CRISTINA LAVANZA March 18, 2009

AHSE II D

HEALTH ECONOMICS

HEALTH CARE SECTOR

ENUMERATION:

1. DETERMINANTS OF THE DEMAND FOR MEDICAL CARE

 Income
 Price of Commodity
 Cultural-demographic factors
 Locality/access to health facilities
 Household size
 The insurance effect
 Age
 Sex

2. MULTIPLE INPUTS IN THE SUPPLY OF HEALTH SERVICES

 Manpower
 Health infrastructure
 Medical technology
 Pharmaceuticals
 Financing

ESSAY:

1. WHAT ARE THE DIFFERENCES BETWEEN ORDINARY COMMODITIES AND

HEALTHCARE GOODS AND SERVICES?

The differences between the ordinary commodities and healthcare goods

and services are the following: First, in ordinary commodities, consumers are the
one evaluating whether they would buy that kind of product or not. They are the
one deciding for what to while in healthcare goods and services, the patient is
seeking for medical attention. Meaning, patients are consulting other people
about certain issues, needs and wants. Second, in ordinary commodities, after
the consumers has evaluate whether he would buy the product, he would then
decide for himself while in healthcare goods and services, the doctors or the
person whom the patient consult about medical matter, will determine and decide
whether what the patients need. Doctors will be the one to decide for its patients.
Third, in ordinary commodities, when the consumers had already decided to buy
that product, he then pays for it while in healthcare goods and services, after the
doctors or physicians evaluated and decided what the patient need, the patient
would consume it and after consuming, he would pay for it.
2. HOW DOES EACH OF DETERMINANTS AFFECT THE DEMAND FOR HEALTH
CARE?

Determinants do affect the demand for health care because it is the basis
whether the patient needs it, can afford, and has knowledge about that certain
health care. In income, if the patient has a big income then he would prefer to
ask for more modern and fast way in curing his illnesses but if the patient doesn’t
have enough income, then they would prefer to admit to the lesser price of health
care just to ease the pain they felt and some of them would just ignore the pain to
be able to save money. In price commodity, the lower the price of health care
goods and services, the higher the probability that it would be consume. In terms
to education, the higher the knowledge of the person, the more he is open to
medical care. Meaning, he is more conscious about certain things concerning
about his health. Marital status also can affect the demand for health care. If he
is single and no responsibility like feeding his own family, the greater his
tendency to use more of the medical care.

3. IF THE PRICE OF MEDICAL CARE WERE SET TO ZERO FOR EVERYONE, WOULD
INDIVIDUAL DEMANDS FOR MEDICAL CARE STILL DIFFER? UNDER WHAT
CONDITIONS WOULD YOU FAVOR A “NEGATIVE” PRICE FOR MEDICAL CARE?

Yes, the demands for medical care would still be differ even if its price
would set to zero for everyone because, still, depend to what the people really need.
If the price is set to zero the demand for medical care would increased. There are
several conditions on considering a negative price for medical care. These are using
health facilities that have been used so if the negative price is higher the demand
would decrease and if the negative price is below the equilibrium the demand
increases.

4. EVALUATE THE STATEMENT, “MEDICAL CARE IS NEVER FREE, ALTHOUGH THE

INDIVIDUAL RECIPIENT MAY PAY NOTHING.”

Yes, it is never been free because certain amounts were out for it to be
produced. Yes, maybe some of the recipient may not lend any amount for the
certain medical care that they have consumed but still it is not for free. It is never
been free; it is just in a way that someone pays for it for them. Like if you’re
having your health insurance, the company will be the one to shoulder your
account or credit for that certain medical care that you have consumed. Like in
foundations or charities, they do shoulder certain medical care for others who
weren’t able or can’t afford certain medical care they need. The money of the
foundations and charities were money that came from can’t be counted numbers
of people who has a concern for their fellows who were unfortunately can’t afford
to avail medical care.
5. THE PHYSICIAN HAS A DUAL ROLE IN MEDICAL CARE, AS A PATIENT’S AGENT
AND AS A SUPPLIER OF A SERVICE. UNDER WHAT CIRCUMSTANCIES WOULD
THESE ROLES BE IN CONFLICT? WHAT EMPIRICAL EVIDENCE SUPPORTS EACH
OF THESE DIFFERENT ROLES?

The role can be in conflict in a way that the physician is under the
circumstances of being responsible for his actions in giving medical treatment to
her patients. And being the patient’s advisor and supplier of medical needs, he
has a financial stake in his services used in giving care. Therefore in giving an
ordered use of medications to the patients the physician is acting not just in the
interest of being an advisor of the one in need of medical treatment but rather an
interest in his own because upon doing it he is gaining income for himself.
6. WHAT ARE THE FACTORS THAT MIGHT CAUSE DOCTORS TO EXPERIENCE AN
INCREASE IN THE NUMBER OF REQUESTS FOR ANNUAL PHYSICAL
EXAMINATIONS EVEN THOUGH THEY DO NOT CHANGE THEIR FEES FOR THIS
SERVICE?

Even though that the physicians don’t change their fees for medical
services still the request for doctors annual physical examinations is increasing
due to the public requirement for their different field where they belong. Like for
example in nursing, nursing students are required to have several medical
examinations to be able to enroll in their subjects. As well as going abroad, it also
required that all boarders should take their medical test and if they pass to that
test, that’s the time that they were allowed to go abroad. Also for health sake
that’s why people do have their annual check –up to be sure that they don’t have
illnesses.

7. IT HAS BEEN SAID THAT EXTENSIVE PUBLIC AND PRIVATE INSURANCE

COVERAGE RESULTED IN AN “EROSION OF THE MEDICAL MARKETPLACE.”
EXPLAIN THE STATEMENT.
8.

This means that due to the high demand of having insurance, financial
status of medical marketplace has been affected. It causes erosion to the
medical marketplace because some doctors do take advantage of the fees that
their patients. Some doctors also give incomplete result to the patients for them
to take other tests. This is the reason why some patients are not consulting their
doctors if they are sick if it is not severe.

9. HOW WILL A CHANGE IN THE PRICE OF MEDICAL CARE AFFECT THE DEMAND
FOR HEALTH INSURANCE?

The change in the price of medical care can affect the demand for health
insurance because it would depend if the patient can afford or not. One of the
reasons why most of the people are availing a health insurance, it is because of
the price of the medical care. Having health insurance, you can lessen the
amount that you have to spend in that certain medical care you need or your
family needs. If the price of medical care is affordable in the sense that people
can afford it then they don’t have to avail a health insurance but if the price of
medical care is high just like today then people would prefer to avail a health
insurance to lessen the burden that they have to shoulder then the demand
would increase.
10. WHAT ARE THE FACTORS THAT AFFECT THE DEMAND FOR HEALTH
INSURANCE? WHAT ARE THE EFFECTS EACH FACTOR HAS ON THE DEMAND?

The factors that affect the demand of health insurance are the following:
How risk – averse is the individual, probability of the event occurring, magnitude
loss, price of insurance, income of individual. In risk – averse, if he has a utility
curve that is increasing but at a decreasing rate, he is willing to pay an amount
above pure premium for insurance coverage. If the probabilities of event
occurring is very high or low, the demand for health insurance is lower. The
greater the size of the loss if the demand of health insurance is greater. Demand
of health insurance is less or lowered if the price is higher. The income could
affect whether an individual can afford avail an insurance.

11. WHAT IS “MORAL HAZARD “? HOW DOES IT AFFECT THE DEMAND FOR HEALTH
INSURANCE?

Moral hazard is the prospect that a party insulated from risk may behave
differently from the way it would behave if it were fully exposed to the risk. Moral
hazard arises because an individual or institution does not bear the full
consequences of its actions, and therefore has a tendency to act less carefully
than it otherwise would, leaving another party to bear some responsibility for the
consequences of those actions. It can affect health insurance demand because
people who had avail insurance and committed a mistake that would require
them to avail certain medical care, the health insurance would shoulder it for
them.

12. IN WHAT WAY DO TECHNOLOGICAL INNOVATIONS AFFECT THE DEMAND FOR

HEALTH INSURANCE? EXAMPLE: INEXPENSIVE NEW DRUG THAT WOULD
REPLACE CARDIAC SURGERY OR DEVELOPMENT OF ORGAN TRANSPLANTS.

Technological innovations can affect the demand for health insurance

especially if it is in lower price because people would really prefer avail for it than
the medical care that were expensive which can create a hole to the pocket. If
medical care of health goods and services are already affordable then people
would not do an effort in availing a health insurance which can just exhaust them.
Like in the example, it is a major health problem that may cause them thousand
in order to be cure, and technological innovations offer a alternative that can cost
you less, then why avail to the more expensive? Right?

13. WHAT IS THE MOST IMPORTANT INPUT IN THE SUPPLY OF HEALTH SERVICES?
WHY?

The most important input in the supply of health services is the

MANPOWER because they are highly skilled people and are important inputs in the
supply of health services. Often there is a trade-off between abundant supply and
high quality manpower. Like the physicians they play a crucial role. Unlike other
inputs, manpower takes long time to produce.
14. WHY DOES MANPOWER TAKE A LONG TIME TO PRODUCE?

Manpower takes time to produce because it takes time for them to

prepare themselves to be able to serve others. Nurses, physicians, med – techs
therapists, aides etc. are highly skilled people and are important inputs in the
supply of health services. Often there is a trade – off between abundant supply
and high quality manpower. Like nurses, it takes time and a lot of effort to be able
to be a registered nurse and serve people. They have to study well in years and
they have to pass the board examination to have a license to be a nurse and
serve others.
15. WHY DO SPECIALIST PHYSICIANS TEND TO FOLOW THE GEOGRAHIC LOCATION
OF BIG HOSITALS?

The specialist physicians tend to follow the geographic location of big hospitals
because the geographic location of the hospital is just the same of the map to our country to
where it leads the right direction where will be going to be. In big hospitals, rates are higher.
So, specialist physicians tend to work in their field because of higher income and
comfortability in working.

16. HOW DO TECHNOLOGY AND SPECIALIZATION IMPROVE THE OUTCOMES OF

HEALTH SERVICES?

The technology and specialization improve the outcomes of health services because
it is faster and sufficient. The illness of the patients is easily detected because the machine
used in detecting it. Compared to manual way in knowing or giving treatment to the patient,
the new come technology is more helpful and make life easier. Technology and
specialization improve the outcomes because of advanced technology the results are faster
and more accurate. It is easy for the physician to diagnose.