Changing Demographics and Health Care Costs
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What effects will changing population demographics have on health care costs and services?
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Solution Summary
Changes to population demographics (the types or categories of people that comprise the overall population, such as age, gender, race, etc) have a direct influence on health care costs and services.
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Changes to population demographics (the types or categories of people that comprise the overall population, such as age, gender, race, etc) have a direct influence on health care costs and services. Since the human body declines in overall health with age, we assume an increase in costs and a higher need for health related services as the overall size of elderly people within a population grows. Likewise, if the percentage of people within a population is relatively younger, one might assume that healthcare costs would be lower for that population (relative to a population which is generally older), but of course, one cannot or should not make blanket statements such as this as if they are established fact.
In developed countries such as the US and western Europe, the institution of insurance has arisen to assist individuals in mitigating the worst of catastrophic health costs (and to make the insurance companies a little bit of money). The insurance model spreads the risk across the population in the form of insurance payments. I pay a monthly premium to my insurance company, and when I get sick, the insurance covers my incident costs. However, there are many months when I am not sick or when I don't get into an automobile accident and break my neck (thus incurring a $900,000 hospital bill), yet I still make those monthly insurance premium payments. Thus, the risk to health care costs for one individual is spread across all of the people making insurance payments to the same company. In any one period, say a month, the chances of EVERY person requiring health services is relatively low. Why is this ...
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