Positive Externalities In Health Care

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Externalities Externalities are considered to be any impact on people who are not involved in an economic transaction. Externalities can be positive or negative. In the healthcare industry, there are positive and negative externalities due to the care that’s provided to other people. The people who are not directly involved in the treatment benefit from others being healthy because it decreases the chance of them catching the same illness. This is one of the many positive externalities that exist from others receiving health care services. Additional positive externalities include health affects wealth, technology, and vaccinations. “Healthy workers are absent from work less and are more productive workers. A health care market that effectively …show more content…

“An interesting byproduct of the newer solutions to medical dilemmas is the slowly growing resistance of antibiotics in bacteria (“Externalities”, 2016)”. The person who is affected by the negative externality concerning the use of antibiotics by others will see it as lowered utility: either subjective displeasure or potentially explicit costs, such as higher medical expenses in the future to treat infections that could have otherwise been treated easily at a lower cost (Ditah, 2011). In order to mitigate antibiotic resistance, healthcare workers should stop prescribing antibiotics unless it’s truly necessary. Additionally, the government should make more of an effort to tackle antibiotic resistance. People should also be educated about how overuse is …show more content…

Most positive externalities do not need mitigation. However, subsidies would help the directly and indirectly affected individuals. “Subsidies involves the government paying part of the cost to the firm (Pettinger, n.d.)”. When a price of a good is reduced, it encourages consumption. “A subsidy shifts the supply curve to the right (Pettinger, n.d.)”. Free universal health care would help ensure that everyone gets vaccinated (Pettinger, n.d.). “This prevents the spread of infectious disease, which benefits everyone (Pettinger, n.d.)”. So, this creates a personal benefit from other people being healthy (Pettinger, n.d.). Positive externalities also can create a free rider problem. “For example, individuals who are vaccinated reduce the risk of contracting the relevant disease for all others around them, and at high levels of vaccination, society may receive large health and welfare benefits; but any one individual can refuse vaccination, still avoiding the disease by “free riding” on the costs borne by others (Ditah,

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