Economics 415 Health Care Economics

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Economics 415Health Care Economics

• Introduction

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• Health care expenditures rising

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• Health expenditures per capita rising

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• Health Care Expenditures, as percent of GDP
  rising

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• Health Care Quantity Health Care Expenditures
  (per capita) / Health Care CPI, so 1 unit what
  100 would buy in 1982-84

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• Health Care and Law of Demand Quantity demanded
  decreases as relative price increases
• Relative Price of Health Care, Med CPI/All but
  Med CPI

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• Law of Demand Relative Price vs. Quantity
• Is this a Demand Curve?

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• Why would relative price and quantity both go up
  over time?
• Supply Change?
• Demand Change?
• Why do the changes in S or D that we see occur?

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• Traditional Health Insurance paid (a large
  percentage) for whatever expenses a person
  incurred, say 80
• Imagine Beer Insurance
• Suppose someone else paid 80 of your beer tab
• You would pay fixed monthly premium, but would
  get unlimited beer access
• Would you buy beer insurance if you thought you
  werent going to drink that much?

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• What happens in this kind of market?
• Who would be willing to sell beer insurance?
• Solution sell only to those you dont expect to
  drink much
• Very buyers who dont think the premium is worth
  it, those who expect to be low consumers of beer

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• Beer insurance companies refuse to insure college
  students
• BTW, only brewers with 3.8 UG GPA can get into
  brewers school, which takes another 6 years to
  complete
• College students rally to enact Beercare
• As demand rises, prices rise, insurers worry
• Next step Control who or where insured beer
  buyers can buy

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• Your paper????