Module Components

• Overview
• Assignments

Topics

• The Demand for Health and Health Care
• Determinants of Health
• Is Health Care Different? Health Care as a Derived Demand

NDNP 803 - Executive Leadership and Healthcare Economics

Module 3: The Demand for Health Care

The Demand for Health and Health Care

In order to measure the demand for health care, it is important for us to understand how we measure demand. In economics, demand is measured by production, specifically gross domestic products or GDP. It is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory. GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. Critics of using GDP as an economic measure say the statistic does not take into account the underground economy - transactions that, for whatever reason, are not reported to the government.

The Bureau of Economic Analysis (BEA) even supplies its own analysis of the quarterly data, presenting several useful documents that condense the massive release down to a manageable and readable size.

Strengths

• GDP is considered the broadest indicator of economic output and growth.
• Real GDP takes inflation into account, allowing for comparisons against other historical time periods.
• The Bureau of Economic Analysis issues its own analysis document with each GDP release, which is a great investor tool for analyzing figures and trends, and reading highlights of the very lengthy full release

Weaknesses

• Data are not very timely - it is only released quarterly.
• Revisions can change historical figures measurably (the difference between 3% and 3.5% GDP growth is a big one in terms of monetary policy).

Now, if we look at the GDP for health care, we can use this as a measure to understand the demand for health care. In 2020 it was 18.8%.  From the slide below we can see that health care spending has steadily increased as a percentage of the GDP.  The US percent is the highest compared to these other high-income countries.  Among these countries, the US is the only country without some type of public health care program.

For more information and reports explore the Commonwealth Fund: https://www.commonwealthfund.org/