Health is a Durable Good: How to Invest in Your Health

The answer to question one 

Health is a durable good and is desired for two purposes namely consumption and investment. People demand health for their satisfaction utility. From the perspective of consumption, people demand health because it improves the quality of their life. The improvement in quality is the utility associated with the improvement in health. As an investment good, it means that investing in good health produces returns because the consumer has less sick days and more healthy days to work and earn income. However, as a person spends in health, the health improves significantly initially up to a point; therefore, from that point, additional investment does not produce commensurate improvement in health due to the law of diminishing marginal utility (Piketty & Saez, 2014). For a sick person, the price elasticity of demand would be low or inflexible. That person has little choice due to his or her poor health status. However, for a healthier person, he or she has more options. After all, he is not that sick and can wait if the prices of health-related goods are too high until they stabilize. The same person can even fly overseas to get treatment at a lower cost. 

The answer to question two 

Moral hazard defines a situation where a person has an incentive to take risks that others will pay for it (Leaver, 2015). A good example is the bankers who caused the financial crisis in 2007/2008. The incentives in the banking system encouraged them to create complex financial products bad on subprime mortgages. They knew the underlying assets were toxic and could create problems, but in a case of collapse, shareholders and the general economy would shoulder all the risk. I agree with the concept because in some instances, such as in the example I have provided above, moral hazard is clear. The main determinants of health disparities are wealth/income, education, and government policy. Wealthier or high-income people have the money to pay for health insurance, and poor people do not have the same. Higher education is associated with higher income. Also, education means better compliance with the physician instruction and higher awareness of one’s needs; hence, they seek preventive care which is vital to address chronic conditions such as cancer. Government policy underpins access to health insurance and other supportive measures meant to produce greater inclusion on health matters. 

The answer to question three 

This law states that adding inputs to a process initially leads to high gains in output until a certain point in which additional inputs does not lead to as much improvement gain in output. In the short run, the law holds. However, in the long term, the law may not hold because improvement gains can be made by investing in new technology (Weitzman, 2008). In the short run, it is not possible to make such an investment that will boost productivity. The supply curve of physicians is impacted by the long years it takes to train them, and the growth of new schools for training doctors does not match the demand for their services. 

Moreover, long working hours and low pay, considering the time spent in the medical school, discourages young people train as doctors. Low pay affects the supply of doctors along the supply line. However, for the fewer students taking up medicine, that factor shifts the supply curve of doctors to the left and thereby creating shortages. 

The answer to question four 

I agree with those sentiments. Over the years, the shortage of doctors has become acute. The number of young people training as doctors is not as high as needed to address the deficit. Moreover, even with the doctors available, only a few focus on the primary case, preferring specialties such as internal medicine, oncology, and a few other specialties considered lucrative (Green, Savin & Lu, 2013). In the meantime, the training of nurses has improved over the years. Most nurse practitioners and physician assistants are excellent and highly trained which makes them good candidates for replacing physicians on primary care (Bodenheimer & Smith, 2013). In most states, most nurses cannot even make prescriptions, which is wastage of talent given their high level of training. Nevertheless, with most states coming to terms with the reality of physician shortages, nurse practitioners and physician assistants are now taking responsibilities reserved for physicians only. I, therefore, I agree with physicians are overburdened and shifting some of their duties to other healthcare professionals is the right way to go. 

The answer to question five 

If all the statues limiting the activities of physician assistants were eliminated, things would improve. According to the theory of demand and supply, the increased supply of a good lowers the price. Currently, the limitations make it impossible for competitors to physicians to enter the market leading to shortages (Green, Savin & Lu, 2013). The shortages make the services of doctors artificially high consequently. Therefore, if the limitations were removed, the cost of medical services currently offered by physicians would go down. Physicians would offer the needed competition to lower the costs. The cost of healthcare would also go down. Another benefit is that patients would get services faster compared to the current situation. Also, most of the students who attend medical schools for training in primary care would prefer to enroll as physician assistants and that would lower the demand for medical education. Thus, on the cost of training of doctors, the heightened competition would medical schools would lower the cost of training physicians. 

References 

Bodenheimer, T. S., & Smith, M. D. (2013). Primary Care: Proposed Solutions To The Physician Shortage Without Training More Physicians. Health Affairs, 32 (11), 1881-1886. doi:10.1377/hlthaff.2013.0234 

Green, L. V., Savin, S., & Lu, Y. (2013). Primary Care Physician Shortages Could Be Eliminated Through Use Of Teams, Nonphysicians, And Electronic Communication. Health Affairs, 32 (1), 11-19. doi:10.1377/hlthaff.2012.1086 

Leaver, A. (2015). Fuzzy knowledge: An historical exploration of moral hazard and its variability. Economy and Society, 44 (1), 91-109. doi:10.1080/03085147.2014.909988 

Piketty, T., & Saez, E. (2014). Inequality in the long run. Science, 344 (6186), 838-843. doi:10.1126/science.1251936 

Weitzman, M. (2008). Utility Analysis And Group Behavior An Empirical Study. Efficiency of Racetrack Betting Markets World Scientific Handbook in Financial Economics Series, 47-55. doi:10.1142/9789812819192_0009