...Health care expenditure has been on the rise for several years across several countries around the world. Between now and 2050, the OECD predicted that for average nations, public expenditure on health care and long-term care could double as a share of GDP in the absence of new policy to address past trends in this sector, rising from the current average level of 6-7 % of GDP to around 10% (OECD 2006). That estimate includes the consideration that as people live longer, they also remain in good health for longer. Even including cost containment measures, results have shown that public spending on health care could see large increases, and in less wealthy countries, those increases could be dramatic. The dynamic of these changes has been characterized...
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...An Economic Analysis of Health Care in China (draft 8/8/06) Gregory C Chow Princeton University Abstract After describing the institutions for health care in China as they evolved since 1949, this paper presents statistical demand functions for health care. It applies the demand functions to explain the rapid increase in health care demand and the resulting rapid increase in price when supply failed to increase. The failure in increase in supply was traced to the system of public supply of healthcare in China. The reform experience of Suqian city in the privatization of healthcare is reported to demonstrate the positive effect of privatization on supply. The government’s health care program for the urban and rural population is described and an evaluation of it is provided. Outline 1. Introduction 2. Changes in Health Care Institutions 3. Demand Functions for Health Care 4 Supply for Health Care: Public or Private? 5. Government’s Program for Health Care 6. Evaluation of the Current Health Care System 7. Conclusion 1. Introduction With a population of over 1.3 billion China has received much attention, including its spectacular economic development since 1978 and the accompanied deterioration of health care for a substantial segment of its large rural population. Section 2 of this paper...
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...DEMAND Medical Expenditures. Do increased expenditures = increased health? - Distinguish diff b/n medical services and health - Medical Services: Treatment of disease and Preventative measure, Diagnostics, Pain Management, Counseling - Health: General Well-being. - Narrowing objective - Affects how you will allocate medical resources. - To produce health, there are more factors than just medical services **Provide a medical treatment efficiently ≠ produce health efficiently SLIDE 4 Skewed spending concentrated on the top 5% of the population (spend 50% on health care) Top 1 percent spends 20% of HC expenditures (this is the chronic disease carriers who use most of the medical care resources) Measuring Health.. Cannot cover the entire spectrum (mental and social well-being) SLIDE 5: WHAT IS HEALTH? Measures only covers certain aspects like life expectancy (but it doesn’t take into account the quality of life) The more accurate the definition of health, the more difficult health is to measure. Pg 146: Measures of life status. Human Capital Theory of Health Care: Capital can be used as input to produce other products or goods Human capital was like any other type of capital; it could be invested in through education, training and enhanced benefits that will lead to an improvement in the quality and level of production. The concept of human capital recognizes that not all labor is equal and that the quality of employees can be improved...
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...Health Economics- HSA510 Project Paper Foundations of Health Care Economics Supply and demand or demand and supply, which comes first in the study of consumer behavior regarding health care choices. Such questions can boggle the mind; however, healthcare economists and researchers have made it easier for professionals, health care managers and others to decipher how rational individuals make consumption choices when faced with limited choices, especially in the health care environment. In economics, the simplest way to determine the demand for a particular health care service can be illustrated through supply and demand curves. The theory of demand proposes that when prices increase for a health product or good then there will be less demand for that product or good. A further assumption of this theory is that all other things are equal or held constant. Therefore, if consumers buy less at higher prices then the demand curve will slope downward. Consideration should also be given to other variables that may affect the demand for a health product or good. Those variables or demand shifters would include income, other prices, insurance, and tastes. Supply can also be determined in the same fashion as demand. If a health supplier or producer is willing to offer a health product or good for at a certain price, generally if the price raises, so does the supply and in this case, there would be an upward sloping demand curve. The supply shifters in this case would...
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...would an economist approach the problem of alcohol abuse? According to David H. Jernigan, PhD of the Johns Hopkins Bloomberg School of Public Health, alcohol abuse presents a significant public health problem and raising the tax on alcohol would have the most significant impact to decrease alcohol consumption. Excessive alcohol use causes 79,000 deaths per year and it is the number one leading cause of drug problems among youths. Jernigan writes “People increase their drinking when prices are lowered and increase their consumption when prices rise”. He further states “Alcohol demand is elastic: In the U.S., a 10% increase in the price of alcohol would lead to a 7.4% drop in beer consumption, a 4.9% drop in wine consumption and a 14.7% drop in distilled spirits consumption (Jernigan, D.H. nd). Operating on the assumption that people use their disposable income to consume alcohol, Jernigan concludes that the more expensive the price of alcohol, the less people will be able to afford and this includes people addicted to it and young people. He is most likely correct in his assumption as it conforms to the principles of supply and demand. When prices rise, demand drops. It is interesting to note that Jernigan predicts only a 4.9% decrease in the consumption of wine. One can surmise that the typical wine aficionado has more disposable income that beer and hard liquor consumers and thus would not be impacted as much by the taxes. In addition to increasing prices of alcohol, another...
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...the society today is health care reform and government plays a large role in regulating managed health care systems. A vast difference between movement along and shift in the demand curve for the different health care systems. For instance, the government funds Medicaid and Medicare to provide services to the indigent and disabled population. However, many factors exist that influence the control of health care spending from an economic standpoint. The objective of this paper is to discuss the role of government and the supply and demand curves concept to show the difference between movement along and shift of the curves in the managed care system. The concept of medical price elasticity to evaluate the manage health care industry is also discussed. Resource Allocation Law makers presented several proposals for health care reform and the final bill passed with the intention of providing health care to all Americans. One important issue concerning many consumers about health care reform is the selection of an appropriate managed health care program because one must choose a managed care provider by December 31, 2010. The application of principles to understand the health care systems is challenging because of the complexity of health care as a product or service; however, the fundamental problem addressed by economics is allocation of limited resources among unlimited demand (Scott, Solomon, & McGowan, 2001). Such is the case in the health care industry. According...
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...applications of economic tools and analysis. To analyse the market, we will examine the price elasticity demand and income elasticity demand of tobacco products the factors affecting each of these and the externalities caused by this product. Further, to explore further into the tobacco market, this blog post will discuss the theory of Rational Addiction, which contributes greatly to tobacco consumption. A. Elasticity of tobacco products Before analysing the elasticity of the tobacco market, it is important to know the fundamentals of elasticity. To start, elasticity refers to the degree of change of the demand or supply of a product in response to change in price of the product. The elasticity of products varies because consumers may find some products more essential than others. A good or service is considered to be highly price elastic if a price increase leads to a sharp change in the quantity demanded or supplied. Conversely, the demand and supply of price inelastic goods or services sees modest changes with any change in price. In most countries, the price elasticity of demand for tobacco products is fairly inelastic. This will be discussed further below. I. Calculating price demand elasticity To determine the price demand elasticity of a product’s demand curve, the following equation can be used. Elasticity, Ped = (% change in quantity / % change in price) If the elasticity value we obtain from the above formula is greater than or equal to 1, the demand curve...
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...Abstract Cigarette and Tobacco taxation has been a hot topic for years. Typically, the taxing of this product is accepted as there are health concerns associated with the consumption of tobacco products. The concept of raising cigarette taxes aligns with goals of increasing revenue for local, state and federal governments, and also works to increase the overall public health of the country. Although the taxation is widely accepted, there are concerns associated with who the taxation effects primarily, how funds are being utilized and issues with meeting budget goals with the earned revenue. This paper addresses each of these topics in an effort to identify the effectiveness of cigarette and tobacco taxation. Introduction The concern associated with the health risks of tobacco use and cigarettes began as early as the 1930’s. The ill effects of tobacco were studied by epidemiologists in long term case studies to assess the increase of lung cancer mortality to smoking. The findings were considered merely casual by Surgeon General Leroy Burney in 1957. As a few years passed, the concern between the relationship of smoking and health grew. This led to The American Cancer Society, The American Heart Association , The National Tuberculosis Association and the American Public Health Association collaborating together to address a letter to President Kennedy. In this letter they asked for a call to action on the issue of cigarette smoking. The Kennedy Administration...
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...Economic Terms and Health Care History Shonda Menezes HCS/440 John Gaze January 16, 2011 Economic Terms and Health Care History Health care economics has gone through many changes over the years. With all of the changes health care organizations have had to adjust their financial strategies as well as their organizational strategies. The economy has had a lot to do with all of these changes. Healthcare organizations have so many demands put on them. Some of the changes that have occurred are due to the advances in medicine such as diagnostic, procedures and pharmaceutical. Insurance Payments over the years have changed. It used to be that you had health insurance and your bills would get paid over the years the payment system has changed and more and more is coming from the patient’s pocket. In this paper the focus will be these key terms supply and demand, microeconomics, microeconomics and elasticity. The issue is not how to fill or reuse empty beds. In this changing environment, hospitals and health systems must focus on streamlining and simplifying operational processes, facilitating case management, promoting the least costly setting for care delivery, and optimizing resource sharing among departments. When hospitals have addressed these issues, then solutions to the “bed problem” will be obvious.Cynthia Hayward, 1996(Marcinko, 2007). Division of economics focused on evaluating scarcity in health care systems in different economies. ("Health Economics", 2012)...
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...As scarce as truth is, the supply has always been in excess of the demand. Josh Billings Desire versus Demand First, we need to clarify what we mean by demand. Demand means the quantity of any particular good that people will buy at a given price. Notice that demand is not how much of a good that people need or desire. Needs or desires may be keenly felt, but do not necessarily lead to actual purchases of goods or services. As the saying goes: “if wishes were horses, then beggars would ride.” People cannot buy what they cannot pay for. Therefore needs or desires are not effective demand. Effective demand means only the quantity is actually purchased. Also notice that the quantity that people will purchase is not fixed. It varies according to the price. So, in economics, the quantity actually purchased is never absolute, but always relative, depending on price. This is very important to remember. In casual conversation, people often mention "demand" as if it is one fixed amount. They say, for example, that demand for Lexus autos is high, or that demand for less popular makes of autos is low. This may be fine for casual conversation, but it is too vague and not specific enough for serious discussion of economic principles. The quantity demanded depends on the price because goods are scarce. If there was an unlimited supply of any particular good, everyone could have as much as they wanted, and there would be no-one willing to pay even a penny for that good. 25 Economics...
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...healthcare we can characterize the demand for healthcare as irregular and unpredictable. The intensity and elasticity of demand is affected by several facts. Degradation of health conditions (illnesses, wounds) is connected with huge losses and the cost itself. There are also costs for healthcare that have to be considered. People lose their money, have to change their lifestyle. Pain and discomfort are a serious intervention into a personal integrity. The price elasticity of demand for healthcare really is controversial. When trying to find it there is a need to have on mind a remarkable heterogeneity of the production. The question of finding, whether the demand curve is not very elastic (whether most of the expenses for healthcare is involuntary – dictated by the actual health condition) or relatively elastic is rather difficult. Most experts however believe that health care demand is fairly inelastic. If you are sick, you will not be very price sensitive. There are exceptions like plastice surgery but most studies find that patients are insensitive to changes in health care prices. The elasticity is according to some estimations between 0,2 and 0,7. It’s important to separate healthcare and the actual health. If there is the connection between these two entities there can be the demand of an individual for healthcare connected with a demand for health. If the connection is not that strong, it’s more of a demonstration of an individual of his interest in getting...
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...university dormitories have on the price elasticity of demand for dormitory space? What impact might this in turn have on room rates? Answer: The effect of the price elasticity of demand would be more inelastic for adding the rule in the university. The room rates impact would increase as students oppose to follow the rules while they are in that University. 7. You are chairperson of a state tax commission responsible for establishing a program to raise new revenue through exercise taxes. Why would elasticity of demand be important to you in determining the products on which the taxes should be levied? Answer: If I were the chairperson of a state tax commission responsible, I would select the products that were price inelastic, because the tax increase will increase the tax revenue. Elasticity of demand would be very important to me considering that “the higher tax on a product that has an elastic demand will bring in less tax revenue.” (Econ pg. 86) In this case, goods and services such as cigarette, liquor and phone service are the helpful to excise taxes because these are the products that have not decrease in demand when an excise tax is levied. 9. Because of a legal settlement over state health care claims, in 1999 the U.S tobacco companies had to raise the average price of a pack of cigarettes from $1.95 to $2.45. The decline price of a pack of cigarettes sales was estimated at 8 percent. What does this imply for the elasticity of demand for cigarettes? Explain. ...
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...assess the impact of the health care issue you selected in microeconomic terms. Most existing work on the price elasticity of demand for health insurance focuses on employees' decisions to enroll in employer-provided plans. However, any attempt to achieve universal coverage must focus on the uninsured, the vast majority of who are not offered employer-sponsored insurance. A survey was conducted to survey assess the willingness to pay for a health plan among a large sample of uninsured Americans. The experiment yields price elasticities substantially greater than those found in most previous studies. We use these results to estimate coverage expansion under the Affordable Care Act, with and without an individual mandate. We estimate that 39 million uninsured individuals would gain coverage and find limited evidence of adverse selection. In the United States, the economy shapes the complex interactions among employment, health coverage, and costs, as well as financial access to care and health outcomes. In economic downturns, few employers drop health coverage or restrict employee eligibility. More commonly, they reduce costs by changing benefits and cost-sharing provisions. Employees in low-wage jobs, working in small firms, and those in certain industries have been far more likely than others to have been uninsured when they lost their jobs, but this recession is affecting a broader swath of the workforce. Research on the effects of economic cycles on health status is confusing...
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...1-) (Categories of Price Elasticity of Demand) For each of the following absolute values of price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. In addition, determine what would happen to total revenue if a firm raised its price in each elasticity range identified. a) ED = 2.5:elastic b) ED = 0.8:inelastic 2-) (Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic in each case. Please give details to your numeric answers. a) Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 400 units. 200/600= 1/3=33.3/22.2=.667 b) Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 500 units. 100/600=.1667 / 2.25/1.75=.757 3-) Consider the following pairs of goods. Which would you expect to have the more elastic demand? Why? a) water or diamonds=water b) insulin or nasal decongestant spray=insulin c) food in general or breakfast cereal=food d) gasoline over the course of a week or gasoline over the course of a year = week 4-) Outsourcing Inpatient Care to India The Wall Street Journal, Monday April 26, 2004. Global health care has arrived. During 2003, Canadian resident Terry Salo flew to India to have his hip replaced. He paid only...
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...tax. The revenue collected is then used to finance services and activities such as health care, schools, fixing of roads, providing lighten streets, pay debt and many other public services. Thesis statement In order for Jamaica to have a good tax system it must satisfy several general principles of taxation. The main principles include productivity, equity and elasticity. Productivity – When a tax system produces revenue it satisfies the principle of productivity 1. generating of revenue helps the government to pay its debts and expenses 2. Provide health and security for the country 3. Increase in tax collecting will increase in employment which will intern increase in spending power and buying power. Closing statement. Equity- is the fairness to the taxpayers in ensuring that individuals who have the same amount of income should be taxed at the same rate and those who earns more should pay more. 1. Contributing towards the support of the government should be according to the citizens’ income and ability to pay. 2. The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid ought all to be plain and clear. 3. Every tax ought to be levied at the time, or in the manner in which it is most likely to be convenient for the contributor to pay it. Closing statement. Elasticity - A tax system should be flexible so that it can satisfy the changing financial...
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