Quiz : Special Topic 9 Earnings Differences Between Men and Women

Business

The third party payment and scarce supply of medical services has increases the spending and prices of the medical care in US. This becomes a great concern and debate among the economists. The third party payment method had also increases the inefficient use of resources leading to wastage and some times over consumption of the health care services in the US. The third party payment by insurance companies and government had increases the demand and price of medical services for two reasons: 1. The subsidies and the third party payments decrease the out-of-the-pocket payment of the consumer and the consumer faces a lower price of the medical care. This increases the demand for these services and the price of these services increases. The medical care, on the other hand, is subject to inelastic supply. Thus, increase in price does not affect the prices much and the prices keep on increasing. 2. The decrease in out-of-the-pocket payment also decreases the incentive of the consumer to find a service that is worth its value and the supplier loses their incentive to provide the service at lowest cost. The consumer opted for the best regardless of prices because they do not have to pay the fees. The suppliers also charge higher prices as they know it will not affect its demand. In this way the general price of medical services continue to rise.

The third party payment and scarce supply of medical services has increases the spending and prices of the medical care in US. This becomes a great concern and debate among the economists. The third party payment method had also increases the inefficient use of resources leading to wastage and some times over consumption of the health care services in the US. The employers provide the medical insurance as a compensation package for the employees. This is the part of the total cost incurred by the employer for each employee. If the benefit from the employee exceed or equal to the cost of hiring the person, he will be hired and not otherwise. Then the compensation package is earned by the employees and not a gift.

The third party payment and scarce supply of medical services has increases the spending and prices of the medical care in US. This becomes a great concern and debate among the economists. The third party payment method had also increases the inefficient use of resources leading to wastage and some times over consumption of the health care services in the US. The politicians want to provide the medical care for free. But each service has a certain cost of operation and service. The countries where the government provides health care as a public good imposes politically imposed restriction and other non-price methods to ration the health care services. Thus the health care cannot be provided for "free" and neither one can force anyone to provide any service for free. Because, each service needs resources and as resources are scarce it has certain value attached to it. If we force someone to provide the service for free, the incentive of the service provider will be none and the service will be inefficient one.

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