement. Yet the data supporting this is shaky since there is no clear indication that “for-profit hospitals are posting higher operating margins than their nonprofit counterparts” (Cheney, 2016, p.1). Both institution types clearly have an incentive in theory to offer quality care to attract more patients, either to serve their mission in the case of nonprofits and to attract more patients in the instance of for-profit institutions, although the type of incentive structure to do so (again in theory) is different.

Economic Policy and Healthcare Disparities

Even though nonprofit healthcare organizations do exist in the US, in contrast to other modern, industrialized nations where healthcare is not a for-profit industry, the United States is relative unique in having a largely for-profit healthcare industry sector. This can almost inevitably create economic disparities as “access to care in a free market health care system is completely contingent on one’s ability to pay for it” (El-Sayed, 2012, par.12). Individuals have access to healthcare services based upon the extent to which they have higher quality, low copay, low deductible healthcare policies (usually provided by their employer) or they have access to government-provided healthcare insurance such as Medicaid or Medicare. Furthermore, disparities can also be created by the simple nature of health and wellness—left to their own devices, young and healthy people are less likely to seek out health insurance while older and sicker people are, which can create imbalances in the market as insurers are more likely to be burdened with patients who have greater need of services.

In the past, insurers used to exclude individuals with preexisting conditions from their rosters, to ensure that people did not seek out insurance simply when they became ill. The ACA prohibited such discrimination but also created an individual mandate, to ensure that the young and healthy citizens would also have to purchase insurance, not simply the old and frail. However, arguably the penalties for not being insured are not high enough under the ACA, given that insurance companies alleged that they had to increase premiums due to the explosion of interest in purchasing plans by individuals who consumed more care and the lack of interest from the young and healthy to purchase health insurance plans which can be costly even when they have high deductibles (Blumenthal & Collins 2017). The challenge of maintaining a largely for-profit healthcare system that adequately addresses the needs of all Americans remains daunting.


Blumenthal, D. & Collins, S. (2017). Where both the ACA and AHCA fall short, and what the

health insurance market really needs. Harvard Business Review. Retrieved from: insurance-market-really-needs

Cheney, C. (2016). Differences between NFP and for-profits are marginal. Health Leaders

Media. Retrieved from: between-nfps-and-profits-are-marginal#

El-Sayed, A. (2012). Five reasons free markets don’t work in healthcare. The Huffington Post.

Retrieved from: market_b_1405396.html

Pearl, R. (2017). Healthcare’s dangerous fee-for-service addiction. Forbes. Retrieved from: addiction/#46a71759c8ad

Ladd, A. (2017). There is never a free market in healthcare. Forbes. Retrieved from: health-care/#1d078d3c1147 [END OF PREVIEW]

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Cite This Research Paper:

APA Format

How Macro and Microeconomic Concepts Impact Healthcare.  (2017, October 9).  Retrieved September 21, 2019, from

MLA Format

"How Macro and Microeconomic Concepts Impact Healthcare."  9 October 2017.  Web.  21 September 2019. <>.

Chicago Format

"How Macro and Microeconomic Concepts Impact Healthcare."  October 9, 2017.  Accessed September 21, 2019.