Reference no: EM132933176

SCEHA2-B22 Applied Science

Section A

Learning Objective

Inadequate and unplanned investment in the health sector results in frequent break out of epidemics and deaths, which can seriously retard the current and the future growth of a country. This has been an unfortunate experience of some of the African nations including South Africa. At the end of this assignment students will demonstrate the basic knowledge of health economics and how it helps mitigate these issues through managing resources effectively and efficiently.

Project Topic
Demonstrate the basic knowledge of economics and its relation to the healthcare sector.

Scope
This is a question-based assignment, therefore, students are expected to discuss and demonstrate in detail the concepts of market failure, demand and supply, elasticity and how a given country, specifically the government manages the healthcare funds.

Technical Aspects
Students must follow the requirements when writing and submitting assignments as follows:
• Use Arial, font size 12.
• Include page numbers.
• Include a title page.
• Number all questions correctly.
• Write no more than a maximum of 12 pages (excluding cover page, table of contents and bibliography).
• Ensure any diagrams, screenshots and PowerPoint presentations fit correctly on the page and are referenced.
• Include a table of contents.
• Use the accurate referencing method throughout the assignment.
• Include a bibliography based on the applicable referencing method at the end of the assignment.

Question 1

Study the scenario and complete the question(s) that follow(s):

Use the above scenario to answer the question below:
1.1 What is market failure?
1.2 Provide an economic explanation for why government subsidization of child immunizations may lead to a more efficient outcome.
1.3 List four sources of market failure.

Question 2

Study the scenario and complete the question(s) that follow(s):

Scenario B

Understanding the patterns of both demand and supply on a weekly, monthly, or seasonal basis allows for focused efforts to shape demand to match supply, and/or increase (or decrease) supply during periods of high (or low) demand. Improving access is all about getting supply and demand in equilibrium, meaning there is no backlog of appointments and no delay between when the demand is initiated and when the service is delivered.

The gap between supply and demand not only contributes to a delay in meeting patients' needs, but it can also be expensive and generate waste in the system. The experience of many health care organizations demonstrates that demand is not insatiable, but actually predictable. In fact, the demand for any kind of service - appointment, advice, or message to a provider - can be predicted accurately based on the population, the scope of the provider practice and, over time, the particular practice style of each provider.

Periods of high or low demand can be anticipated, based on an analysis of demand data collected on all requests coming into the system. An improved access system uses these predictions as the framework to match its supply to the needs of a population of patients for any specific service. Therefore, measure supply, measure demand, and then compare the two.

Use the above scenario to answer the question below:
2.1 Most modern countries have prohibitions on the trading of human organs in the marketplace. What impact do you believe such laws have had on the availability of organs for patients that need them? Furthermore, which people are most likely to be able to obtain the organs that they require and why? Explain the ethical dilemma that is at work that makes the strict application of basic economic principles difficult to put into practice in cases like this.

2.2 Assume that the government of South Africa has determined that many injuries and deaths have occurred as a result of accidents involving the installation and repairs of electrical equipment at private residences. In reaction to this problem the country's assembly decided

to pass a law which made a requirement that all certified electricians take and pass a tougher state licensing examination. Analyse the impact that this law is likely to have on the market for electricians and explain why safety may not necessarily improve.

2.3 Explain how the price system eliminates a surplus.
2.4 Critically evaluate the following statement. "It's better to make people wait in line than it is to make them have to pay more for the product."

Question 3

Study the scenario and complete the question(s) that follow(s):

Use the above scenario to answer the question below:
3.1 Define price elasticity of demand. What does it measure?
3.2 When the price of Rifadin capsules increases by 15 percent, the quantity of Rifadin capsules demanded falls by 30 percent. Calculate the price elasticity of demand. Is the demand for Rifadin capsules elastic, inelastic, or unit elastic?
3.3 When the price of Voltaren tablets falls by 20 percent, the quantity of Voltaren tablets demanded rises by 10 percent. Calculate the price elasticity of demand. Is the demand for Voltaren tablets elastic, inelastic, or unit elastic?
3.4 If a good is income inelastic what does this imply would happen to consumption of this good if you were to win the lottery?

Question 4

Inequality and poverty affect each other directly and indirectly through their link with economic growth:

4.1 List any two (2) major sources from which households derive their incomes.

4.2 What factors determine the differences in salaries, wages, and income that we observer? Explain why wage and salary income differs among individuals. (4 Marks)

4.3 Explain why wage and salary income differs among individuals.

Question 5

Study the scenario and complete the question(s) that follow(s):

5.1 What relationship is shown by a demand curve?
5.2 Based on the scenario, propose ways of managing demand.
5.3 List five (5) specific things that can cause an increase in demand.
5.4 With an aid of a table and a relevant example, illustrate and explain a demand schedule.

Question 6

Generally, patients who are well-informed about their conditions and treatment options are more likely to take an active role in managing their own care.

6.1 Explain the term ‘adverse selection' with an aid of an example and explain why it is a problem.

6.2 When private companies offer health insurance to their employees the insurance carrier they contract with typically requires that all employees be obligated to participate and pay premiums whether they wish to or not. What problem is the health insurance company trying to avoid? How does this policy mitigate this problem?

6.3 Explain the adverse selection problem that is faced by health insurance companies when offering individual health insurance policies. What method do health insurance companies employ to combat the problem?

6.4 In cases where a life insurance policy owner is not the same person as the insured, insurance companies often require that such purchases be for those with an "insurable interest". For life insurance policies, close family members and business partners will usually be found to meet this test. In this case the purchaser is demonstrating that they would suffer an economic loss if the insured were to die. What economic argument could be made for why insurance companies would make such a restriction when it seems there might be a market for life insurance to people who wish to ensure others for whom there is not such "insurable interest"?