The complexity of the health care services and their nature as a product does not allow the direct application of economic principles to the public health sphere (Scott, Solomon, & McGowan, 2001). The basic economic laws of resource allocation and their efficient use can be only understood in the framework of production functions of health care providers. The production theory can be applied to health care services in order to achieve efficiency in the resource allocation. One of the intrinsic characteristics of the health care markets is the difficulty in measuring a market value of the provided services (Scott et al., 2001).
The fast growth of health care spending constitutes a serious problem for public health. The determinants influencing health expenses hinge on the variation of the demographic and social factors, as well as, health care system characteristics. Usually, healthcare expenditures are commensurate with the growth of GDP (WHO, 2011). The World Health Organisation (WHO) report confirms this trend and suggests that the national health spending does not exceed the level of economic development (WHO, 2011). Other factors influencing health care outcomes and thus increasing the cost of health care are the consequences of obesity, socioeconomic status of people from deprived neighborhoods, risky health behaviors and the rise of chronic diseases (WHO, 2011).
The medical expenses are rising because of the lack of proper functioning of the market system in the health care industry. However, there is a sentiment that national medical spending and the medical industry are not similar in their nature to other market transactions and, therefore, they must be treated differently (Buff & Terrell, 2014). The government must regulate third party influence and significantly decrease the prices driven up by the hazardous practices. If free market approach along with the adequate regulation is applied to the medical industry, it is reasonable to expect the dramatic lowering of the health care expenditures and the increase of their quality (Buff & Terrell, 2014).
There are many mechanisms for public health financing of services. However, according to the WHO report all of them have a similar influence on the total health care costs. On the other hand, the different approaches to the collection of revenues have an impact on the accessibility of the services. Out of pocket payments and prepaid services significantly increase financial protection of the system. Insurance-based and tax-based organizations of the health care funding are the most common mechanisms of funding public health services (WHO, 2011).
The main economic role of markets is to increase the efficiency of the resource spending. Since, the health care industry does not have effective mechanisms that would help to reflect the real costs of produced services there must be another way to control consumers’ incentives (Aaron, 2005). The rationing might help to organize the health care budgets and regulate the number of clinics and the amount of provided services. The significant drawbacks of rationing, however, is that it is impossible to predict the correct cost of capital and that shortages of available personnel might follow after its initiation (Aaron, 2005).
Primary prevention level is aimed at preventing the onset of a medical condition. The secondary level of prevention attempts to prevent a disease from becoming progressively worse. It is important to detect an illness at the stage when it is the most treatable. The tertiary level of prevention is aimed at inhibiting the progression of illness (Academy Health, n.d.).
References
Aaron, H.J. (2005). Health care rationing: what it means. Web.
Academy Health. (n.d.). Research Insights. Web.
Buff, M & Terrell, T. (2014). The role of third-party payers in medical cost increases. Journal of American Physicians and Surgeons, 19 (2), 75-79.
Scott, R. D., Solomon, S., & McGowan, J. (2001). Applying Economic Principles to Health Care. Emerging Infectious Diseases, 7(2), 282-285.
WHO. (2011). The determinants of health expenditures. Web.