Presenter: Joseph Reid Paper: The Market for Health Care Date : 6/04/07.

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Presentation transcript:

Presenter: Joseph Reid Paper: The Market for Health Care Date : 6/04/07

Primary Considerations 1.Consider differences in the market for health care. 2.Identify market failures and market provided solutions. 3.Look at the types of firms in the market. 4.Compare efficiency of these firms. 5.Consider policy implications.

Lit. Overview 1.Market is complex due to market failures. 2.Both the number and types of firms in the market matter. 3.There are many different ways to analyze policy.

Demand Unstable Risk Inelastic

Supply 1.Existence of Geographic Monopolies 2.High Operating Expenses 3.Different types of firms have different goals.

Information and Insurance Asymmetries of information exist Expectations of consumers and producers may differ Insurance is purchased to help eliminate risk.

Incentives 1.Firms may either maximize profits or maximize quality. 2.If maximizing profit then the firm will want to identify the consumers willingness to pay and provide exactly this much service. 3.Consumers don’t really know what is going on and whether they are receiving the top quality service.

Firm Goals and Nonprofits Goals are to either maximize profits or maximize quality Nonprofits waive rights to profit and therefore maximize quality without regarding cost. This leads to higher prices. Exist for two reasons: –1. Consumers want high quality regardless of price –2. Due to altruistic goals of employees and charitable donations, nonprofits are actually able to offer services at competitive or below competitive costs.

Health and Growth Health care has been seen to aid in the growth rate of countries both theoretically and empirically. Having a healthy population ads to productivity and the happiness of its citizens; therefore, this suggests that the government should indeed spend money on health care.

Policy Policy 1: Spend equally on basic needs for survival and longevity. Policy 2: Spend on reducing the risk and cost for high risk patients to lower insurance and medical care costs for both groups. Policy 3: Use quality of life assessments and a cost-benefit analysis like method to analyze the impacts of policies and compare them to determine the best policy.

Conclusions The health care market faces several market failures and has a complex structure that causes hardship for consumers. Health care is important for a societies growth and well being. There is disagreement as to how money should be spent; however, progress is being made towards finding methods of policy analysis that can be implemented easily and effectively.