How Might Older People's Health Depreciate?

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Grantham University HSN511 HSN511 – Health Services Management Professor Michael Snell Written Assignment 2 – Income, Risk and Consumer Demand for Health Care Why is the depreciation of capital good a cost of society? Capital good is defined as goods that are used in the creation of other goods to include tools, raw materials and even the factories that help create the goods for use. Capital goods depreciate because of physical wear and tear or technological change. Depreciation is not necessarily considered negative for society. Utilizing depreciation in health care high ticket items can be expensed over its projected life. A health care facility must ensure they earn enough to cover the cost and to also maintain the value of the machine. It must also earn the competitive 5 percent return…show more content…
According to the Grossman model health is considered a capital good that does not depreciate instantly, it can depreciate with age, illness or injury. Why might older people’s health care expenditures increase in the Grossman model even though their desired health stocks may be lowered? --------------------- List at least three factors that might increase an individual’s marginal efficiency of investment in health capital. ------------------------------ The deductible feature of an insurance policy can affect the impact of moral hazard. Explain this in the context either of probability of treatment and/or amount of treatment demanded.----------------------------- Describe the benefits of society from purchasing insurance. Describe the costs. Define and discuss the welfare gains from changes in insurance coverage. If only risk-averse people will buy health insurance, why do many people who buy health insurance also buy lottery tickets (an activity more consistent with risk taking)? Speculate on the differences and

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