Financial Analysis for Managers Article Analysis - Managed Healthcare Systems

Essay by Elizabeth LawnUniversity, Bachelor's December 2004

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Article Analysis - Managed Healthcare Systems

Government plays a large role in regulating managed

healthcare systems. There is a vast difference between movement along and shift in the demand curve for these healthcare systems. Government funded Medicaid and Medicare to provide services to those whom are in need of it. Many factors exist that influence the control of healthcare spending from economic point of view. The objective of this paper is to discuss the role of government and the difference between movement along and shift of the demand curve in the managed care system.

The US healthcare system manages the largest healthcare market in the world. In 2001 the market grew to $1.5 trillion and it's expected to reach nearly $2 trillion dollars by 2007 (Torreblanca, Friend & Oasterom). The government now leads healthcare so it is crucial to understand the US healthcare system and its institutions is extremely beneficial to healthcare patients.

Why is healthcare such a controversial area? Why do people demand healthcare?

Basic Healthcare coverage that means healthcare expenditures and reimbursement has been funded by the limited healthcare system such as Medicaid, Medicare, and private insurers (Torreblanca, Friend & Oasterom). Until the early 1990's healthcare was provided by traditional health insurance plans where the bills were sent to their insurers. This then became a problem when healthcare providers would opt for the most expensive treatment so they would make more money. Over the past decade, things have made a drastic change. Since the change there has been an overwhelmingly large shift towards managed care systems, which seek to reduce unnecessary healthcare costs. Employers are trying to reduce their insurance bills and are quickly switching to managed care plans.

The demand for healthcare has expanded because of changes in the age population, increasing incomes, and improvement in medical...