MGEC34: Economic of Health Care
Professor: Michele Campolieti
Suggestions of Future Development of Canadian Health Care System and Health Insurance Industry
Received: March 18th, 2013
There are several economic aspects that policy makers in Canada can learn from the models described in this essay. These economic aspects come from various lessons learned from other countries. This essay will discuss the budget constraint model to understand the consumer behaviors towards health care and the issue of adverse selection will also be analyzed, followed by the production of health care and the role of the government in the production of health care. This essay will conclude with suggestion of the lessons that policy makers in Canada can learn. Any of the economic models that exist must have assumptions; assumptions must be fulfilled to assert constancy. In the standard budget constraint model, there are three assumptions: (1) consumers are rational and have perfect information about quantity, pricing and the key players in healthcare, (2) there is no uncertainty about the future, and (3) important decisions are made as if the future is known with certainty. Consumers can choose any affordable combination of healthcare and other goods. Among these bundles, consumer has a set of preference which provided different levels of satisfaction. The budget constraint model states that the demand for medical services is derived from the demand for health care and how the consumer produces health. Consumers do not purchase health. Indeed, they produce health by spending time on health improving activities and purchasing medical care inputs. An example of the Indian health market supports this model. India has a universal health care system of which government covers most medical services provided, similar to Canada. In India, many of the healthcare consumers are...
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