Supply And Demand In Health Care Essay

How Supply, Demand and New Policies Affect the Costs of Medical Supplies, and Healthcare

Just like other markets, the costs of medical supplies, healthcare services and insurance premiums are affected by supply and demand. In general, when there is high demand for a product or service and supplies are limited, costs rise. That said, there are other factors responsible for influencing the costs associated with healthcare: These factors include tax increases, additional regulations placed on medical devices and/or healthcare services.

The Journal of the American Medical Association (JAMA) Addresses Health Care Costs From 2000 to 2011 there was a rapid increase in the costs associated with medical supplies and health care. These continuous increases were of great concern to insurance companies and to patients. According to JAMA, cost increases related to medical supplies, hospital care and medications accounted for 91 percent of the rise in health care inflation.

Estimates suggest similar increases through 2024. One factor that contributed to this increase is the 2.3 percent excise tax that the Affordable Care Act (ACA) placed on medical devices.

Inflation Related to Healthcare Costs Outpaced the Consumer Price Index (CPI)

From 2005 to May of 2015 (with the exception of 2008), health care inflation outpaced the CPI. As costs for medical supplies and healthcare services increase, so do insurance premiums; however, the ACA is not the only factor responsible for these increases. Other issues affecting the cost of medical supplies, insurance coverage and healthcare services, include:

• an increased focus on precision medicine;

• health care system consolidation;

• new medications and medical devices;

• changes to insurance