Health Economics Task As prices increase, health economists should advocate giving something up because demand will decrease, and this means there will be little to spend on other important resources. The cost of health services is on an upward trend and health economists advise that this may go on for a while. Most Americans nowadays cannot afford to pay their medical bills in time also had difficulty paying mortgages, rent and up keep expenses (McKay & Deily, 2008). This means that they will reduce their spending on some products and health care products could be one.
Research on the relationship between the cost of health care and the outcome has proved to be mutually exclusive. The higher the cost of health care the better the quality of medical services (McKay & Deily, 2008). As more health services are offered, there is a tendency of reduced satisfaction after a period of time. Hospital managements should use all available resources to cater to more patients to maximize the utility of unit costs by using marginal analysis. This way, marginal benefits can be controlled so that they do not reduce with increased quality of health care. Trade offs in healthcare arise when healthcare providers substitute various resources, such as delivery for cheaper ones so that they can reduce the costs of their operations.
This makes their expenses to be minimal: hence, they become profitable (Schlander, 2006). The rising costs of health care has led to opportunity costs of luxuries and reduced expenses on food and transport to cater to medical bills. Despite having medical insurance coverage, most families are still finding it very expensive to pay for health care. Normative economics applies subjectivity on its analysis of situations whereas positive economics use real facts of economic systems to derive observations and conclusions.
The decision to increase the healthcare services can best be handled by positive economists. This is because health care is affected by real situations and being biased will lead to wrong decisions. Moreover, it should be in a marker economy where the forces of demand and supply can determine how much health services to provide. The higher the demand for health services by consumers the more health care providers will be compelled to supply.
A planned economy cannot be entrusted to fully make the decision for it uses pre determined criteria such as need based on past data. Health care is a microeconomics issue. Microeconomics explores how companies and individuals make decisions on how to use their resources for production. Macroeconomics looks at how the resources are allocated to the whole economy. It studies the whole industry and not specific companies or individuals. However, micro and macro economics are interdependent. General changes in the economy affect health care.
If the rate of inflation increases, the price of health services is bound to increase. An increase in price leads to low demand for health services, which in turn would lead to low supply. Increasing the quantity of health services would increase production efficiency. This would mean more doctors and nurses and thus more supply for the increasing demand of better health services. With a larger pool of health professionals would also allow for competition, which would pave way for technological and medical advancements in the health sector. References McKay N.
L. & Deily, M. E. (2008). Cost Inefficiency and Hospital Health Outcomes. Health Econ. 17 (7): 833-48. Schlander, M. (2006). Normative Health Economics? Retrieved on February 23, 2012 from: