MARKET MECHANISM IN THE HEALTH CARE SYSTEM. What Is Health? The Mosby Medical Encyclopedia (1992, p. 360) defines health as “a state of physical, mental,

MARKET MECHANISM MARKET MECHANISM IN THE HEALTH CARE IN THE HEALTH CARE

SYSTEMSYSTEM

What Is Health?What Is Health?

The The Mosby Medical Mosby Medical EncyclopediaEncyclopedia (1992, p. 360) (1992, p. 360) defines health as “a state of defines health as “a state of physical, mental, and social physical, mental, and social well-being and the absence of well-being and the absence of disease or other abnormal disease or other abnormal conditioncondition..

Economists take a radically Economists take a radically different approachdifferent approach

They view health as a durable good, or They view health as a durable good, or type of capital, that provides services. type of capital, that provides services. The flow of services produced from the The flow of services produced from the stock of health “capital” is consumed stock of health “capital” is consumed continuously over an individual’s lifetime continuously over an individual’s lifetime (see Grossman, 1972a, 1972b). (see Grossman, 1972a, 1972b).

Each person is assumed to be endowed Each person is assumed to be endowed with a given stock of health at the with a given stock of health at the beginning of a period, such as a year. beginning of a period, such as a year. Over the period, the stock of health Over the period, the stock of health depreciates with age and may be depreciates with age and may be augmented by investments in medical augmented by investments in medical services. services.

Death occurs when an individual’s stock Death occurs when an individual’s stock of health falls below a critical minimum of health falls below a critical minimum level.level.

The total utility curve is upward sloping and The total utility curve is upward sloping and depicts the relation between an individual's depicts the relation between an individual's

stock of health and utility.stock of health and utility.

The total utility curve is upward sloping The total utility curve is upward sloping and depicts the relation between an and depicts the relation between an

individual's stock of health and utility.individual's stock of health and utility.

MP curve establishes the relation between the MP curve establishes the relation between the marginal product of medical care and the marginal product of medical care and the

amount of medical care consumed. amount of medical care consumed.

CCurve illustrates the relation between marginal urve illustrates the relation between marginal utility and the stock of health, and it is downward utility and the stock of health, and it is downward sloping because of the law of diminishing marginal sloping because of the law of diminishing marginal

utility.utility.

A generalized short-run health production function for an individual takes the following

form:

Health = Health = HH medical care, medical care, technology, profile,technology, profile, lifestyle, lifestyle, socieconomic status,socieconomic status, environmentenvironment

CCurve illustrates the relation between marginal utility urve illustrates the relation between marginal utility and the stock of health, and it is downward sloping and the stock of health, and it is downward sloping

because of the law of diminishingbecause of the law of diminishing marginal utility.marginal utility.

MP curve establishes the relation between MP curve establishes the relation between the marginal product of medical care and the marginal product of medical care and the amount of medical care consumed. the amount of medical care consumed.

The total product curve shifts upward with the The total product curve shifts upward with the development and application of new medical technology development and application of new medical technology

because of an increase in the marginal product of because of an increase in the marginal product of medical care.medical care.

Main push and pull factors in migration and international recruitment of health workers

Typology of migrant health workers

Number of international nurse registrants to Norway as recorded by SAFH 1996-2002

Doctors: number of new full entrants to GMC (United Kingdom) register from EEA countries, United Kingdom training and other countries, 1993–2003

Amount of Medical Care Spending

The total product curve shifts upward with the The total product curve shifts upward with the development and application of new medical development and application of new medical technology because of an increase in the marginal technology because of an increase in the marginal

product of medical care.product of medical care.

A framework for analysing future trends in HRH

the data in the figure show that great strides have been taken in terms of more people insured in the United States.

Trends in the share of the female workforce as a percentage of the totalhealth workforce in selected countries in the 1990s

Medical Care Quality

A Note on the Relation between System Structure and

Performance

Percentage of physicians intending to migrate to EU countries, 2002

Female practising physicians as a percentage of all practising physicians in selected countries in the 1990s

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