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


            The health care industry in the United States is vast and one of the biggest in the world. United States is known for the wide health care system. One out of every seven dollar spent in the United States is dedicated to the health care services. This is a greater percentage than any other industrialized country. The health services are very important for any developing or industrialized country. For the development and progress of the country, health cannot be ignored. Good health plays a vital role in the progress of any country. As health is the basic need of human beings and the governments should take major part in providing health facilities to their countries. Moreover, governments should make sure that for every citizen, the health services are accessible and also in cheap rates.

            The health care system in the United States is wide and easily accessible by almost everyone. Though the services vary in prices, according to the treatments and hospitals. There are many issues in the health care system, the health care services are influenced by the political representatives and the citizens. To solve the issues and analyzing the proper health care services, the supply and demand approach can be used. Therefore, the supply and demand approach can be used to analyze the related issues and hunting down the opportunities for the healthcare in the United States.(Davidson, 2013)

            The supply side of the health care in the United States is very problematic. Most of the healthcare suppliers are dominated over the market and have definite market power. The suppliers of the health care, such as hospitals, are mostly controlled by the government authorities and the non-profit organizations. Mostly the government or non-profit organizations don’t have an aim of earning the profits and their goal is to serve the public. The supply of health care includes Hospitals, doctors, surgeons, nurses and administrative staff. The law of demand applies to health care in a way that if the price of health care increases, then the demand decreases. The characteristics of health care are that its demand is inelastic.

Case Analysis

a) Income of individuals and Preferences

Having good health is the first priority of any individual. Individuals use their available resources to meet the challenges regarding health care. The main preference for the individuals is good health and living a good life. Individuals give preferences to the things according to their resources. For instance, if the income of the individual is low, then the individual would prefer the services or product which seems to be in its budget or he/she could afford it. Moreover, the individual would take initiatives to prefer those items which seem to be more suitable for overcoming the obstacles and more towards fulfilling the needs of the individual. If the resources of the individual are higher than he would prefer the items which are less needed in that situation.

The behavior of the individual would change and hence, this also affects the demand and supply of the product or services. The demand and supply of the product or services depends on the customer behavior. Similarly, if the individual doesn’t have the resources to invest in the desired products then the demand of the product would gradually decrease as the customer would prefer the products which are more important to him/her at that particular time. Similarly, if the resources are high, then the customer will not think a lot in taking the buying decision and even though if the need for that product is low still the individual would take the decision of buying the product.

The individual preferences and the income of the individuals, mostly affects the healthcare system and also its activities. With respect to healthcare the supply and demand of health care are mostly affected by the preferences of the customers and their income. If the customers have low income, then he/she would not be able to access the medical health facilities and hence, it would result in the low demand of the healthcare services. If the income of the customer is high, then it depends on the preferences of the customers that whether the customer is giving preferences to healthcare or to other consumer goods.......................

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