the demand for healthcare

Order Instructions
This week, you will study about the demand for healthcare. The common sense view is that people seek medical care when they fall ill. Within an economic model, health may be viewed as a stock that is inherited by individuals, which depreciates over time—at an increasing rate after a stage in one’s life. Individuals demand health as a consumption commodity as well as an investment commodity. As a consumption commodity, we want good health for its own sake because it makes us feel better and contribute to our enjoyment of or satisfaction with life. As an investment commodity, we want good health because of what results from it. When we are healthy, we are productive, and we generate income.

Your Learning Objectives for the Week:

Explain how key economic elements of the US economy impact the healthcare delivery system

You are a member of a presidential commission appointed to consider a mandatory national health insurance plan, and the question of how to fund the plan is being discussed.

Specifically, three distinct funding mechanisms are being considered to cover the cost of the plan. Each mechanism will generate approximately $4,000 per year on average per income earner. The funding mechanisms include:

Think about funding plans from the perspective of three workers:

A flat rate premium
A doubling of the current 7.65% Social Security payroll tax
A 7% increase to income tax
Consider these three funding mechanisms from the perspective of three different representative income earners:

A. Person A – earns $25,000 per year
B. Person B – earns $25,000 per year with an additional $1,000 in investment income
C. Person C – earns $85,000 per year with an additional $10,000 in investment income
Create a simple 3×3 matrix that outlines the considerations for each combination of funding mechanism (1, 2, 3) and income earner (A, B, C) to guide your thoughts. Based on these considerations, answer the following questions:

Which of the three funding mechanisms (1, 2, 3) do you support, and why? Be sure to describe the relative financial burden each funding mechanism imposes on each of the income earners.
How has the emergence of different types of health insurance plans (e.g. HMO, PPO, EPO, POS, HDHP) affected trends in demand for health care services?
List and describe various economic and societal factors that affect demand and pricing for health care services in today’s market
Submit your 3×3 matrix along with your responses to the discussion questions.