Demand for Healthcare
Summary: How do we define Price and Quantity? Is Demand for Healthcare downward sloping or Vertical? Rand-HIE Set up Oregon Medicaid study Rand-HIE vs Oregon Medicaid study How to define Price and Quantity? Measuring Quantity: A quick visit to the doctor's clinic is not equivalent to an overnight stay at the hospital. So, counting both as one unit of healthcare is not appropriate. Researchers handle this difficulty by measuring separate demand curves for different kinds of care. Measuring Price : Price involved in healthcare is paid by third party such as insurers or government. Co-payment rate are taken as measure of price because it is proportional to the marginal cost (cost of one additional unit) faced by patients. Is Demand for Healthcare downward sloping or Vertical? If people care about their health above all, they must be ready to give any price for their healthcare. This means they have rather a vertical demand curve of Healthcare. A team of researchers at the Rand corpo...