A look into Health Economics

Abstract

We will explore health economics in the area of predictability of future demands for medical care, whether the demand will rise or diminish. Using the variables of the changing price of health care services, time, and the effect of income, we will contrast this to educational attainment within the community and the impact this has on market equilibrium and economic optimization.

The Changing Price of Health Care Services

The health care market is not unlike any other market in the respect of supply and demand. When more is desired by the consumer for a product or service then the price becomes more and when less is desired price falls. Furthermore other aspects are the same in all markets, including efficiency, competition, and opportunity cost. Efficiency is evaluated by how well resources are distributed to promote social welfare. Opportunity cost is a measure of how well a company can look at the next best alternative in the use of their resources. The core variable that drives price down is when many hands are in the mix causing competition or who has the best results in the fore mentioned variables, and the efficiency of those variables. However in the Health market differs from other markets in the respect of the human equation because it is not solely based on desire but also on need.

Addressing Time and Human Capital

Time has one positive and two negatives as it impacts health economics. The positive is found in the youth of our populace. Simply the younger you are the less need for medical services which provides health or better understood as not using health resources. This addresses scarcity in the respect how we distribute a limited resources. This is the based on the principle of give and take, we take resources from our youth who have less need and give this to the old who need it more. As we become older we need medical care more as our bodies begin to breakdown or simply the morbidity factor. Furthermore in time our population will increase causing an overall need which impacts our health resources, this will be explored further in our conclusions.

The Effect of Income

The median income found in different social classes has a direct affect on being able to obtain medical care, accessing preventative measures that promote a healthy lifestyle. At first glance and in short term analysis’s those who do not have the means to pay for medical services provides health, but in the long term causes a catastrophic effect on health economics. Within the lower classes of our society a health issue is often not addressed until the problem becomes acute, or even chronic in which case this class will seek emergency rooms to address their health needs coupled with the inability to pay for what is the most expensive service found in our healthcare system, acute care. This drives up price that is shared by all of society. We as a society must address this disparity with lower costing preventative care to our lower classes to prevent this cascading event of rising cost.

Concerning Education

Education is twofold both within the area of the provider and the consumer. Health economics assumes that the consumer is rational in their decision making when it comes to the human capital. However rational decision making is based on awareness of a given situation. Void from education many decisions are less than perfect when it comes to rationale, because of lack of knowledge of the problem that befalls them. Without education a person simply does not know how to address their health needs effectively, use preventative measures, or live a healthy lifestyle. Education will raise awareness and increase the provision of health. The more educated the provider the better the quality of health services in the realm of evidence based decisions, providing awareness to the consumer, and providing a safer delivery system that combats tort law cases more affectively. Truly education is the largest factor in health economics in lowering overall cost in the medical services (Healthy People 2020).

Conclusions

Statistically the cost of healthcare continues to rise in America. One major factor is the median age of our populace is growing older, as more and more baby boomers are turning sixty five and go on Medicare. Our population continues to grow increasing the demand on medical services. We conclude that education is the best answer in whether the need for medical services will increase or decrease in the future. We feel that education will at the very least cause equilibrium in the demand for health services if we are proficient and global when it comes to providing education. However if we fall short in educating our populace we predict that the demand for medical services will continue to increase.

Reference:

Dewar, Diane. (2010). Essentials of Heath Economics. New York. Jones and Bartlett.

SOPHE. (2010). Society For Public Health Education.