Health Demand, Elasticity, Principle and Agent in Determining Demand Coursework

Health Demand, Elasticity, Principle and Agent in Determining Demand for Medical Care - Coursework Example The cited unique factors may be classified within the â€Å"health status† variable that impact expectation but their role are far too important in the healthcare setting to be relegated as a mere sub-factor. This is the case because the patients are the ones seeking care and that demand is initiated based on their healthcare needs. Afterwards, the physician then prescribes the quantity as well as type of treatment/medical product or service to be needed. For instance, a person is admitted into emergency care because of severe diabetes. Upon examination, the physician has determined that one of his legs has to be amputated in order to save his life. Here, the demand for the surgery and the medications entailed were determined based on the condition of the patient and the judgment of physician. I believe that if the patient is insured the impact of income and price may be diminished. This can also be highlighted in the dynamics behind the decline of price and its impact on dema nd. In conventional goods, a decline would precipitate demand. However, in the case of health care a decline in price, say, of a diabetes drug, would not immediately translate into demand or a significant change in the demand curve because it will be dependent on the number of diabetics and their need and health status. Imagine a situation where consumers have incomplete information about their health status and about the productivity of medical care. Examine the roles of the principal and the agent in helping consumers to determine the demand for medical care in the described situation. Provide at least one (1) detailed example of such roles in action to support your response. Let us suppose that the patient is covered by medical insurance. He is, in effect, the principal in this situation while the physician serves as his agent, acting in his best interest since his decisions are made to improve the patient's well-being. This is the ideal scenario where the agent recommends care services and medications for the client’s benefit. For instance, the physician could prescribe highly-paid and, therefore, effective procedures. The patient without any medical knowledge as to his condition or the treatment would not have known the difference between such procedures and low-paid primary care. But t he condition and the physician’s influence move the demand curve towards highly-paid care and specialties.