MicroEconomics – Term Paper Example
Topic: Micro Economics The current scenario at the U.S. government’s intervention in the healthcare system presents an example of micro-economic forces of supply and demand at work and their impact on the market. The government intervention impacts the marke in the current context adversely as it applies according to the theory of supply and demand (Luna, 2010).
The new legislation signed by the Obama government on healthcare that became effective from March 2010 presents the micro-economics scenario where there are a number of insurance companies providing healthcare insurance and healthcare providers. On the demand side, most of the Americans have insurance cover. On the supply side, there are many insurance plans to select from healthcare providers that accept insurance. As it happens in a market, supply and demand impact market prices. Healthcare market because of innumerable buyers and sellers is highly competitive to be explained by the model of supply and demand (Luna, 2010).
It has reached an equilibrium point but not to the satisfaction of physicians whose reimbursements have got limited for Medicare; they will opt out of Medicare in future. It will happen because the Act of providing healthcare to 32 million Americans will extend the demand curve to the right resulting in supply curve going left creating a new equilibrium price quite greater than the current price. Any price ceiling below the market price by the government will cause deficiency in services by suppliers (Luna, 2010).
The government intervention would discourage people in future to choose healthcare as a career due to high opportunity cost and price for healthcare will shoot up further. To overcome the drawbacks from supplier side, and cause a shift of the supply curve from left to right, the supply of doctors, nurses, and other medical providers need to be increased.
Luna, Jason. (2010, July 26). Government intervention in the healthcare system. Economics News. Retrieved from http://news.surfwax.com/economics/files/Microeconomics.html