46 Toh, Nicole Bernadette J.

2A - Medical Technology
HETAR Quiz

November 10, 2015

1. Why is it difficult to pay for healthcare? Kindly refer to the diagram below.

It is hard for
people to pay for health
care primarily because of financial problems. We all know that health care is
expensive,including the labor by the doctor or specialist, medicines, as well as the
facilities and equipment to be used. When sickness occurs unexpectedly, people are most
likely unprepared financially. Though there are public or government hospitals available,
service of private hospitals still makes a difference but for a more expensive cost. When
it comes to insurance, sometimes confusion takes place of who is supposed to pay for
health care most especially when it talks about the covered and uncovered services of the
insurance.
2. How does the government control the budget/expenditures? Kindly be guided by
the equation AE= C + I + G. Where: AE = Aggregate expenditures/ National
Income; C= Consumption; I = Investment; G = Government Expenditures.
An inflation-minus-one rule, would place a limit on spending growth. As long as
the ratio of government expenditures-to-GDP exceeds 18% (the thirty year average of tax
revenues), each years growth in government spending would be limited to the last three
years inflation rate, according to the GDP deflator (annualized), minus one percentage
point. Because GDP growth would almost always exceed budget growth, the ratio of
spending-to-GDP would come down. Legislators would be constrained on the total
growth in spending. Nothing- not defense, not entitlements, not favorite projects - would
be exempted. Total spending means that everything is included. Just as now, there can
and will be wrangling over what gets funded, but the amount of budget growth would be
constrained.
The rule provides discipline for the long run and prevents us from falling into the
political trap of using excuses like recessions to escalate permanently the size of the
government. To prevent slipping back into the same mess, we should limit budget growth

in any year, even those in which the ratio of spending-to-GDP was under the target of
18%, to no more than twice 1 the prior years increase. And once the spend-to-GDP ratio
exceeded 18%, the inflation-minusone rule would prevent us from ever approaching our
current situation.
The inflation-minus-one rule provides a mechanism by which we can grow our way
out of the problem, without raising the proportion of GDP that is taxed. As GDP grows
more rapidly than spending, the ratio of the spending-to-GDP declines. Eventually, the
deficit vanishes, and with taxes remaining at historic levels, there is no additional
impediment to economic growth.
A variant would be to tie the growth in government spending to growth in GDP. This
has the advantage that it is more directly tied to the problem, namely that the size of the
government grows faster than the size of the economy. It has the disadvantage that during
a prolonged recession and slow recovery, like the current one, the constraints on
spending growth might be too severe. Of course, the safety valve would allow legislators
to circumvent the constraint, but it is better to build this in directly rather than relying on
extraordinary measures.
3. Describe Keynes circular flow of goods.
Keyness vision of the economy suggests a circular-flow frameworkin which
earning and spending are brought into balance by changes in the level of employment.
Graphically, the circular flow appears as the Keynesian cross, the crosss intersection
identifying the particular state of the economy in which income and expenditures are in
balance.
The circular flow of income and spending shows connections between different sectors
of an economy
It shows flows of goods and services and factors of production between firms and
households
The circular flow shows how national income or Gross Domestic Product is
calculated
Businesses produce goods and services and in the process of doing so, incomes are
generated for factors of production (land, labour, capital and enterprise) for example
wages and salaries going to people in work.
Leakages (withdrawals) from the circular flow
Not all income will flow from households to businesses directly. The circular flow shows
that some part of household income will be:
1.Put aside for future spending, i.e. savings (S) in banks accounts and other types
of deposit
2.Paid to the government in taxation (T) e.g. income tax and national insurance
3.Spent on foreign-made goods and services, i.e. imports (M) which flow into the
economy
Withdrawals are increases in savings, taxes or imports so reducing the circular flow of
income and leading to a multiplied contraction of production (output)

The Circular Flow of Income and Spending with the External Sector added

Injections into the circular flow are additions to investment, government spending or
exports so boosting the circular flow of income leading to a multiplied expansion of
output.
1. Capital spending by firms, i.e. investment expenditure (I) e.g. on new technology
2. The government, i.e. government expenditure (G) e.g. on the NHS or defence
3. Overseas consumers buying UK goods and service, i.e. UK export expenditure
(X)
An economy is in equilibrium when the rate of injections = the rate of withdrawals from
the circular flow.

4. How do we use Cost Benefit Analysis and Cost Effectiveness Analysis in

prioritizing maternal care programs? Give examples or scenarios.
Costbenefit analysis (CBA), sometimes called benefitcost analysis (BCA), is a
systematic approach to estimating the strengths and weaknesses of alternatives that
satisfy transactions, activities or functional requirements for a business. On the other
hand, Cost-effectiveness analysis compares the costs and health effects of an intervention
to assess the extent to which it can be regarded as providing value for money. This
informs decision-makers who have to determine where to allocate limited healthcare
resources. Both CBA and CEA help prioritize maternal care programs by finding the best
intervention for an agreeable value of money and also by providing the greatest benefit in
improving the health status (specifically the fertility rate) of the country. An example of a
scenario is provided below:
In Zambia, as in other low-income
In 2003, Safe Motherhood Action
countries, maternal health indicators
Groups were established in Zambia as
have remained stubbornly resistant to
part of a national safe motherhood
improvement: for example, the
programme. Initially, they were
presence of skilled birth attendants at
supported by the United Nations
deliveries has hardly increased in the
Population Fund in North-West
past 20 years and the maternal
Province before being adopted by the
mortality ratio remains over 500 deaths
Government of Zambia in a national
per 100 000 live births. Two
programme. Each group serves a
contributing factors have been
cluster of villages and is encouraged to
consistently identified: (i) a lack of
meet regularly in a communal area.
knowledge about when to access
The aim was to mobilize communities
health-care services, which leads to
to improve the health of women, men
delays in care seeking; and
and children and reduce the number of
(ii) difficulties with transportation,
human immunodeficiency virus
which lead to delays in reaching
infections. However, a lack of central
health-care facilities. The problem of
coordination has meant that
stagnating maternal health indicators
communities often found it difficult to
has probably been exacerbated by a
know how to use these groups and, as a
counter-urbanization trend, with
result, many of these remain dormant.
people moving to more remote areas.
Our intervention involved revitalizing
Although most of the rural population
Safe Motherhood Action Groups to
of Zambia lives less than 8 km from a
raise awareness of the need to prepare
health centre, the average distance to a
for pregnancy complications and
health-care facility equipped for safe
delivery. The main aim was to improve
delivery is more than 15 km.2 The
both understanding of maternal health
2007 Demographic and Health Survey
and access to maternal health-care
(DHS) in the country reported that
services. There is growing evidence
57% of women in rural areas regarded
that better utilization of maternal
distance as a barrier to accessing health
health-care services depends on
care when sick.
mobilizing the entire community. For
example, in a programme for

improving birth preparedness in Nepal

that focused only on women,
knowledge of obstetric danger signs
increased but there was little change in
the proportion of deliveries involving a
skilled birth attendant. It was
suggested that the lack of progress

occurred because education was

provided only for women and not for
the whole community and because
other barriers to health care, such as
the cost of getting to a facility,
persisted.

5. How do we utilize elasticity in understanding pricing decisions?

Price sensitivity is not just about charging high prices to maximize revenue. It might
also relate to cut prices - sometimes dramatically - to encourage people who may
otherwise not be part of the market to use the service or goods being provided.
Business is like business of education, learning of price elasticity of demand. This
concept is a cornerstone in any discussion of microeconomic principles and pricing for
marketing effectiveness. Practically, price elasticity of demand involves the idea that
consumers are affected by manipulation of price. On the producer part of view, price
represents a distinct reflection of the production and marketing costs incorporated in
bringing the product to the marketplace as well as the beginning point in the calculation
of revenue and profit. On the consumer part, price is a critical ingredient in the image
and value-conceptualization of a product.

Sources:
http://www.tutor2u.net/economics/reference/circular-flow-of-income-and-spending
http://www.global-economic-symposium.org/knowledgebase/the-globaleconomy/fiscal-consolidation-through-fiscal-rules/proposals/fiscal-consolidationthrough-fiscal-rules-1
http://www.medicine.ox.ac.uk/bandolier/painres/download/whatis/Cost-effect.pdf
http://www.who.int/bulletin/volumes/92/1/13-122721/en/
http://www.ukessays.com/essays/economics/how-could-demand-elasticity-lead-to-pr
icing-decisions-economics-essay.php