Indicate whether the following statements are true or false. Why or why not? Explain your answer...

Indicate whether the following statements are true or false. Why or why not? Explain your answer clearly and concisely.

a. [5 points] The fact that health and income are positively correlated suggests that a policy of transferring income from the wealthy to the poor will increase overall health in society.

b. [5 points] The concept of need in health care derives from the presence of externalities in healthcare markets.

Expert Solution

a. The given statement is false.

It is somewhat a fact that health and income are positively correlated in an economy. This means that once there is an increased revenue and the wealth of an individual is higher, it would mean that the particular individual would be able to dedicate much of the wealth to maintain his/her health and hence a direct correlation between health and income is obtained. But here, the policy of transferring the income from the wealthy to the poor is suggested as a means of improving the overall health of a society. This may not be considered as a good option to improve the overall health of a society. Moreover, the transfer of wealth in an economy is not justifiable as wealth creation is the basic freedom of an individual and the economy has no role to transfer the wealth as such. But in practice, much can be done to improve the overall health of the society. For example, urging the wealthy class to initiate investments in the medicare sector and the health expenditures would ensure that the poor sections of the society would have the opportunity for access of healthcare. Also, transfer of wealth, if done also could not ensure that the basic health is maintained in the whole society as it also needs the establishment of healthcare facilities in an economy so as to ensure the same.

b. The given statement is true

Healthcare needs of a society is always a factor that is being influenced by the externalities in the society. For example, consider the current situation wherein the covid-19 pandemic has been spread in the whole world. The spread of the pandemic has made the healthcare system to work together to find a vaccine for the same. Similarly all the present medicare and healthcare facilities are a result of similar interventions that have been caused due to externalities in the healthcare sector. The presence of new externalities would enhance the public systems to work together to finds an alternative so that the society would be affected on a lower scale and hence would reduce the negative economic effects due to the same. Unless there is an exigency in the healthcare system, this would mean that the present healthcare system is efficient enough to cater to the needs of the population and hence it would not require any huge interventions from the healthcare sector. Hence, exigencies are always a necessary factor for the development of healthcare of a society.

Rahul Sunny answered 2 years ago

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