In this presentation, the focus will be in the field of economics. The central problem of economics involves the study of scarcity (limited choices and unlimited wants). It shows how individuals, societies, governments, businesses, households allocate their scarce resources when faced with the problem of scarcity. It is about the choices that we make and the effects of our choices on each other. Economics is highly applicable to every aspect of our lives, from the decisions we make as individuals to the structures created by governments and firms. Economics is important as it can be used to address a variety of questions and problems in the society, including the desirability of a particular financial investment opportunity, the benefits and …show more content…
Market failure arises when there is a spillover cost/ benefit onto a third party that is not directly involved in the production or consumption of the particular goods or services. The concept I would like to talk about today is about moral hazard in the healthcare system arising from asymmetric information leads to the problem of market failure.
Asymmetric information theory is originally proposed by Akerlof (1970) and further developed by Spence (1973) and Stiglitz (1975) among others. The theory states that information asymmetry creates an imbalance in power between agents in transactions; this leads to a possibility that some agents may take advantage of the situation and results in market distortion. The common forms of behavior of the agents with information advantage are adverse selection and moral hazard.
The term "moral hazard" originated from the insurance literature. In modern economics, economists understand it as a description of loss-increasing behavior that arises under insurance. In many contemporary textbooks, it is defined as a situation where there is a tendency for an individual to take undue risks because the costs are not borne by the party taking the
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In heath care, a patient whose medical cost is fully covered by his insurer/employer/government may demand any and every pharmaceuticals and other treatments that promise any benefit at all, without regard to cost, which leads to the problem of moral hazard. Thus, the question is on how much should the government finance healthcare such that it does not lead to the problem of moral hazard whereby individual over-consume healthcare and increases the burden of the government financing due to such overconsumption. The research paper, titled “Shifting the burden of health care finance: a case study of public–private partnership in Singapore” by Meng Kin Lim on Singapore discusses the approach adopted by the Singapore government, which is that of co-payment between both the individual and government through the use of the 3Ms (medishield, Medisave and Medifund). In this paper, it shows that how via the use of the 3M framework that Singapore government is able to help to subsidise the needy who are unable to pay for healthcare via the use of means-testing, but at the same time prevent individuals from over-consuming healthcare via the use of the co-payment system. The co-payment process makes the individuals think if the treatment is really necessary for them. This helps to ensure that there is no over-consumption of healthcare due to moral hazard thus increasing
Also, some individuals in the society are lazy and do not want to actively contribute to their healthcare. The universal healthcare in this regard may be projected to increase healthcare accessibility, but practically promote instances of personal irresponsibility and laziness. Additionally, people may tend to live carelessly since their health need has been taken care (Dye et al., 2013). The cost of healthcare in the country is way too high compared to the available resources and respective budget allocations.
How do we live in a world of scarce resources? And finally, when is a market free? (Loc.8 and 14). Cavanaugh anwers and addresses these issues within the “four brief chapters” of his book. Thesis
These economic concepts were scarcity and choice and self -interest. The first economic concept of scarcity and choice is seen when the authors discuss money as a limited resource. The limited resources which in this case is money by incomes that cause people to decline health insurance coverage. According to Sered and Fernandopulle, it is an individual’s choice not to get any health insurance because they cannot afford it. Sometimes it comes down to choosing to pay their bills or have proper health coverage.
Today's health care system is difficult to understand. It has undergone dramatic changes over the years. There are many changes that shift the movement from "an indemnity plan to a managed care system. " Not only has the U.S. health care system undergone dramatic changes, but as well continues to evolve to a rapid pace (Conklin, 2002).
First, there would be a decreased amount of health care costs that would be absorbed, and second, social programs would have more money in their budget to use
Furthermore, with the indication of health coverage, necessary care and improved population health
Some people are at a ton of risk, such as being old or having a history of poor health. These people in poor health are more expensive to cover simply because they hold more risk for the insurance company as they require more
This will in result increase the lifespan of the individuals in the country. According to Dye et al. (2013), socialized health care system has medical costs reduced. Currently,
Economics can be defined as “the study of (1) the allocation of material goods to satisfy material wants, (2) the market sector, and (3) the allocation of scarce means to satisfy competing ends” (Becker, 1976, p. 3). However, he explains how none of these definitions clearly explain what the economic approach is. The economic approach is distinctive because it integrates multiple disciplines to a wide variety of human behavior. For example, an economic approach can integrate the disciplines of economics, sociology, psychology, etc. Some of the main issues with the use of the economic approach to explain human behavior is there are many unknown or immeasurable events that could impact human behavior.
Health Care Law: Tort Case Study Carolann Stanek University of Mary Health Care Law: Tort Case Study A sample case study reviewed substandard care that was delivered to Ms. Gardner after having sustained an accident and brought to Bay Hospital for treatment. Dr. Dick, a second-year pediatric resident, was on that day in the ED and provided care for Ms. Gadner. Dr. Moon, is the chief of staff and oversees the credentialing of all physicians at Bay Hospital.
In advanced economies there are various ways to deal with the question of scarcity. Different countries use different approaches or types of economic system. Arguments about the merits of markets and planning proceed at different levels. For example, opponents of the market system are often found really to be attacking ‘capitalism’. Private ownership of the means of production leads, they claim, to an inequitable distribution of income and wealth and to the exploitation of labor by the capitalist class.
It is the classic example of market failure. All in all, government intervention in healthcare is due to the government intervention itself. These interventions include the patent law which deliberated to advocate innovative activity and licensure which is intended to maintain minimal standards of quality. All these contribute to the monopoly power that dominates the whole market as well. The specific person or enterprise manages to control the whole market since they are the only supplier of a particular commodity.
This is so because, universal access to health will really do good to the world and it is a Necessity in order to reduce the level of discrimination experienced in terms of finances . Universal access to health will ensure that there will be access to equitable quality health care and will also give security to those who are financially incapable at the present to afford quality health care die to their financial status. Although this may be the case in the future, there will face challenges especially in implementing the regulations that would be set up in order to enable equal distribution of medical resource and
Comparing Economic Systems There are three different economic systems Traditional, Market and Command. The survival of any society depends on its ability to provide food, clothing and shelter for its people. Due to the fact that these three societies face scarcity, which means “The state of being scarce or in short supply”, decisions concerning WHAT, HOW and FOR WHOM to produce must be made. However, another similarity is that all societies have an economy or an economy system which is an organized way of providing for the wants and needs of their people. This determines on the type of economy system they have.
Insurance is the equitable transfer of risk of a loss, from one entity in exchange of money. In today’s world, it is difficult to find a person who is not fully insured. Thus, insurance is a means to manage possible risks, as no one wants to face any type of a loss. It is evident that the insurance companies are now profiting to a greater extent since everyone wants to be on a safer side and avoid risks. This has in turn helped in the economy’s development and growth.