Exchange In Health Care Essay

One way health insurance change the typical market exchange is because the presence of health insurance involves three players instead of two. In general, in a typical market exchange, there is a consumer (buyer) and supplier (seller). A consumer purchases a product, which the supplier sells. However, in a health care transaction is not as simple because the third player (insurer or third party payer) pays for all or partially for the health care transaction. As a result, the consumer does not bear the full cost of receiving health care services. The presence of health insurance had changed the typical market exchange because of the type of events that led to a medical transaction. These events include the diagnosis and treatment being unknown initially when a patient seek medical services and the patient's response to

In addition, it is difficult for the patient to weigh his/her preferences for medical services as compared to other goods and services, and it makes it difficult for suppliers to know which goods and services will be demanded and at what price they can sell their goods and services. Health insurance in the market exchange affects supply and demand in health care as well based on the previous statement and because of other factors that the presence of health insurance creates in healthcare economics, such as supplier induced demand and moral hazard.

2. Summarize both demand and supply in the healthcare economics context. For example: Describe factors that change demand. How does cost affect the level of supply?

Demand and supply are two important concepts in healthcare economics. They are two factors that affect the consumption and production of goods and services based on changes in price. First let’s talk about demand. Demand is the quantity of goods and services that a consumer is willing and able to purchase over a specified time. As price of good or service