Question

How should healthcare be distributed? What effects do insurance have on the Demand and Supply and amount provided of Healthcare? How does the way HC is going change the effect of the allocation of Healthcare resources? Are Insurance and Healthcare the same and thus interchangeable terms?

Answer 1

Healthcare should be distributed because of follwing reason

• The primary reason of health care distribution is to enable all citizens to receive health care services whenever needed
• To deliver health services that are cost-effective and meet pre-established standards of quality.
• To reduce the cost of health care provided in hospitals by moving services into a person's home.

Effects do insurance have on the Demand and Supply and amount provided of Healthcare

Shift in demand curve

Income

Health care is a normal good. Rising inflation incomes of consumers cause the demand curve for services( health care) shift to the right. On the other hand, if real median family income remains unchanged, there is no influence on the demand curve.  

Prices of Substitutes

The prices of medical services and goods that are substitutes can change and in turn the demand for other medical services.

For example, treatment of a back problem by a chiropractor is an alternative etreatments provided by orthopedic doctors. If the price of orthopedic therapy increse then some people will switch to treatment by a chiropractor.

As a result, the demand curve for chiropractic therapy shifts rightward.  

Number of Buyers

As the population increases, the demand for health care rises. the distribution of older people in the economy must total number of population is important. As more people move into the 65-age group, the demand for health care services becomes greater because older people have more frequent and prolonged spells of illness

An increase in substance abuse, involving alcohol, tobacco, or smoking also increases the demand for health care.

SHIFTS IN THE SUPPLY OF HEALTH CARE

Changes in the following nonprice factors change the supply of health care.

Number of Sellers

Sellers of health care include hospitals, nursing home psychologists etc are host of health care services suppliers. To ensure the quality and safety of health care, every industry is regulated and licensed by the government.

Tighter restrictions on the number of sellers shift the health care supply curve leftward, and reduced restrictions shift the supply curve rightward.

Resource Prices

An increase in the costs of resources supply of health care service shifts leftward. The most important factor behind increasing health care spending has been technological change.

the way HC is going change the effect of the allocation of Healthcare resources?

Because of increasing demand for healthcare services and rising costs to provide those services How to allocate resources

• Rising cost of healthcare

• Continued medical advances have lead to accurate and more diagnoses and better treatments but also have increased the cost of healthcare.  

• More people are living with chronic disease and disabilities

• Healthcare rationing

Rationing refers to the conscious decision to exclude certain people from a treatment or services that they need.

Rationing is   utilized when prices are set for health insurance and health care services that some people cannot afford.

Insurance and Healthcare are not same

Healthcare is defined as the field concerned with the restoration or maintenance of the health of the body or mind.” Also pertains “procedures or methods” related to the care of a physical or mental person health.

Health insurance is defined as “insurance that compensates the insured for loss or expenses incurred for medical reasons, as through illness or hospitalization.” health insurance is part of the overall medical care “industry,”