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Concepts that define financing health care including risk, demand, and elasticity - Essay Example

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Financial health care is a major subject in the economy of any government and more so a matter that every individual seeks to get acquainted with, both the patients and the hospital owners especially. Health care is categorized as a primary human want as it is a vital factor…
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Concepts that define financing health care including risk, demand, and elasticity
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CONCEPTS THAT DEFINE FINANCING HEALTH CARE College Concepts That Define Financing Health Care Including Risk, Demand and Elasticity
Financial health care is a major subject in the economy of any government and more so a matter that every individual seeks to get acquainted with, both the patients and the hospital owners especially. Health care is categorized as a primary human want as it is a vital factor that claims lives of many if not taken seriously. However, it is important to note that health services are provided by both the government and private wings but are never free in most cases. Knowledge on how to finance health matters is therefore crucial. Financial health care comprises the funds that come about to purchase drugs by the pharmaceuticals and at what price they sell the drugs to the patients.
The whole mechanism in the health sector is a cost share sort of scheme. The consumers who are the patients in this case give the lowest contribution in most government based health centers universally. Conversely, there are a number of risks observed by the health centers and also the patients. One possible financial risk suffered by medical institution is the likelihood of drugs lacking consumption and they end up expiring while on storage if they appear to be expensive to the patients. On the other hand, the patients risk death if they fail to purchase certain drugs or fail to receive certain treatments due to their financial hiccups. An impact of financial risk is severe to the consumers or rather patients in the health sector.
Another factor that defines how to finance the health care sector is the demand of the treatments and also the drugs. Demand of services and goods like any other sector of an economy is affected by both the price and quantity of the goods or services among other factors. While financing the health sector, the main factor affecting demand is the necessity of the drug or treatment by the patients followed by the price. This trend in the health sector is less likely to be observed in other markets. Patients will demand for a particular drug or treatment depending on whether it is necessary or not and in most cases the chronic diseases bring the highest demand in their treatment and purchase of their drugs. For instance, diseases like asthma or cancer tend to show high demand for their treatment.
Elasticity of a product or a service portrays the responsiveness of either of the two in relation to changes in their prices. In most cases the elasticity is usually negative or less than whereby minimal change in price greatly affects the quantity of product or availability of the service in demand. Free checkups by health care’s result to large turnout of patients or reduced price will lead to more patients opting to buy the drugs. However, this is not always the case as earlier stated, health matters are taken care of with necessity therefore even a slight increase in the price of a certain treatment or drug does not reduce its elasticity. This is because there are no many substitutes in the health sector.
In essence the concepts involved in determining the financial mechanism in health care comprises of all members of the society contributing a share of the amount needed. Nonetheless, the patients lack of many options and also the health sector can be monopolistic since their services are a must have for many people. Risk is therefore to be avoided as much as possible by the consumers as compared to the pharmaceuticals. Laws of demand and elasticity in health care tend to deviate from the expected trends in other sector of the economy. For instance, demand is mostly stable and prices do not make any significant impact. The concepts are crucial for those providing services in the health sector.
References
Street, A., Jones, A., & Furuta, A. (January 01, 1999). Cost-sharing and pharmaceutical utilisation and expenditure in Russia. Journal of Health Economics, 18, 4, 459-472. Read More
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