History and Evolution of Health Care Economics
Healthcare economics has drastically changed over the years. It makes up for one sixth of American budget (Johnson, 2009). Health care economics has drastically changed partly due to new advances in technology over the years. Money is the factor of health care economics. Money drives economics and makes up health care and how far it can go. Economics will continue to change and financial advisors who have more education on health care economic advances will be beneficial to keep with changes in economics.
Economics focuses on market. Market is like the buyer buys a product or service and the seller gains the money from the buyer. Economics is the science that deals with the production, distribution, and consumption of goods and services or the material welfare of human kind (Merriam-Webster, 2012). In the past individuals paid for their own medical bills and insurance or government companies were scarce. In 2012 we have services like Medicare, Medicaid, and countless insurance companies through employers or private companies. The flow of funds has changed drastically from the early years of healthcare. For example, in 1929, 81% of medical expenditures came from individual “out of pocket,” and only 19% came from government or third party organizations (Getzen, 2007). The flow of funds in 2007 reversed and 11% of medical expenditures came from “out of pocket” and 89% came from third party organizations or insurance (Getzen, 2007).
Not only was just the percentage of people paying for healthcare but the transactions of flowing funds were completely different. Today exchanges of services are done with money from insurance, out of pocket costs, or government money. In 1900 some doctors would take exchange of eggs or flour for their health care services (Getzen, 2007). They almost acted as vendors when it...