Essay on Economic Tools and Concepts

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Economic Tools and Concepts As one leader in the free world more money is spent on health care in this country than any other industrialized nation. The major expense to the health care system is managing chronic diseases and illnesses. Each year trillions of dollars are spent on health care, which continues to be an economic burden in this country. The impact on the economy can be attributed to increasing health care costs, declining health of Americans, and decrease productivity among workers (Preventive Medicine, 2009). The goal of this paper is to discuss the various economic tools and concepts such as supply and demand curves and price elasticity, and marginal analysis in the managed health industry. The government has poured…show more content…
Any change in cost leads to a movement along the demand curve. For example if the cost of bariatric surgery rose significantly, many obese people would seek another means of treatment for weight loss. So if the income increases and the price of the surgery decreases there will be a shift in the demand curve. Demand Management is an additional way to manage health care costs. Through this approach, the patient decides his or her health care with or without the provider’s support. Demand management assists clients in managing their need and demand for health care services. By providing self-care information such as advice lines, self-care videos, workshops, and publications, the consumer will be able to make informed medical decisions (AIPM, 2011).
Medical Price Elasticity

The curve’s elasticity is dependent on the degree to which the demand or supply curve responds to the change in price. The price elasticity will provide an estimate on the effect of consumer demand changes in regards to price changes. “For instance, the price elasticity of medical service is defined as the percentage change in quantity of medical care demanded divided by the percentage change in price of the same product” (Health Economics, 2010, para 3). Based on this definition the price elasticity for medical services is between zero and negative one, so if the costs increase by 10%, the demand for medical services should
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