Question

a. If the “medical arms race hypothesis” is true, then would we expect to see higher quality hospitals in urban or rural areas? Why?

b. If the “medical arms race hypothesis” is true, then would we expect to see higher quality hospitals in areas with high rates of insurance coverage or areas with low rates of insurance coverage? Why?

c. Give an example for why a “medical arms race” could be bad for (i) the economy, and (ii) patient health.

d. The “medical arms race hypothesis” is based on the presumption that individuals are protected from the high prices hospitals pay, so they don’t feel the sting of a high bill. For whom is this presumption NOT true?

Answer 1

The medical arms race is a common term used to define the escalating the medical price because of increased competition between the medical service provider to use most advanced technology and types of equipment.

a) Yes, because of medical arms race Hospitals will invest in most advanced technology and improve the facilities they have with them ultimately resulting in higher quality hospitals only in the Urban area.

Rural area doesn't get such technology because they don't have the paying capacity.

b) Areas with higher medical insurance coverage will see more of the higher quality hospitals because the paying capacity of those areas is greater than other areas. People with no insurance couldn't even afford those hospitals reducing the demand for them.

c) The economy: It will increase the price of the medical services and make it unaffordable for many people and affect the human resource capacity of the economy.

Patient health: The patient will not be able to afford the services which could even lead to his death.

d) For the people who don't have any insurance cover for their illness. The statement is not true for them.