Healthcare Systems and their Functioning During Hard Times

The Side Effects of Austerity

As the governments around the world reduce their spending on social welfare, healthcare is a sector that endures the most of this cost cutting as in most countries; it is heavily dependent on governmental support and funding for sustenance. The drive towards austerity which means that governments reduce their spending in order to deal with the economic crisis has made matters worse for the citizens of the west as they have been used to accessible and inexpensive healthcare. Of course, in the United States, people have always paid more than their European counterparts have. However, the passage of the Health Care Reform Act or Obamacare as it is also known has raised the hopes of those who earlier were unable to pay premium rates for healthcare. Therefore, the key aspect of the current drive towards cutting social spending is being felt in Europe rather than the US. Apart from this, there are reports of pharmacies shutting down in Spain because the government has not paid them their dues for more than a year and this situation is indeed dire. Further, Europeans were always used to quality healthcare because of their social welfare oriented economies, which means that they are being hit hard now.

Spending on Healthcare: A Burden or a Wise Investment?

Healthcare is a sector that takes in money and resources but does not yield direct and immediate gains to the government. For instance, governments need to spend on healthcare but the returns from it are not direct in the sense that people do not pay more for the services or pay the full rate since it is discounted. Of course, the fact that a healthier society is a wealthier society and leads to productivity improvements is the reason why governments spend on their healthcare in the first place. Therefore, when there are economically hard times in the offing, governments cut down on spending on healthcare as they want to ensure that they invest in something, which generates direct, commensurate, and immediate returns. The clear implication of this austerity is that citizens of the countries go without quality healthcare and this has knock on effects on other sectors of the economy as well as society. The way out would be for governments to ask, the private sector to chip in and share the burden by providing their employees with health insurance. This has been the case in the United States where most employees who belong to the organized private sector have health benefits.

Some Model Healthcare Systems

Turning to the developing world, it is a fact that healthcare systems in most of the third world countries are in shambles and the situation is so bad that only private sector healthcare is the norm rather than the exception. In the context of the ongoing economic crisis, these countries have further fallen back on their spending on healthcare, which means that a large number of people are steadily being pushed into poverty because of the rising cost of healthcare among other things like inflation and lack of employment. Though all these aspects might look and seem depressing, it is indeed the case that the world is going through a crisis in healthcare and it is for this reason that laws like the Health Care Reform or Obamacare that have been passed in the US need to be considered by other countries as well.

The Role of the Private Sector

The private sector has a very important role to play in this as it can subsidize some of the costs incurred by its workers in terms of spending on healthcare. This is the only way out of the current situation and more so, because healthy workers are any day preferable over sick and unproductive workers. Finally, it is high time for all these stakeholders to agree on the pertinent model for healthcare as otherwise we would be risking a lost generation that is weak, sick, and unable to contribute economically to the extent, which previous generations did.


❮   Previous  Article Next  Article   ❯


Authorship/Referencing - About the Author(s)

MSG team comprises experienced faculty and professionals who develop the content for the portal. We collectively refer to our team as - “MSG Experts”. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

Globalization