Ch 6-9 Flashcards
Health status production function
HS = f (HC; L; E; G)
L is lifestyle
E is environment
G is genetics
What are the three causes of increased population health
economic growth
public health and related initiatives
modern medicine
What are the 5 factors in the nature of health care as a commodity
Derived demand for health care, informational asymmetries, uncertainty, externalities, and vulnerability
Definition of a need
a need is based on the amount and types of services that are effective in improving health
Definition of a Demand
amounts of various health services a consumer desires at given prices, income, etc..
Definition of Utilization
refers to the types and amounts of different services that are actually consumed
Demand for Health Care function (7)
HC= F (tastes/preferences, price, income, prices of related good, HS (NEED), provider, quality of HC)
What did the Rand experiement show
showed that health care utilization decreases as money prices increase. Co-insurance rates make a difference in medical care utilization.
Positive and normative definitions of SID
Positive: ability of physicians to shift demand curves
Normative: systematic exploitations of market power by physicians for their financial interest in response to market condition or health care policy
Expected Utility Equation
Expected Utility= p1U1+p2U2 Where p is probability
Expected wealth Equation
EW =W1p1+W2p2 where p is probability and W is wealth associated with probability
2 types of Moral hazard
Ex ante, people live unhealthy knowing they are covered
Ex post, over consuming health care knowing you are covered
2 types of risk selection
Adverse risk selection, low risk drop out leaving only high risk
Cream skimming, actions are taken to insure only low risk individuals are in the pool
