Elasticity In Healthcare

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The article starts off by stating that medical care expenditures have risen from four to almost eleven percent over the last four decades, which it is primarily due to the spread or increase in health insurance. Health insurance automatically raises demand for health services in regards to higher quality and also the amount of services demanded, which in turn leads to high healthcare expenditures. The author states that no one in specific has been able to show a link between the spread of health insurance that can quantitatively account for the most of the rising healthcare costs. In turn, he states that if there is no proof of this link, then the notion that inaccurate prices due to health insurance are causing excess resources in medical …show more content…
This concept of price elasticity is stated in our text and also throughout the foundation of general economics. As a general rule of thumb, price elasticity of demand is a measure showing the responsiveness of a certain quantity demanded and how its elasticity is affected when it comes to a change in …show more content…
Now this ideology may align for some individuals, but not all. For example, I had a friend (who was also my former coworker) who quit a good paying job that was only part-time to find a full-time job that provided health coverage because for him health insurance is important and his demand for healthcare seemed more important than his salary. Others may view insurance as exogenous, by ignoring this ideology which research has shown that the demand for medical care correlates to insurance induced variation in price. This author is presenting various theories as to why and how insurance can affect demand and cost of healthcare. This can show relating back to our text that there can be a number of things that contribute to rising healthcare costs; it may not just be one factor. The author also states that certain samples taken in studies may not represent the general population which is the case in many studies done throughout

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