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Health Care Demand

In: Business and Management

Submitted By melissasingh
Words 352
Pages 2
Health care demand – the expression of a desire to obtain a health care good or service given its price does depend on individual preferences and resources.
Health Care Need – does not depend on Individuals preferences rather it depends on their health status, the availability of an effective service that can improve health and social judgement as to what constitutes a need as opposed to a want. the investment demand for health care is positively related to an individuals earning ability. Following from the Grossman model discussed in Chapter 5, other things equal, the higher an individuals earning capacity, the more value they place on good health status.
Why do we expect high and low income individuals demand different quantities of health care when care is free at point of service and they have the same level of ‘need’? The principle investment demand for health states that an individual’s demand for health capital is derived from the monetary benefits associated with improved health. The monetary benefits originate from the increased time available for work due to the improvement in one’s health. An important assumption of this principle states that individuals will demand health only due to its impact on their ability to work and earn income. Therefore, the investment demand for health care is positively related to an individuals earning ability; the higher an individuals earning capacity, the more value they place on good health status. A high income individual values the loss of work time higher than a low income individual which in return prompts that high income earner to have a higher demand for health capital. Health takes the form of an investment since you are able to generate more income by increasing your time available for work when you have a good health status. Higher income results in the opportunity to purchase both health care and market

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