Economic Concepts in Health Care Spending Research Paper

Pages: 4 (1261 words)  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics  ·  Written: October 6, 2019

First and foremost, the major health insurance programs, Medicaid and Medicare are negatively impacted. Faced with increasing health care expenses governments might try to reduce health spending by decreasing eligibility for public health insurance, as a result of increasing uninsurance rates amongst households. In addition, there is the impact of decreased reimbursement to medical providers by the government, an increase in patient cost-sharing, decreasing the eligibility and kindness of public insurance and also a decline in government expenditures on other sectors of the overall economy (Cooper and John, 2011).

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Identify TWO Economic concepts that can be used to evaluate the trade-off between health care and other economic goods and services. In doing this: Define the economic concept completely Apply the economic concept to the current issue of rising health care spending and trade-offs

Research Paper on Economic Concepts in Health Care Spending Assignment

One of the economic concepts that can be used to evaluate the trade-off between health care and other economic goods and services is opportunity cost. Basically, the opportunity cost of the action takes into account the value of the best foregone alternative action. Notably, opportunity cost arises owing to the reason that numerous resources are scarce and have alternative uses. The choice and selection of one action, therefore, more often than not implies that an alternative action will be foregone. In regard to the trade-off between health care and other economic goods and services selecting factors of production for a particular purpose, for instance, additional health care services imply that there is the loss of the capacity to use such factors of production for other purposes, for instance, additional educational services within the nation. The opportunity cost of dedicating resources for the production of a good or service takes into account the benefits that are forgone from those similar resources not being utilized in the “next best alternative.” The economic cost is a summation of implicit and explicit costs. On one hand, explicit costs encompass the actual monetary payments for products or services. Basically, these are the inputs for production. On the other hand, explicit costs encompass the opportunity costs (University of Maryland, 2019). The trade-off can be explained using opportunity cost in that when the government allocates greater funding for health care, it implies that other sectors will have to be foregone or be allocated lesser funding.

A second economic concept that can be used to evaluate the trade-off between health care and other economic goods and services is the marginal principle. This economic concept encompasses the comparison of the marginal cost against the marginal benefit of a particular decision. The marginal principle asserts that the level of an activity should be increased in the event that its marginal benefit surpasses its marginal cost. However, the level of an activity should be reduced in the event that the marginal cost surpasses the marginal benefit. If conceivable, it is recommended that the level at which the marginal benefit is equivalent to the marginal cost should be selected (University of Maryland, 2019). Numerous decisions on spending are undertaken on the basis of the marginal analysis as purchasers make a determination of how much of their decreased income or increased income is apportioned to the incremental procurement of various goods or services. This concept can be used to analyze increased spending in health care through the examination of the incremental increase in health spending as a percentage of the marginal increase in gross development provides insights into the embedded marginal spending priorities of consumers as well as payers.

  1. University of Maryland. (2019). Week 1: Economics and Health Economics.
  2. Mayer, D. A. (2010). The Everything Economics… [END OF PREVIEW] . . . READ MORE

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How to Cite "Economic Concepts in Health Care Spending" Research Paper in a Bibliography:

APA Style

Economic Concepts in Health Care Spending.  (2019, October 6).  Retrieved July 9, 2020, from

MLA Format

"Economic Concepts in Health Care Spending."  6 October 2019.  Web.  9 July 2020. <>.

Chicago Style

"Economic Concepts in Health Care Spending."  October 6, 2019.  Accessed July 9, 2020.