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Economic Evaluation of Health Care Systems and Health Reforms

Health care is among the sectors in most countries that receive enormous funding. Decisions on resource and capital allocation to this sector are made based mainly on social factors rather than economic factors. However, economists have intervened and offered economic approaches to this. Economic evaluation approach involves use of cost-effectiveness and cost-benefit analysis. These tools are fundamental in decision making in health care system of any given nation. Use of economic evaluation approaches in decision making in the health sector has come with many benefits. For instance, use of cost-effectiveness analysis and cost-benefit analysis in high income countries has contributed to better health (Russell, 2015). In light of this, this proposal explores the tools used in economic evaluation, role played by insurance companies in the healthcare sector, healthcare for people with mental illness and the barriers to health reform.

Tools Used in Economic Evaluation 
Tools used in economic evaluation comprise of cost-benefit analysis, cost minimization analysis, cost-utility analysis and cost-effectiveness analysis. Cost analysis is a fundamental resource tool used in hospitals when it comes to financial management. It involves systematic categorization and analysis of the cost of intervention to those with illness. It also involves basic steps of identification of the problem, coming up with alternatives, defining the perspectives and coming up with the methodology for implementation (US National Library of Medicine, 2016).

Cost-benefit analysis is fundamental in assessing economic efficiency and decision making in the implementation of new programs. It  holds that the discounted value of benefits must be more than the discounted present value of benefits. When implementing programs in the health sector, comparisons of alternative programs should be made based on their benefits and costs before deciding on the best. This technique allows for measuring benefits of health care rather health care benefits alone. However, cost-benefit analysis is very expensive and complex to undertake. This is attributed to the fact that assigning monetary value to health benefits is not practically possible (US National Library of Medicine, 2016). [“Write my essay for me?” Get help here.]

Cost-effectiveness analysis involves measuring consequences of certain interventions based on a single outcome like cases detected and mortality avoided. Comparisons of alternative interventions at hand are then made basing on the cost per unit of their effectiveness.  Most health systems rely on this tool since it helps in identification of interventions that maximize health care while making use of the available resources. However, this tool does not allow comparison among different disease cases when differing outcomes have been recorded.

Cost utility analysis is similar to cost-effective analysis only that it gives the chance to compare different health outcomes by measuring them as a single unit. Basically, this technique is involved with comparing different intervention with the aim of achieving a particular quality. In cost minimization analysis, an outcome of more than one output is taken to be equal. While making comparisons of alternative interventions using this technique, incremental costs (like hospitalization) and consequences (like health outcomes) are listed without considering further their cost-effective ratio.

Poor costing systems in any sector have calamitous consequences. The healthcare system faces the problem of not being able to properly measure costs and relate them to outcomes. This has played a role in reverting to the more anticipated reimbursement approaches. The current initiatives for healthcare reform are thought to worsen the situation by making the inefficient health care system more accessible to many people without delivering an improved system at lower costs (Kaplan & Porter, 2016).

Role Played by the Insurance Companies in Health Care
When it comes to health care, the cost of health service provision is always the patient’s’ main concern. No one can predict the time when illness will strike and hence this leaves everyone unable to plan well in terms of finances before getting ill. The insurance industry comes in to save the day by providing health covers for people. In case illness strikes, the insurance company pays for the costs on condition that the individual has been paying for subscriptions as provided for in the terms and conditions of the insurance policy (Kaplan & Porter, 2016).[Need an essay writing service? Find help here.]

Health Care for People with Mental Illnesses
Some of the challenges the healthcare system faces is service delivery for patients with mental problems. This is brought about by the fact that these patients suffer from a condition that has a chronic course, many disabling consequences and increased risks of being poor. This has resulted into a lot of disparities in health care provision for these groups. Such disparities can be attributed to an interplay of factors like systemic issues and stigma to health care providers. This, combined with other factors, is what contributes to the poor physical health for these patients (Lawrence et al., 2010).

Gaps in health care for the mentally challenged individuals have resulted into evolution of some health services in order to address this. For instance, there has been an improvement in the access of mental illness patients to health care facilities. Primary health care settings and services have also been improved to serve this population. This is owing to the fact that mental health patients use health facilities more than do the other members of the society.

System based approach is also used in improving quality of health care for the mentally ill patients. This involves having a well-developed screening and diagnosis protocols, monitoring outcomes and utilizing evidence-based treatment. Ensuring effective communication between health providers is also fundamental. Developed healthcare facilities could employ the use of web-based tracking and data management systems that can be used in tracking patients   in terms of prognosis and drug adherence.

Barriers to Health Reform
A health care reform is always the best option when a healthcare system that cannot meet the demands of the public or is becoming inaccessible to the public. Increased costs and poor system performance could also cause a push for health reform. However, most countries have failed to implement the really needed health reforms due to various reasons. The United States for instance, has problems with its health care systems but any reform attempts have always been thwarted by the prevailing political ‘climate’ (Geyman et al. 2003).[Click Essay Writer to order your essay]

There are many barriers for health reform; this ranges from myths held by the people of the given nation as well as other concrete limiting factors. To start with, humans are known to love to maintain the status quo. This may make people tend to believe that implementing the new health reforms will bring more problems. There are many costs brought about when implementing the health care reform. For instance, in 2006 Romneycare was implemented in Massachusetts to help increase health care for the insured. However, this meant that Massachusetts would be spending more on healthcare than any other state in the United States (Angell, 2015).


Kaplan, R. S & Porter, M. E. (2016). The Big Idea: How to Solve the Cost Crisis in Health CareHarvard Business Review. Retrieved November 25, 2016,
Geyman, J. P. (2003). Myths as barriers to health care reform in the United States. International Journal of Health Services33(2), 315-329.

US National Library of Medicine. (2016). Health Economics Information Resources: A Self-Study Course: Module 4. US National Library of Medicine.

Lawrence, D., & Kisely, S. (2010). Inequalities in healthcare provision for people with severe mental illness. Journal of Psychopharmacology (Oxford, England)24(4_supplement), 61–68.

Russell, L, B. (2015). Population Health: Behavioral and Social Science Insights. Agency for Healthcare Research and Quality.

Angell, M. (2015). What are the barriers to real health reform? Physicians for a National Health program.

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By Hanna Robinson

Hanna has won numerous writing awards. She specializes in academic writing, copywriting, business plans and resumes. After graduating from the Comosun College's journalism program, she went on to work at community newspapers throughout Atlantic Canada, before embarking on her freelancing journey.

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