Economic Tools and Concepts As one leader in the free world more money is spent on health care in this country than any other industrialized nation. The major expense to the health care system is managing chronic diseases and illnesses. Each year trillions of dollars are spent on health care, which continues to be an economic burden in this country. The impact on the economy can be attributed to increasing health care costs, declining health of Americans, and decrease productivity among workers (Preventive Medicine, 2009). The goal of this paper is to discuss the various economic tools and concepts such as supply and demand curves and price elasticity, and marginal analysis in the managed health industry. The government has poured
These commodities are likely to be more of a necessity to the consumer in his or her daily life such as basic necessities (Investopedia, 2011). “Income elasticity measures the percentage change in the demand for medical services as income increases. If the income elasticity is greater than one, medical services are a luxury good” (Health Care Economics, 2010, para 3). As the consumer becomes wealthier, they want more of what is deemed good. A good or service such as physicians or managed care is considered to be highly elastic if a small change in price leads to a sudden change in the quantity demanded or supplied. Generally products of this nature are easily accessible in the market, and a person may not necessarily need in his or her daily life (Investopedia, 2011).
Marginal Analysis Will the implementation of preventive health services conserve government spending or denote a worthy investment? This appears to be the topic of debate in how best to lower health care costs in this country. A Florida Department of Health Study examined 20 proven preventive services and determined how much money would be saved if these services was implemented. Some of the services used in the study included immunizations, screenings for breast and cervical cancer, “tobacco cessation screening, alcohol abuse screening, and daily aspirin use” (Maciosek, Coffield,