Economic Terms and Health Care History Essay

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Economic Terms and Health Care History HCS/440 July 9, 2012 Economic Terms and Health Care History What is healthcare economics? This paper will cover the history and evolution of health care economics and the time line of health care funding. This paper will also cover economic terms such as supply and demand, gross domestic product, and elasticity and inelasticity to name few. Understanding these terms and the timeline of economics in healthcare will benefit managers in making decisions for the organization. The first term is what is economics? Economics is “The science that deals with production, distribution and consumption of good and services (Getzen & Allen, 2007).” In the early 1900s there was not what a person would call health insurance. Most patients were treated in their homes which included any type of surgery. This type of treatment lasted until the 1920s. In 1918, the Bureau of Labor Statistics survey was with 211 families living in Ohio and 7.6 of their average annual medical expenditure was for hospital care. The main cost wasn’t associated with the medical cost it was the lost wages because of loss of work due to being sick. Most people felt they didn’t need health insurance. Because people felt they did not need health insurance and commercial companies were unwilling to provide it (, 2010). Between 1920 and 1930 the price of medical care would start to rise due to people not being treated in their homes but in hospitals. Physician quality changed because of the American Medical Association (AMA), they decided that physicians need a license to practice medicine. By requiring physician to be educated this put a restricted supply of physicians and because the supply and demand (lack of doctors but medical care needed) caused the price of medical to increase. The birth of health insurance began in 1929 with
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