Economic Tools and Concepts Paper

1460 Words Feb 15th, 2011 6 Pages
Economic tools and concepts paper
Nadine Ranger
November 29, 2010
James Hamilton
Economic Tools and Concepts Paper One of the most prominent topics in the society today is health care reform and government plays a large role in regulating managed health care systems. A vast difference between movement along and shift in the demand curve for the different health care systems. For instance, the government funds Medicaid and Medicare to provide services to the indigent and disabled population. However, many factors exist that influence the control of health care spending from an economic standpoint. The objective of this paper is to discuss the role of government and the supply and demand curves concept to show the
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However, drastic changes occurred over the past decade. The change created an overwhelmingly shift toward managed care systems, which seek to reduce unnecessary healthcare costs. Employers trying to reduce insurance costs are quickly switching to managed care plans. The demand for healthcare expands because of changes in the aging population, increasing incomes, and improvement in medical technology. Elderly people demand more healthcare and healthcare systems must supply the expected quality of healthcare. The improvement of medical technology largely increased treatments to enable people to have a good quality of life. The resource factors such as land, labor, income, capital, goods, and services cause shifts in managed care. The increase in the health care price reduces people’s income and this means that the healthcare price is more expensive compared to other goods and services. An increase in income results in an increase in demand and vice versa. However, a reduction in income will decrease the quantity of healthcare treatments. The relationship between price and quality of healthcare demanded indicates the quantity of healthcare services that can be obtained at a feasible price. A change in price leads to a movement along the demand curve. For example if the price of eye surgery rose significantly, then people would seek another alternative of treatment. This would lead to a fall in the demand, but when income increase or prices of

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