Healthcare Costs

“U.S. health care spending grew 3.6 percent in 2013, reaching $2.9 trillion or $9,255 per person.  As a share of the nation’s Gross Domestic Product, health spending accounted for 17.4 percent (Micah et al., 2011).

Using the above information and other information you will be directed to below, do the following:

  • Define the economic principle of opportunity cost.
  • Locate current GDP expenditures and express the percentages in a graph or a chart.
    You will find the necessary information either on the October 16th, 2014 post of the Health Affairs Blog or on other websites that contain relevant information: Slow Health Care Spending Growth Moderates GDP Growth InThe Short Term And Policy Targets Should Reflect This.
  • Explain whether spending 17.4% of GDP is too much or too little to spend on healthcare.
  • Defend your position using the concept of opportunity cost and highlight specific GDP expenditures that are impacted by healthcare expenditure (opportunity cost).

Reference:

Micah, H., Martin A. B., Benson, J., Catlin, A., & The National Health Expenditure
Accounts Team (2011). National Health Spending In 2011: Overall Growth
Remains Low, But Some Payers And Services Show Signs Of Acceleration.
Health Affairs. Retrieved from http://content.healthaffairs.org/content/32/
1/87.abstract

MODEL ANSWER

Opportunity cost principle is related and applied to scarce resource. When there are alternative uses of scarce resource, one should know which best ……………PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ……………is and which is not. We should know what gain by best alternative is and what loss by left alternative………….PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ………….

Devenport. an American ……….PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ……………explains the concept of opportunity cost with reference to an example. Suppose a girl had two kinds of fruits- one pear and one peach, and if a bad boy is after her to seize the fruits, then the best way for the girl is to drop one fruit and run with the other, so that, she can at least save one fruit, at the cost of the other. When the girl so drops by the way – side one fruit and runs with the other, …………..PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ……the opportunity cost of the fruit she saves is the foregone alternative of the fruit she lost. This is the opportunity cost theory.

PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ……….concept of opportunity cost plays an important role in managerial decisions. This concept helps in selecting the best possible alternative from among various alternatives available to solve a particular …….PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ………. This concept helps in the best allocation of available resources. The opportunity cost of any action is simply the next best alternative to that action – or put more simply, “What you would have done if you didn’t make the choice that you did”.  The income or benefit foregone as the result of carrying out a particular decision, when resources are limited or when mutually exclusive …….PLACE ORDER FOR COMPLETE AND CUSTOMIZED ANSWER ……….are involved.

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