Question

Write down merits and demerits of public health services

Answer 1

Answer:

Advantages of Public Health Spending

Increased healthcare spending aimed at improving quality of healthcare services results to a decrease in medical care expenses through increased and improved access to new technologies that provide for new treatment options and treatment for large number of individuals (Newhouse, 1993).

At local level, healthcare spending is beneficial because it creates employment for healthcare specialists, increases wages for health care workers, expands local tax revenues and increases demand for related goods and services.

As the health sector becomes a greater portion of GDP, employment and related activities in health sector also grow. The national Bureau of Labor Statistics reveal that health sector employed 6.3 million practitioners and technical workers in by November 2003 (US Department of Labor, 2004), and a further 3.2 million Americans were employed in health care support occupations. The health sector is therefore a significant source of employment for America workers.

Disadvantages

Raising healthcare spending could lead to slow economic growth and employment (Monaco & Phelps, 1995). Raising healthcare spending has significant impact on federal budget (Monaco & Phelps, 1995). Many employees are interested in limiting their contribution to increasing healthcare costs by requiring their employees to increase their contributions or by providing different forms of coverage that potentially reduce available household income as more costs are shifted from employer to employee (Monaco & Phelps, 1995).

The overall economic growth for US is 3.6 percent, while healthcare spending is estimated at 9.3 percent. A larger share of resources is therefore allocated on health care, negatively impacting on private and public sectors of economy (CMS, 2003). Furthermore, federal states and municipal governments are faced with the cost rising more rapidly than revenues, placing high scrutiny on all discretionary healthcare spending. Companies faced by rising healthcare spending may be forced to cut other expenses, reduce wages, reduce health insurance benefits, or advocate for the employees to pay a greater share of costs. This leads to shifting of more costs to consumers, making them to choose between high value of health care and other goods and services.