This week will begin to take on some of the assumptions of the free market and how they are met in the current healthcare system. Looking at the assumptions, you will take on the topics of the demand for health services, health insurance, and health status. First, you will focus on whether consumers have enough information to overcome the tendency toward asynchronous information. Then you will look at the demand for health and subsequently the demand for health insurance. Finally, in this week, we are going to tackle behavioral economics as it applies to healthcare and spend some time looking at the famous RAND Health Insurance Experiment (HIE). It is the Oregon Health Insurance Experiment where these experiences provided great insight into our healthcare system. Along with the behavioral economics, you will begin to look at how to create behavior through programs such as patient cost sharing.

So in this week, you will look at the first five important assumptions in the chapter “Demand for Health, Insurance, and Services.” In a special chapter, “Topics in Demand: Externalities of Consumption and the Formation of Preferences Supply,” you will take on assumptions, which deal with externalities, that is, things that are caused by an activity that are outside of the activity. An example of an externality would be generating electricity by burning coal, which is an efficient activity, but it creates an externality regarding air pollution. This air pollution becomes a problem that must be dealt with and has an added cost on the original activity’s goal of generating electricity.

Your Learning Objectives for the Week:

Interpret the factors that affect the supply and demand for health services in order to predict responses, price, quality, and other factors commonly influenced by health policies.
Analyze current-day delivery of healthcare policy related to concepts involving efficiency and equality.

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