Hypothesis - There is no significant relationship between non-economic factors and the demand of health care. In order to test this hypothesis, this study will take data from the really world, by looking at hospital records and using the provided statistical methods to test the predicative power of the empirical model.
Variables – the variables that will be spending money in health care while dollar will be used as the measure of exchange.
Monthly spending will be (x) and the income status will be (y) in the last 5 years (2007 – 2012).
Y = a +bX + c (where b will measure the between Y and X. in this case if b is statistically significant and positive, then this will mean that the hypothesis cannot be rejected.
1. Preference and tastes of consumers/patients
Preference and tastes of patients may change the demand of health care. This is because it involves changes of attitudes towards medical care. For instant, television, cinemas, journals, and advertising according to Kee ler and Emmett B (72) this is said to be one of the causes for changes in preferences of cosmetic surgery. Likewise, health science has enhanced that people believe that there must be a treatment for all conditions. As a result of this, he argues that many patients are now enthusiastic to by greater amounts of health care services at the most possible price.
2. Physician influence
Physicians also affect the client’s preferences by recommending treatment. Some doctors protect against mismanagement suits or boost their own incomes by asking for more office visit or tests that are really not needed. It is estimated that abuse and fraud accounts for about 20 percent of total health care spending. It’s said that one-third of some measures are inappropriate.
3. State of health controls
This can either be demographic and genetic (past illness, age, race, sex, race, marital status, etc.) or social structure (education, religion, family structure, occupation, etc.). Past illness might greatly affect the way a patient chooses his or her health care. In cases where someone has been seriously sick before, he will be more likely to buy big amounts of health care services when compared to someone who has never been seriously ill before. As far as age is concerned, the elderly are more likely to buy many health care services. This is because they are old are more prone to age related illnesses. When it comes to social structure, those people who are more educated are more aware of importance of health care services, and they, therefore, buy more services when compared to those who are less educated.
4. Values and beliefs
Different people and traditions have different values and beliefs that greatly affect their choice for health care services. This involves Personal values regarding illness and health, knowledge about the causes and significances of sicknesses, and also their attitudes toward health care etc.
5. Quality of health care
Today, many patients are alacritous to paying higher prices for better quality health care services. People nowadays don’t care how much it’s going to cost them, but they will pay higher prices as long as they are guaranteed quality medical care. People eve move to other countries that have better and improved medical services to seek for treatment. The curve below shows a quality health care demand curve.
Price of health care services
Quality of health care services
Today, it has become generally accepted on the demand for health care that the certain types demand of these services mostly depend on two decision processes. In the first decision, the patient decides whether or nor he or she needs the medical attention. On the other second stage, the providers of the health care together with the client decide on the magnitude of the treatment. Usually, this kind of demand is in most cases measured as count variable. For instance, the number of client visits a doctor in a given period of time. You will agree with me that one of the assumptions used to describe the two decisions. In order to allow for the correlation, we have to discuss and apply all non-parametric maximum likelihood estimators, in which the correlated unobserved ones heterogeneity is introduced into the case.
In order to effectively estimate the parameters of an empirical model, there is a formula that can be used. beta0 + beta1 health status + beta2 age + beta3income. is the formula that is used to explore the spending of money in health care. While exemplifying this formula, one needs to add up all the three variables. They include health status, the age of the individual buying the health care services and his or her level of income. For instance, for a poor health status individual, who is elderly and with no income, all the three variables will be used to determine the spending of this individual.
Kee ler, Emmett B. "Effects of Cost Sharing on Use of Medical Services and health," Medical Practice Management, 8(1): 11-15. 1992.
Manning et al. “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment,” American Economic Review, 77 (June 1987):251-77.