The economics of end stage renal disease Essay Example | Topics and Well Written Essays - 750 words

The economics of end stage renal disease - Essay Example For ESRD patients, all medical expenses both relating to their kidney disease or other conditions are the responsibility of Medicare (Hirth, 2007). ENDR patients pay for their treatment in four ways: 1) a monthly premium ($78.20 in 2005), 2) 20% for covered outpatient facilities (copayment) 3) a deductible for inpatient care and 4) outpatient prescription drugs. In many cases, patients have private insurance that cover the copayment and prescription drugs. In low-income groups, people may have their premium and deductible paid for by the government too. The amount actually paid by ERSD patients is very low (Hirth, 2007). The Medicare plan provides payments depending on the service provided. There is a single composite rate for dialysis for patients that comprise dialysis including labour, equipment and supplies (Hirth, 2007). Physicians, generally nephrologists, are paid a fixed monthly amount for out-patient services where as hospitals are paid a fixed amount too for in-patient care depending on the diagnosis of the patient (Hirth, 2007). The decision by the American government to cover ESDR was motivated by the political and economic prognosis at the time (case study). The funding for the Medicare program is from wage taxes, general tax revenues and beneficiary premiums (Hirth, 2007). 76% of dialysis centres are private run (Hirsh, 2007) and two chains are responsible for all private dialysis centres in the US (Hirth, 2007). An example being Fresenius National Medical Care (case study). A study in Canada looked at the economic burden of ESRD in 2000 and found that the direct, mortality and morbity costs to the government in one year was $1857 million (Zelmar, 2007). In the US, $27 billion was spent in 2003 (USRDS from Hirth, 2007) and costs are still increasing (case study). Outpatient clinics need a large investment to be profitable (case study).The Medicare Payment Advisory Commission has recommended

MARKETS AND THE ECONOMY Assignment Example | Topics and Well Written Essays - 1500 words

MARKETS AND THE ECONOMY - Assignment Example The factors explaining the increase in budget deficit stabilizers are outlined below: 1) As the economy goes into recession, corporate profits decrease leading to lower corporate tax revenues for the government. Due to lower demand in the economy, companies sell less and have higher cost pressures leading to lower profitability. 2) As corporate profit decrease, companies start firing employees leading to an increase in unemployment in the economy. This further leads to lower income tax revenues for the government. 3) As unemployment increases, the government has to make more payments for unemployment benefits and other welfare programs (transfer payments). These three factors automatically increase the government deficit during recession due to lower revenues and higher spending built into the system. 4) In order to spur demand in the economy, government can spend higher than usual. This spending could be through lowering taxes and/or increasing spending on new/existing projects. All the four factors combined mean that some of the effect of recession on households and companies is mitigated by government spending. Unemployed workers get state benefits and companies get opportunities to invest in new projects. The combined effect is that companies are encouraged to hire more workers to work on those projects thus reducing unemployment and people have more disposable income due to reduced taxes thus increasing consumption. Therefore, the increase in budget deficit during a recession helps stabilize the economy by bringing it back to the equilibrium operating level. Adjustments in wages and prices take the economy from the short-run equilibrium to the long-run equilibrium The price system and wages in the economy do not always change instantaneously. Changes in macro-economic factors like output, demand, supply, interest rates etc do not immediately bring about a change in price levels and wages. Thus, when one or more of the other macro-economic variables changes in the economy, prices and wages are slow to react to this change, therefore the economy comes to operate in a short-run equilibrium where prices and wages are yet to adjust to the other macroeconomic changes. Some of the reasons for this stickiness of prices and wages include contracts for fixed duration like labor union contract for wages fixed for a year, or even market competition prohibiting firms from increasing prices suddenly. However, as time goes (in the long-run), wages contracts get re-negotiated depending on earlier changes in demand and supply, inflation, and other factors. This change in wages leads to change in cost structure of firms and price changes then become necessary. For example, if the labor union re-negotiates to higher wages, the firm must increase its prices in order cover the increased cost of labor. As these adjustments in wages and prices take place, the movements of wages and prices determines the output of the economy. For example, if the firms find it less profitable to produce more, the will reduce their output and the GDP will contract and vice versa. Thus, adjustments in wages and prices take the economy from short-run equilibrium to long-run equilibrium. This is to say that if the prices and wages had changed immediately following a change in the other macroeconomic factors, the long-run equilibrium output would have been seen in the short-run. However, as prices and wages are sticky and adjust to the changes slowly, the economy first settles on a short-run equilibrium where other factors have changed but prices and wages have not and eventually the adjustments in price and wages takes the economy from t