QUESTION PAPER UNIT NO 2

Question Paper Unit No 2

Question Paper Unit No 2

Introduction

Health care economics is related to the study of demand and supply of health care services. It helps in determining the level of health care services consumed in a country or region. Around the world, health care economist strives to evaluate and achieve an optimal level of utilization of health care services at which both the consumer and supplier are entertained with the highest level of satisfaction.

Ten key concepts of Health Care Economics

The following ten key concepts are given below:

Scarcity and Choice

Scarcity and choice is general economic concept that is also applicable to Health care economics. Scarcity refers to the difference between what is available and what is desired. Health care resources in specific would always be limited when it comes to fulfilling the needs of an individual. Since the resources are limited, the individual would then have to trade off as to which of their health related needs are to be fulfilled and which ones should be left unfulfilled. Moreover, the scarcity forces us to make choices, when a person chooses to consume more of something; scarcity limits him or her to consume less of something else.

Opportunity Cost

Opportunity cost in health care economics can be explained as the cost of the health care options forgone to get something else. Similarly, in health care economics, the time and money utilized to access medical facilities could be used for other leisure and recreational activities. Time spent acquiring medical services should be considered as part of health care costs.

Marginal Analysis

It is the study of the outcome of minor changes in the existing outline of health care spending in a specified situation. The cost and benefit decisions related to health care services is made at the margin. In order to acquire the optimal allocation of health-related resources, the marginal benefit associated with health care services should equate the marginal cost associated with it.

Self- Interest

It refers to motivation that encourages an individual or institution (health care institutions) to be the most efficient in making resource utilization and spending decisions, moreover the decisions being made might also augment the society well being.

Market and Pricing

In health care economics, market and pricing serves as the most substantial tool for efficient allocation of limited health care resources. The price in market balances the firm's decision of output level with the prevailing consumer demand. In a price sensitive mechanism, it is often becomes difficult for people to afford social goods.

Supply and Demand

The health care economics also follow the general economic law of demand and supply. The supply of medical services would increase, if the price of the service increases, the equilibrium of demand and supply would therefore, depends on the function of price in the market.

Competition Forces

Competition forces the heath care facilitators to utilize their services intelligently to gratify the customers, it also provide customers with good quality medical services at affordable prices. The absence of competition can give rise to monopoly; a situation in ...