Healthcare in the USA is influenced greatly by economic and social changes. As resources in the system become more strained, the risk of things going wrong increases. Claims for medical negligence in 2002 were estimated to cost the healthcare $230.9 billion.Costs of this magnitude clearly restrict the provision of services to patients. There is little evidence about the claims because information based on common statistics has not been collected and no records of claims exist which enable useful comparisons, either over time or between districts. Consequently, the evidence tends to be anecdotal. One survey of claims found that of the twenty-eight areas of medical specialty, four were responsible for over 60 per cent of the total claims notified. These areas are particularly vulnerable to high-value claims. Clearly, such major financial obligations are a significant factor in health service expenditure.
Successful compensation claims must be met by the hospital responsible for the negligence and the costs will inevitably result in increased prices to future purchasers of care. The burden has to be borne by the relevant clinical unit, or units, alone rather than by the whole service, in order to encourage high-risk units to introduce effective systems of risk management and reduce their exposure to negligence claims. Once an award has been made, damages must be paid immediately and it is often impossible for hospitals to meet the costs incurred by substantial claims against them (Kotlikoff, 2007). Thus, arrangements have been introduced in which a claim must be met by the responsible hospital, after which a loan will be made available from the Department of Health to cover the outstanding portion. These arrangements assume that hospitals are able to assess their exposure to risk and to make a general prediction as to what loans will be required to meet claims in any year. The evidence so far, however, suggests that prediction will be very difficult. From year to year the numbers of claims rises, but the rate of increase is not consistent. More importantly, there is a wide variation in the financial severity of the claims from year to year, both within and between hospitals (Williams and Torrens, 2002). This poses a problem of stability in the system, because individual hospitals will find that the payment of damages imposes such a severe strain on resources that services to patients are prejudiced, particularly when the unit is involved in several cases. That instability will make it increasingly difficult for health authorities to plan for the future. Prices will be difficult to forecast and entire units may cease to be viable. A number of proposals have been made to manage these difficulties. Statistical data suggest that public healthcare covers only 27% of the population (83 million of people) (Kotlikoff, 2007).
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Inevitably, as demand for resources increasingly exceeds supply, the need to identify health care priorities becomes more urgent. There is no agreed measure by which priorities can be assessed. The simple view is that those in most need should receive priority in the allocation of scarce resources, but there is no generally agreed criterion on which the notion of 'need' can be assessed (Williams and Torrens, 2002). Central government is inclined to promote a policy of 'preventive' medicine as a means of tackling the incidence of ill-health and keeping people out of hospital. A health authority responsible for large numbers of elderly patients might wish to concentrate its resources on the treatment of arthritis, or providing hip replacements. By contrast, parents whose baby needs an urgent operation to repair a hole in the heart will say that there can be no greater need than to save a child's life. Nor have we developed a reliable system for measuring the effectiveness of treatment once need has been established. Both need and effectiveness are extremely difficult to assess against an objective yardstick because they are so influenced by our perceptions of illness and health which vary not only from person to person but also in the same person, from time to time (Raffel and Barsikiewicz, 2001).
According to statistical results, Medicare covers middle class citizens including 65+ year old. Medicaid is established to support low income social classes and covers about 41 million people. Child health insurance and veterans insurance support certain categories of people only. The question is particularly pertinent to the assessment of highly sophisticated and hugely expensive medical equipment, capable of achieving the most dramatic results for a relatively small number of patients. When there is a choice between achieving huge improvements in the conditions of those in very poor health (say cancer or transplant patients), or more modest preventive measures (Raffel and Barsikiewicz, 2001). Clearly, this approach to the problem would involve a major shift of power from doctors to politicians and health service managers. The report considered that health policy and priorities require hard choices to be made between competing demands but that the matter should be considered as follows: (i) at the 'macro' or aggregate level, between government departments (e.g. education, social services, and health); (ii) at the 'meso' or intermediate level, between the numerous groups which compete for resources within the health service, and (iii) at the 'micro' or individual level, between patients. Medicaid covers about 40% of poor people in America and remains one of the main programs for this social group. It attempted to identify a hierarchy amongst. (Moran, 1999). This is wasteful in the sense that others, with more to gain, may be denied access to care. Thus one needs to state a principle by which different forms of treatment and types of patient may be distinguished. Health economists have assisted this process by applying the notion of 'opportunity cost' to health service spending, that is, the loss of benefits which results from using finite resources for one purpose rather than another (Kotlikoff, 2007).
In this case, if doctors were to react in a compassionate way and tend to include, rather than exclude, patients then the numbers of treatment-conditions covered by the plan could be larger than anticipated. Thus, given the same quantity of resources, the number of treatment-conditions might have to be reduced and the difficult question presents itself all over again (Kotlikoff, 2007). The statistic measures quantity, not quality. It fails to record that 30 million Americans have no health insurance at all and many others have insurance which specifically excludes the very illness that most concerns the patient. Also, statistics are not compiled in the same way from country to country. Some may include elements which others exclude, or attach different significance to them in a way that makes direct comparison impossible. Allowance must also be made for differing national levels of inflation in order to compare the real purchasing power of money. It would be meaningless to say that health investment in one country had increased four-fold over ten years if that growth had been matched by inflation which eroded any expansion in services in real terms. More difficult still are the socio-economic and cultural variations between nations as to the notion of what counts as health and disease, the patterns of 'illness' which have developed over many years, and the different health priorities which have been identified from place to place (Kotlikoff, 2007). The social insurance serves a number of functions. It smoothes the burden imposed by large claims against Trusts, encourage good risk management, and create a national database from which hospitals may learn how to minimize risk. The scheme comes into operation and will seek to set premiums sufficient only for the current level of claims. Reserves will not be built up for the future. This means that premiums will be relatively low in the early years of the scheme and build up to a steady level over a period of eight or ten years. Insurance in the scheme works on the principle that responsibility for the costs incurred by claims is divided three ways.
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In sum, health economists have begun to make a significant contribution to the way in which the state consider coverage and financial burden of public healthcare. The question is entirely pertinent to the health service. Health economists start with the proposition that health service resources are scarce and that hard decisions between patients are unavoidable. One cannot know to what extent decisions of this nature are typical. But it demonstrates the inevitable fact that social decisions to treat one patient, or one category of patients, may mean that others are denied care. The cause for concern is that some of the routine decisions which dramatically affect access to health care are made at random.