Supply and Demand of Health Care USA Harvard Case Solution & Analysis

The effects of the individual preferences and income could be shown through the graph. The graph provides a clearer picture of how the individual could cause effects on the supply and demand of the healthcare systems in the USA. The variable h shows the healthcare level or the healthcare services, whereas the variable v shows that how the individual’s preferences could affect the health care system and services.We assume that the greater health and high services are given to the individual and increases in one factor so decreases in the other factor. So we can draw a standard indifference curve to give the explanation of how individual preferences and income effects the supply and demand of the healthcare system. The variable h shows the measurement of the demand on the healthcare system and also how it is affected, whereas the variable v showed the amount of increase or decrease in the consumption of the individual. The consumer of goods shows the measurement of the difference between the preference of the individual among the health services and the consumer goods.

The figure shows that the health services and demands would increase if the individual gets sickerthen his/her preferenceswould be in the healthcare services and hence it would increase the demand of the healthcare services, thus, the individual would less prefer the consumer goods over the health.Therefore, it is more obvious that with the increase in h the v variable would decrease as the individual would be giving more preferences to the health care services. Moreover the h2 shows the increase in the health services and v2 shows fall in demand when the h variable increases (as shown in Exhibit 1). Hence, the overall figure shows that how the demand is affected due to the individual preferences and income

b) Insurance Coverage

Health insurance is the means of financing the health care expenses of an individual. Whereas, the majority of people have the private health coverage insurance. Most of the individual company is responsible for the health insurance of their employees and giving them medical benefits according to their compensation package and their designation. Moreover, many individuals are involved in the practices of obtaining the health insurance from the government bodies. Other individuals do not have the health insurance and their medical expenses are not carried by any other companies. The statistics on health coverage indicates that there are different types of health insurances such as that the health insurances are covered by the government bodies, the employers also provides facilities of health coverage to the employees of the organization and other are the private organizations through which the individuals can attain the health insurances.It was estimated that 13.4% of the population was uninsured for the whole year, in 2013.

The basic idea behind having the health insurance is that the individuals want the insurance companies to handle their expenses of health services and also that reliefs them that whenever an emergency appears the insurance companies would handle their expenses. Mostly, when the emergency occurs the individual is not ready for it both mentally and monetarily. Therefore, individuals feels free when they are being covered by the insurance companies and they don’t have to worry about the expenses they would need in any kind of emergency.The individuals who don’t have the health insurance either don’t have the money to bear the expenses or they don’t trust the insurance companies or they are not proactive.

The health care system’s supply and demand are affected by the health insurances. When the individual have the health insurance, then he/she feels free about their medical expenses and mostly visits the facilities for health check or the minor diseases as well.The health care services would increase if the individual takes the insurance coverage. This could be shown via the graph that how the health care is affected by the increase in the insurance coverage. The healthcare services can be indicated via the h, whereas the insurance coverage could be shown using the variable v. If the individual gets the health coverage from any government body, employer or any private company then the health services would also increase with respect to that. So this could be shown the diagram thatwith the increase in the v variable there was also increase seen in the h variable.

This shows that if the individual gets the insurance coverage than it would affect the demand of the healthcare services, so the impact can be elaborated by the h2 and increase of v2 shows that the demand would also increase (as shown in Exhibit 2)...............................

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