Understanding Competitive Markets and Healthcare Costs in HADM 730

HADM 730 1. How does a competitive market determine the types of goods and services to produce, the costs to produce those goods and services, and who receives them? Ch.2 In a competitive market, consumer sovereignty determines the goods and services to produce. Consumers will often purchase goods and services that they deem necessary. The text writes that Consumer sovereignty is most easily achieved in a competitive market system. Through their purchases, consumers communicate their desires regarding goods and services (Feldstein, 2019) . The producers then observe the trends. Observing which goods and services are being consumed. In a competitive market, costs to produce goods and services are determined by the price consumers are willing to pay. Additionally, in a competitive market, the recipients of the goods and services produced are the consumers who are willing to pay for the goods and services. 2. Why does the USA spend an ever-growing portion of its resources on medical services, although they are less cost-effective than other methods in improving health status? Ch.3 The reason for the USA spending an ever-growing portion of its resources on medical services can be attributed to the fact the US spends an ample sum of its money focusing on pharmaceutical research as well as medical technology research. Another reason for the US

HADM 730 spending an ever-growing portion of its resources is because of the focus on treatment rather than prevention the book writes that expenditures on medical services are less cost-effective in reducing mortality rates than changes in lifestyle behavior (Feldstein, 2019). Preventive care has been shown to reduce the need for extensive medical treatment. Additionally, it is believed that health insurance has been comprehensive which has led to individuals utilizing medical services more often. 3. Why do physicians play such a crucial role in the delivery of medical services? Ch. 4 Physicians are a crucial part of delivering medical services because they essentially are a patient's agent. Physicians have the knowledge and skills needed to serve their patients and determine admissions. Furthermore, the book writes that physicians determine admissions to the hospital, lengths of stay, the use of ancillary services and prescription drugs, referrals to specialists; and even the necessity for services in nonhospital settings, such as home care (Feldstein, 2019). The physician also plays an important role in the delivery of medical services by being the only legal party legally allowed to make medical decisions. Neither the patient nor the insurance companies have enough training to make these decisions.

HADM 730 References Feldstein, P. J. (2019). Health policy issues: An economic perspective (7th ed.). Health Administration Press (Hap) ; Washington, Dc.

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