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    This post addresses how providers control expenditures.

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    How do health care providers control expenditures for health care? Suppose reimbursement rates to physicians under all payers are limited by law. Use the supply and demand analysis to show how the limit on the amount of reimbursement is not the only effective way to decrease expenditures for health care if health care providers succeed in increasing the demand.

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    Health care providers control expenditures for health care by providing a greater percent of the lowest care services, and providing a low percent of the highest care services. This is usually done by offering substitute services, in which the lowest care services are comparable to their higher priced counterparts, but ...

    Solution Summary

    The solution provides a detailed discussion explaining how health care providers control expenditures for health care. Supply and demand analysis is used to show how the limit on the amount of reimbursement is not the only effective way to decrease expenditures for health care if health care providers succeed in increasing the demand.

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