What are the economic tools and concepts that can be used to evaluate a current issue in today’s healthcare industry?

  

Writea 1,050- to 1,400-word paper that uses two to three economic tools and concepts to evaluate a current issue or situation that exists in todays health care industry. Some examples of economic tools and concepts are supply and demand curves, marginal analysis, and elasticity. Include a narrative summary for any charts, graphs, and figures that are used. Consider searching websites to view national charts, graphs, and figures that may provide you data concerning economic tools.Citea minimum of three references.Formatyour paper consistent with APA guidelines.Clickthe Assignment Files tab to submit your assignment.Health Economics and Financing, 5eChapter 7: Health Economics and Financing, 5eISBN: 9781118184905 Author: Thomas E. GetzenCopyright John Wiley & Sons, Inc. (2013)

Introduction:

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In the United States, the health care industry is one of the largest and fastest-growing sectors of the economy. However, it is also a complex and costly industry with significant challenges. The rising cost of health care, the aging population, and the increasing prevalence of chronic diseases are among the issues that confront the industry. Therefore, it is vital to evaluate the health care industry using economic tools and concepts. This paper will apply two economic tools and concepts to examine a current issue that exists in today’s health care industry.

Description:

To evaluate a current issue in the health care industry, this paper will analyze the pricing strategy for prescription drugs in the United States. The high cost of prescription drugs has been a significant concern for patients, policymakers, and healthcare providers. The United States spends more on prescription drugs compared to other countries, and the prices continue to increase every year. Therefore, this paper will examine the pricing strategy of pharmaceutical companies in the United States using two economic tools: supply and demand curves and elasticity.

Firstly, this paper will use supply and demand curves to analyze the pricing strategy of pharmaceutical companies. The supply curve shows the quantity of a good or service that producers are willing to produce and supply at a specific price level. On the other hand, the demand curve shows the quantity of a good or service that consumers are willing to buy at a specific price level. The intersection of these two curves determines the market equilibrium price and quantity. Therefore, this paper will use the supply and demand curves to analyze the market structure for prescription drugs in the United States.

Secondly, this paper will use elasticity to examine the pricing strategy of pharmaceutical companies. Elasticity measures how responsive the demand or supply for a good or service is to changes in price, income, or other factors. In the case of prescription drugs, the price elasticity of demand measures how sensitive patients are to changes in drug prices. If the price elasticity of demand is high, patients are more likely to switch to cheaper medications or reduce their consumption. On the other hand, if the price elasticity of demand is low, patients are less likely to change their medication use, even if the prices increase. Therefore, this paper will use elasticity to determine how sensitive patients are to changes in drug prices and how pharmaceutical companies can use this information to adjust their pricing strategy.

In conclusion, this paper will apply two economic tools and concepts: supply and demand curves and elasticity to evaluate the pricing strategy for prescription drugs in the United States. By examining the market structure and the price elasticity of demand, this paper aims to provide insights into the factors that drive prescription drug prices and the role of pharmaceutical companies in the healthcare industry. The paper will also analyze the implications of the high cost of prescription drugs for patients, healthcare providers, and policymakers.

References:

Getzen, T. E. (2013). Health economics and financing. John Wiley & Sons.

Lu, J. F. R., & Hsiao, W. C. (2003). Does universal health insurance make health care unaffordable? Lessons from Taiwan. Health Affairs, 22(3), 77-88.

Pauly, M. V. (2004). The economics of moral hazard: commenting on Nyman. Health economics, policy and law, 3(2), 167-171.

Objectives:

1. Use economic tools and concepts to evaluate a current issue or situation in the healthcare industry.

2. Analyze the impact of economic tools on the healthcare industry.

3. Understand the impact of changing supply and demand curves, marginal analysis, and elasticity on the healthcare industry.

Learning Outcomes:

1. Students will be able to demonstrate an understanding of economic tools and concepts, including supply and demand curves, marginal analysis, and elasticity.

2. Students will be able to apply economic tools and concepts to evaluate a current issue or situation in the healthcare industry.

3. Students will be able to analyze the impact of economic tools on the healthcare industry.

4. Students will be able to describe the impact of changing supply and demand curves, marginal analysis, and elasticity on the healthcare industry.

Headings:

I. Introduction

II. Economic Tools and Concepts

A. Supply and Demand Curves

B. Marginal Analysis

C. Elasticity

III. Evaluation of a Current Issue or Situation in the Healthcare Industry

IV. Impacts of Economic Tools on the Healthcare Industry

V. Changing Supply and Demand Curves, Marginal Analysis, and Elasticity in the Healthcare Industry

VI. Conclusion

VII. References

Solution 1: Using Marginal Analysis and Elasticity to Evaluate the Impact of Prescription Drug Prices on Healthcare Costs

One current issue in the healthcare industry is the rising cost of prescription drugs. Many patients and insurers struggle to afford the high cost of medications, while pharmaceutical companies argue that the costs are necessary to fund research and development. Using the economic tools of marginal analysis and elasticity, we can evaluate the impact of prescription drug prices on overall healthcare costs.

Marginal analysis involves examining the additional cost or benefit of producing or consuming one additional unit of a good or service. In terms of prescription drugs, this means analyzing the cost and benefit of producing an additional pill. Pharmaceutical companies argue that the high prices of prescription drugs reflect the high cost of research and development. However, it is difficult to determine the exact cost of developing a new drug, as companies often spend large sums of money on marketing and advertising. Therefore, it is necessary to consider the marginal cost of producing an additional unit of a drug relative to the marginal benefit.

Elasticity refers to the responsiveness of demand to changes in price. In the case of prescription drugs, if demand for a particular drug is highly elastic, it means that consumers are highly responsive to changes in price. If the price of a drug increases, consumers may choose to switch to a cheaper alternative or forego the medication altogether. On the other hand, if demand for a drug is highly inelastic, consumers may continue purchasing the drug even if the price increases.

Using marginal analysis and elasticity, we can see that if the cost of producing an additional unit of a prescription drug is low relative to the benefit of the drug, pharmaceutical companies may be able to charge high prices without significantly impacting demand. However, if the cost of producing an additional unit is high relative to the benefit, high prices may drive consumers to cheaper alternatives, leading to lower sales for pharmaceutical companies. Additionally, if demand for a particular drug is highly inelastic, consumers may continue purchasing the drug even if the price increases, leading to higher healthcare costs overall.

Solution 2: Using Supply and Demand Curves to Evaluate the Impact of the Affordable Care Act on Insurance Premiums

Another current issue in the healthcare industry is the impact of the Affordable Care Act (ACA) on insurance premiums. The ACA aimed to increase access to healthcare by expanding insurance coverage and reducing costs. However, critics argue that the law has led to higher insurance premiums for many Americans. Using the economic tool of supply and demand curves, we can evaluate the impact of the ACA on insurance premiums.

Supply and demand curves illustrate the relationship between the price of a good or service and the quantity demanded or supplied. In the case of insurance premiums, the demand curve represents the relationship between the price of insurance and the quantity demanded by consumers, while the supply curve represents the relationship between the price and the quantity supplied by insurance companies.

The ACA aimed to increase the number of insured individuals by mandating that all Americans purchase insurance or pay a penalty. This increased demand for insurance, shifting the demand curve to the right. However, the law also placed limits on insurance companies, such as requiring coverage of pre-existing conditions and limiting the amount of profit that companies could make. This decreased the supply of insurance, shifting the supply curve to the left.

Using supply and demand curves, we can see that the increased demand for insurance and decreased supply have led to higher prices. However, the impact of the ACA on insurance premiums may vary depending on individual circumstances, such as income level and location. Additionally, other factors, such as the aging population and increased healthcare utilization, may also contribute to rising premiums. Therefore, it is important to continue evaluating the impact of the ACA on insurance premiums and healthcare costs overall.

Suggested Resources/Books:

1. Health Economics and Financing by Thomas E. Getzen: This book provides detailed information about the economics of healthcare and financing options available in the healthcare industry.

2. Health Economics by Jay Bhattacharya, Timothy Hyde and Peter Tu: This book explains how healthcare economics works and teaches readers about the different economic models used in healthcare.

3. Introduction to Health Economics by Barbara McPake, Charles Normand and Anne Mills: This book is a great introduction to health economics and explains the different types of analysis used in healthcare economics.

Similar Asked Questions:

1. What are some of the economic tools and concepts used in evaluating the healthcare industry?
2. How do supply and demand curves impact the healthcare industry?
3. What is marginal analysis and how is it useful in healthcare economics?
4. What is elasticity and how does it impact the healthcare industry?
5. Can you provide examples of national charts, graphs, and figures that are useful in health economics and financing?

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