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DQ I

Factors contributing to rise in health care costs and the effect of Managed Health Care

One of the factors that have led to rise in the cost of medical health care is poor management, which has led to elevated administrative costs. The induced high costs of operations in the health care services has led to increased costs of provision of medical services to patients, thus leading to rise in overall health care costs (Larson & Muller, 2003). Managed Health Care has negatively influenced this factor by introducing a series of follow up programs, which have in turn increased administrative costs. Although some of these programs have enhanced service delivery and management; they require extra operation expenses which contribute to increase in cost of medical service provision (Larson & Muller, 2003).  

Another factor that has contributed to the rise in costs of medical health care is aging of the population. The aging population has increased demand for medical services, and this has led to increase in the cost of medical care. The Managed Health Care has positively influenced this factor through provision of cost sharing incentives for aging population. In cases where health care provision costs are too high, the Managed Health Care intervenes and intensively manages the situation by contracting with respective providers of the health care services (Larson & Muller, 2003).      

Prescription drugs and growth in technology are also among the factors that have led to increased costs of medical care services. Inflation has led to high cost of acquiring prescriptive drugs, adopting current technology, and general increase in the cost of medical services (Larson & Muller, 2003). The intervention by Managed Health Care has enabled provision of economic incentives for the management to adopt affordable technological procedures/systems, and acquire effective but less costly medical prescriptions/drugs, and other forms of care. This step has positively impacted on the cost of health care services through reduction of medical bills (Larson & Muller, 2003). This is appositive influence that has led to reduction in the costs of health care services.  

Rise in incidences of chronic diseases among the population has also led to an increase in medical costs. Chronic diseases require long periods of treatment, and this poses a high demand on health care services. Managed Health Care has provided financial incentives for patients suffering from chronic illnesses, and at the same time set up programs to enhance efficient use of health care facilities and medical practices. Some of these programs include controlled quality improvement, resource management strategies, and resource relevancy/utilization review. This is actually a positive influence to enhance reduction in costs of medical services (Larson & Muller, 2003).      

Overuse and misuse of medical facilities and resources has also contributed to rise in the cost of medical health care. The intervention by Managed Health Care has enhanced controlled delivery of medical services including controlled inpatient admissions and the duration spent by admitted patients in hospitals. Through these restrictive measures, hospitals have been able to efficiently use the available resources and cut down costs incurred when offering medical care services to patients (Larson & Muller, 2003).  

Another factor that has contributed to the rise in the cost of medical health care is malpractice. The unnecessary medical tests, drug administration and prescriptions have contributed to high irrelevant medical bills which are not necessary. In order to reduce such practices, the managed health care has invented, and implemented programs in health care facilities for reviewing the necessity of various medical tests, procedures and other medical practices before they are put into action. This has enhanced the relevancy of most of the medical tests and prescriptions given to patients, thus reducing overall medical cost (Larson & Muller, 2003).

DQ 2

‘Consumer driven approach to health care systems’

‘Consumer driven approach to health care systems’ can be described as a plan involving third tier insurance of health, where by members are allowed to use personal accounts for health savings and directly paying routine medical health care expenses. At the same time, the high deductible policy of health insurance protects these members from disastrous expenses on medical care. Although the policy costs less, the user is supposed to make payments of routine medical claims by means of a pre-funded account. Failure to maintain the account balance, the user may be required to pay claims just like any other deductibles (Finkelman, 2001).

This system actually relates with the problem of the current system of health care provision in terms of cost influence. The system has both benefits and limitations pertaining provision of health care services. One of the benefits associated with the system is that, patients are given greater control over their expenses, as well as budget on health care services. In this aspect, the approach allows consumers to make own decisions concerning the type of medication to receive. This allows individuals with middle income level to go for affordable medical care services, among the services available (affordable treatment option). The system also allows patients suffering from chronic illness to make a strict follow up of their treatment schedule or regime (Finkelman, 2001). It is claimed that this approach is beneficial in the long run because the use of health reimbursements arrangements induces competition in the health care systems by enhancing availability of free market variables, which leads to price reduction and improvement of healer care services. The main problem with the system is that it allows less wealthy consumers to avoid or ignore appropriate and necessary health services due to cost burden or inability to make appropriate decisions (Finkelman, 2001).    

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