More significantly, Medicaid expansion policies proposed by the Affordable Care Act (ACA) of 2010 are fundamental in addressing the problem of uninsured and underinsured populations. As a result, these policy priorities consistently increase the supply and demand for quality care services by guaranteeing access to coinsurance and comprehensive coverage for various health services.
Although Medicare and Medicaid legislation increases demand and supply for healthcare services, some states are yet to expand Medicaid, meaning they still grapple with the high rate of uninsured and underinsured populations. According to Shrank et al. (2020), states face various challenges implementing ACA provisions, including high premium rates, stagnant wages, growing national debts, and strained local budgets. These constraints contribute to difficulties when paying for insurance premiums.
Eventually, uninsured people affect demand and supply for healthcare services by increasing uncompensated care. Although the Emergency Medical Treatment and Labor Act (EMTALA) of 1986 requires healthcare organizations to provide emergency care to patients regardless of their insurance status and ability to pay, high rates of uninsured patients lead to increased uncompensated costs that reduce organizational capacity to provide quality care.
In the United States, employers, private insurance companies, national and state governments, and patients are the main payers of healthcare services. In this sense, employers, the national government, and states reimburse healthcare services through various models, including, Beveridge system (national health model), the Bismarck system (social insurance model), and private insurance. On the other hand, uninsured patients pay for healthcare services primarily through the out-of-pocket model (Crowley et al., 2020). These reimbursement models have varied effects on the supply and demand for healthcare services.
The national health insurance model entails a scenario where the government acts as a single-payer to provide universal coverage. This system improves demand and supply for healthcare services by creating affordable premiums that enable people to access quality care. On the other hand, the Bismarck system entails compulsory enrollment insurance plans that cover employees. It contributes to financial security, access to quality care, and high demand for reliable services. Finally, private insurance and out-of-pocket models allow people to purchase insurance premiums from their income. These reimbursement models are expensive and inefficient for people of low income, reducing their demand for healthcare services.
The demand and supply for healthcare services rely massively upon various endogenous and exogenous factors, including government policies, insurance, consumer preferences, income, prices, and the availability of complements and substitutes. Unlike other consumer goods and products such as automobiles, healthcare services are prone to uncertainties, lack of consumer information, non-profit motives, restrictions on competition, and consumer ignorance. These factors affect the supply and demand curves for healthcare services. When considering the effects of these factors, it is possible to understand the role of current policies such as Medicare and Medicaid on the demand and supply for healthcare services.
Crowley, R., Daniel, H., Cooney, T., & Engel, L. (2020). Envisioning a better U.S. Health care system for all: Coverage and cost of care. Annals Of Internal Medicine, 172(2_Supplement), S7. https://doi.org/10.7326/m19-2415
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