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
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 ...view middle of the document...
Medical care is only one way to increase health. Pg 143.
H is a function of outputs.
Health is the output and the other factors are inputs (medical care, environment, education.. Etc)
The relation between medical inputs and output can be
described by a health production function ---- Health = H ( environment, education, lifestyle, medical care)
Increased Medical Expenditure pg 144
As expenditure increases, the marginal increase in health is smaller -- This is why the US has a high medical expenditure but we don’t have health outcomes that match that.
Compares expenditures to other countries
After 2,500 ($).
As medical care expenditure increases, the rate of health increase becomes smaller and smaller.
US must look into how to change all the factors (other than just medical care) in order to increase Health levels more with the same amount of medical care:
- Pg 149: Determinants of Health Status
- New technology
- Change people's lifestyle
- ACA- changing financing and delivery system (using same amount of medical care to achieve better health)
LAW OF DEMAND: Pg 30.
Increased Price = Decreases in the Quantity of Demand - Inverse relationship between Price and Quantity of Demand
Assumption-- We have a budget constraint - scarcity of resources.
Medical care increases human capital.
There is a difference between demand and need.
Demand - having the ability to pay for something
Need - Unconstrained desires
Demand Function - Gives you a measure of Quantity for a corresponding Price (Graph on page 31)
Price goes from P0 to P1 -- Quantity goes from Q0 to Q1
Demand curve = Combination of points that change along the demand curve
Other Factors that Affect Demand Curve:
- Pg 31/ 156
- Income -- When Income increases, the demand curve will shift to the right. (same price but more quantity will be demanded).
- Taste and Preferences: Marital Status, Education, Lifestyle , religion
- Consumer expectations
- Demographics : Gender, race, ethnicity, population size
- Health Status: Sicker ppl need more care.
- Brand Loyalty
- Prices of other goods.
1. Complements - 2 products that have to be used together. When one becomes cheaper, the demand for the other increases.
EX: LASIK and optometrist visits.
The demand curve will shift to the right