The Uk Healthcare Market
The UK Healthcare MarketBy Rishi PrakashStudent ID: 9018909Table of ContentsIntroductionDemand for HealthcareGrowth in DemandSupply of HealthcareSupply ConstraintsPrice Mechanism & ElasticityHealthcare & the Free Market Options for Government InterventionIntroductionThis report analyses at the healthcare system in the United Kingdom, discussing some of the primary factors that affect its demand and supply such as demographics, GDP budget, labour, etc. It discusses the inelasticity of demand for healthcare in the UK, stemming from the lack of a price mechanism, and possible government interventions that could tackle this issue. The report has been compiled using academic articles and journals, newspaper articles, and Bloomberg data.Demand for healthcareDemand for healthcare stems from the demand for health. Health and healthcare are considered basic human rights, invaluable to individuals and societies alike. We assume consumer sovereignty exists, i.e., that consumers are the best judges of what goods and services would be most beneficial for themselves. However, as the general population is not usually capable of determining how much, or what type of healthcare services they need, doctors act as our agents in the healthcare market. Doctors are in a much better position to understand the intricacies between health and healthcare (existence of asymmetric information) and advise us on based on our need. In the UK, the demand for healthcare is partly managed by the NHS General Practitioners (GPs), who act as the gatekeepers to hospital services and medications.
Growth in demandOlder people tend to require more health care than younger individuals. Data indicates that an 85-year-old individual costs the NHS 7 times more on average as compared to a man in his 30s. Health spending per person increases exponentially after the age of 50 (Robineau, 2016). With an ageing population and a larger prevalence of chronic diseases today, the demand for healthcare has been increasing rapidly. Chronic health issues are more prevalent amongst younger generations, arising from poorer lifestyles and habits. For example, 26% of the population were classified at obese in 2016 (National Health Service, 2018). [pic 1](Licchetta and Stelmach, 2016)[pic 2](Licchetta and Stelmach, 2016)In addition, with advancements in drugs and medical devices, our expectations of healthcare also increase. This in turn leads to an increase in healthcare products and services that are demanded. For instance, with upgrades in diagnostic testing and advances in chemotherapy, the number of women who die within five years of receiving a breast cancer diagnosis have declined significantly over the past 5 decades (Office for National Statistics, 2019). This implies that more people demand healthcare, as their prospects of recovery have improved.