Discussion – Cost and Supply Curve Shifts
- Go to the American Hospital AssociationLinks to an external site. website, navigate to the Advocacy tab, and review at least three to five key advocacy issues in health care and the factors that influence shifts in cost and supply curves. Compare the health care-based factors in the issues that you reviewed that, in your opinion, cause the cost curve of health care to shift. In your response, provide at least one example showing the manner in which the cost curve shifts.
Expert Solution Preview
The cost and supply curves in the healthcare industry are influenced by various factors that can lead to shifts. Understanding these factors is crucial for medical college students to comprehend the intricacies of healthcare economics. In this context, we will explore key advocacy issues in healthcare and analyze the factors that cause shifts in the cost curve. Additionally, we will provide an example to illustrate the manner in which the cost curve shifts in response to these factors.
One key advocacy issue in healthcare is the rising cost of pharmaceutical drugs. Factors that influence the cost curve in this scenario include the cost of research and development, market monopolies, and pricing strategies of pharmaceutical companies. For instance, when a new drug is developed, the initial cost curve tends to be high due to the substantial investment required for research, testing, and obtaining regulatory approvals. This shifts the cost curve upwards.
Another advocacy issue is the increasing demand for healthcare services due to population growth and an aging population. The factors driving this shift in the cost curve include higher healthcare utilization, increased need for specialized care, and rising costs of medical technology. As more individuals require healthcare services, the demand surpasses the available supply, causing the cost curve to shift upwards.
Additionally, healthcare policy reforms can also result in cost curve shifts. For example, the implementation of the Affordable Care Act in the United States expanded access to healthcare insurance, leading to an increase in demand for services. As a result, the cost curve shifted as healthcare providers needed to accommodate more patients and invest in additional resources.
To summarize, factors such as the cost of pharmaceutical drugs, increasing demand for healthcare services, and healthcare policy reforms can cause shifts in the cost curve of healthcare. These shifts can lead to changes in healthcare pricing, resource allocation, and overall healthcare expenditure. It is important for medical college students to understand these factors to effectively navigate the complex economic landscape of healthcare.