chapter  11
28 Pages

Economics and Finance of Health Care

ByDouglas R. Mackintosh

One of the best ways to study health economics is to examine the national indicators of health expenditures. Relatively more money is spent on hospital and nursing-home care, and relatively less on physicians' and dentists' services. The quantity of health care demanded has increased relative to the quantity of other goods and services in the United States economy. National health expenditures as a percentage of the gross national product increased from 4.6 percent in 1950 to 7.7 percent in 1973. The health system, like the education system, is part of a circular flow of economic activity. Health insurance is increasingly being used to finance expenses not meant to be covered by insurance per se. Social insurance plans tend to be introduced when a social problem exists that cannot be solved by the private sector. Governmental agencies either administer or finance the insurance plan.