Healthcare_and_Health_Economics

The Chapter on Microeconomic Tool for Health Economic has brought me a myriad of term, factors, and theories to ponder. I will attempt to discuss this chapter through a scenario exemplifying the information encompassed in the Chapter. The three hospitals in Toledo have been mandated by the Government to give all citizens the HPZ vaccine shot at a maximum price of $10 due to last 3 year infection rate of the virus. Jackson Hospital along with the other two hospitals holds a 33% share of the market. The City as an incentive would give a $50 tax credit per (shot) there by increasing the hospital net income for the year. Toledo has a population of 1000 and 90% of populous was fully employee and 10% were receiving some type of federal subsidy (social security, welfare, etc.). 300 hundred doses and special ear injectors were the maximum amounts produced by the local government Center for Disease Control for distribution to the Hospital and no more could be produce without the authorization to buy more equipment, hire new employees and expand the plant. The scenario I described shows perfect competition because neither the supplier nor consumer can influence the market and the maximum amount of the product were produced based on the economic inputs. There is no utility in the product because there is only one product to choose from but there are 3 hospitals to choose from and people may choose to go to one based on location, service and the price they decide to sale the vaccine. The Production Possibility Frontier for the vaccination was 300 which was the maximum output for the product without injecting other resources into the economy. The hospitals reported 10 shots were given at a price of $5.00 dollars by each hospital during the months of January – March. The expected demand for the first three month by the local CDC was 100. This caused a leftward shift in the demand curve because shot were not given at the expected rate. The hospital explained that severe snow hindered people from being inoculated during the summer months. During the Months of April – September an outbreak of HPZ occurred in the city of Toledo. April through June 30 shots were given by each hospital at a price of $7.00 per shot. July through September 50 shots were given by each hospital but the condition became worse and price shot to $10 per shot and hundreds of people demanded the shot. The hospital reported that as of September 30th only 27% of the population received shots and 90% of the vaccine shot was used. The continuance of the scenario shows the inelasticity of demand because the price rose but the demand remained constant the demand curve move rightward. The outbreak grew worse the Production Possibility Frontier shifted inward due to the outbreak depleting supply. Price of Inelasticity Picture from Wikipedia definition of elasticity The hospitals were faced with a dilemma each only had 10 shots of vaccine left what would they do' What could they do' The hospitals requested more vaccine shots for the local Center for disease control. The death count from HPZ now stands at 2% of the population affecting mostly the segment of the population who are receiving government subsidies. The next instance of the scenario we face scarcity of economic good due to the shortage. There were only 30 shots left and who will be able to purchase the remaining 30 shots; how would they choose. The hospitals were bombarded with people offering millions in dollars and resources to receive one of the 10 remaining shots. Should the remaining shots be given to someone who can pay the most or someone who is unable to afford the price of the shot such as a welfare recipient' Also, since only 30% of Toledo population could be inoculated anyway, there is a need for production and market supply injection of a new supplier besides the local Center for Disease Control to supply the other 68% of the population. It is known that HPZ is inherent to the Northern Region of the United States and can’t survive in temperature below 64 degrees. Should the CDC solicit outside help produce more vaccine' The is example of welfare loss, since we know the HPC virus dissipates in weather below 64 and people will not contract the HPZ virus because we are currently in the month of October where temperature at night drop below 45 degrees will are marginal social benefit equal our marginal social cost. I believe in this case money will be well spent on research developing the next vaccine or cure for the next outbreak. The local Center for Disease Control held a monopoly on producing and distributing vaccine this helped increase the impact and longevity of the HPV virus. If more competitors were allowed in the market a bigger supply of vaccine would have been available and prices could have possibly been lower. I have discussed through the scenario the scarcity of goods and production possibilities frontier, the demand curve, individual and market demand, elasticity, production and market supply, supply curve and monopolies and the importance of competition in pricing and supply. References Folland, Sherman, Goodman, Allen abd Stano, Miron. The Economics of Health and Health Care. Upper Saddle River. Pearson Prentice Hall. 2004 en.wikipedia.org/wiki/Elasticity_(economics)