Definition of terms used in health economics
Scarcity- human wants are unlimited and the resources to satisfy them are limited. Human beings make decisions on the human want to satisfy first by making a choice. Human beings’ ability to promote the health sector is more than the scarcity of resources to be used to promote it critical decisions.
Opportunity costs- it is the value for money as compared to its alternative use. The opportunity cost by the government to invest in the prevention of child accidents has gains forgone by asthmatic children.
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Marginal analysis- this is an incremental cost that has benefit to the consumer. A sick person willing to buy drugs at a certain price has the marginal benefit of the drugs since they are of benefit.
Market- these are supply and demand forces that shape the pricing of drugs and health care equipment.
Supply and demand- this is the basis of pricing of health equipment’s. supply is more when the demand is high and so is its price and the vice versa.
Competition- more resources are allocated to highly valued items which guarantee high returns. Same case happens to diseases that can affect citizens to ensure they are productive.
Efficiency- this is a measure of how effective resources are used in the delivery of excellent services to the citizens.
Market failure- this happens when a market fails to produce efficient services even after allocation of enough resources.
Question 2
It is the role of the government to maintain health standards of its citizen. The federal government of the united states has played a great role in setting up policies aimed at improving the health status of their health. There is need to improve public health status of every country since it’s a form of security and at the same time a measure to protect the spread of infectious diseases to many people. The federal government has expanded health insurance across the united states to be enjoyed y every citizen. The introduction of Medicaid and Medicare in 2010 in Affordable Care Act was a great move in improving the health of Americans.
The united states system of health care shows that the federal government has concern over the health of its citizens. United states of America devote much of it national income in improving health systems in their country. this is contrary to other western countries whose health system still lag behind that of the unite d states. Reports of 2017/2018 indicates that the united states spend 16.9% of its gross domestic product in financing the health sector which is the highest among all other western countries.
Cost of running a health care in a free market is a major determiner of the accessibly of services by citizens. In cases where the government sets a high cost of accessing health services in a government hospital, few people have access to health care thus the government will have failed in its role (Erlangga, Suhrcke, Ali, & Bloor, 2019) . It is also estimated that higher costs would force health insurance covers have low coverage which means citizens will be disadvantaged while accessing quality health care. One of the challenges faced by free market health care is that citizens do not access quality services of health care. This is because the government has no regulation towards health care providers who in turn misuse citizens by rendering low quality services.
In cases where resources allocated to health care doesn’t generate quality services, that becomes a waste of resources. government intervention in health care services cannot be described as market failure since majority of low income citizens are able to access cheap and affordable health services. The government through insurance has established medical covers that allow citizens to easily access health services. In this concept, government intervention in health services cannot be considered as market failure.
Question 3
Access to free health by citizens is a great mile in improving the health of a country. in any case, once hospital fees are reduced, majority of low income earners who have lower level insurance covers access medical services comfortably (Goddard, 2015) . Report indicates that introduction of free access to health care is not a sufficient condition to improve health care but it improves the health outcomes. In any case, we cannot ignore the importance of free health care to citizens as long as the free health care comes with excellent delivery of services.
Question 4
Cost benefit analysis involves the comparison and interventions which relates to the resources injected in the health care system and the benefits expected. For a privately owned health care, Cost Benefit Analysis (CBA) is a necessary tool to consider in health care investments since its sole aim is to generate profits while rendering quality services to the citizens (Green, 2012) . In case it is a government run health care, CBA is not a necessary tool for consideration since it is the right of the government to ensure citizens access quality health services.
Cost effective method is a comparison between the resources injected in a health care system tally with the effectiveness of the services financed. This means that cost of resources procured for the health system has direct advantage to the services enjoyed by citizens. In this case, cost effective method is the best analysis that give best results for the government.
References
Erlangga, D., Suhrcke, M., Ali, S., & Bloor, K. (2019). The impact of public health insurance on health care utilisation, financial protection and health status in low- and middle-income countries: A systematic review. PLOS ONE , 14 (8), e0219731. https://doi.org/10.1371/journal.pone.0219731
Goddard, M. (2015). Competition in Healthcare: Good, Bad or Ugly? International Journal of Health Policy and Management , 4 (9), 567–569. https://doi.org/10.15171/ijhpm.2015.144
Green, C. (2012). Applied Methods of Cost-Benefit Analysis in Health Care. Journal of Public Health , 34 (2), 317–317. https://doi.org/10.1093/pubmed/fds009
