Opportunity Cost, Essay Example

“Consumers don’t want to accept the idea of scarcity in health care, or the idea that we can’t do everything that’s possible.”

This statement relates to consumers not accepting opportunity costs and scarcity. Limited resources and increased expenses associated with health care should not only be the employer’s responsibility. Indeed, by not being prepared to pay higher prices for health care – theoretically speaking – employees would pay the price of losing their job security. When employers have to take on the burden of increased health care costs alone, they would increase their overhead costs, resulting in possible layoffs. Therefore, an employee can think that by increasing their contributions (opportunity cost) they would also increase their job security. Therefore, to get something, like the latest medicine, the employee will need to give up some of their financial resources.

Alternative Plan.

If the employee had to pay the first 1000 dollars, they would be more motivated to stay healthy and reduce the cost of health care. However, it is likely that employers would also introduce in-house health education or healthy living programs to avoid long-lasting illnesses requiring ongoing treatments, resulting in the total cost being over 1000 dollars. When after the 1000 dollars provided by the employer exhausted, the employee would also be required to contribute, therefore, they would be motivated to avoid long-term illnesses. Either way: the change of responsibility for the first 1K would certainly make employees make a more careful selection of health care providers, and possibly would encourage them to take preventive steps. The determinants of health care demand are health-seeking behavior, economic variables of individuals, localty, the “insurance effect” and forward-thinking. Indeed, health care can be viewed as an investment into well-being and productivity.

Caps on Medical Malpractice Awards.

The higher the malpractice awards’ limit the more doctors’ costs associated with practicing will be. This will have an impact on the cost of health care in general. Indeed, while there is a need for malpractice settlements, there is also a need to ensure that quality service is rewarded by the government. This would mean that doctors whose practices are of a consequent quality and provide excellent care would not only be able to reduce their malpractice insurance payments but their costs for the public, too. This would increase the low-cost availability of high quality health care. While the Government needs to protect citizens, they need to be aware of the price (opportunity cost) associated with malpractice legislation.

Government Intervention and Health Care.

One of the major arguments against the government’s intervention and possible takeover of the health care would eliminate competition. As Adam Smith states, without competition, there are limited choices and there is no market control. Indeed, as the Adam Smith Institute (Worstall) states, health care provided by the state is extremely expensive, not driven by innovation and competition. Looking at the example of NHS in England, development is slow, and several of the services are outsourced within the system. With freedom to select providers within the organization, the government would need to reduce patients’ options to keep administrative and legal costs low. As the decisions would not be challenged by the competitors, the quality would be likely to fall. As the Worstall states: “the effect of competition is to save lives without raising costs”.

Works Cited

Landro, Laura “The Informed Patient.  Consumer Responsibility Rises With Costs”.  Dow Jones & Company, 2003. Web.

Worstall, T. “So, does competition work in health care or not?” Adam Smith Institute. 2013. Web.