Question

Identify and discuss the factors that influence the demand for healthcare and, in turn, healthcare economics. What factor do you believe has the greatest impact on healthcare economics and why?

Answer 1

Healthcare indicates caring of patients in the form of hospital care, doctor service, clinical service, medical instrumental facility, nursing care, etc. Patients demand for healthcare and it depends on certain factors.

Required factors are as below:

No.1) Income: In a developed country where per-capita income (= GDP/ number of population) is high people can bear the cost of healthcare easily, making a higher demand of it.

No.2) Cost of healthcare: If the cost of getting these services are high, the demand of getting it would be low. Therefore, cost and demand are inversely correlated.

No.3) Education: If people have education, they can realize the importance of education and for them demand would be high; an illiterate person may not have such demand. Suppose a literate person goes for regular check-up, but an illiterate person goes to doctor only when he becomes seriously ill.

No.4) Quality: If the quality of service is good, the demand would be good. Suppose a country doesn’t have good quality healthcare, rich people of that country go to some other country for better healthcare.

No.5) Tradition: People follow tradition. If the tradition of a family is not to be getting admitted in hospital, the demand of healthcare for that family would be low since members of that family believes in miracle while getting ill.

“Cost of healthcare” has the greatest impact, since it creates direct effect on consumers’ pocket. The sources of funds to cover health care expenditures are Medicare, Medicaid, Private health insurance, and out-of-pocket. If the cost is high, all these sources are affected – like insurance company charges higher price, which reduces demand, and disturb the healthcare economics.