Question

How does poverty influence peoples’ choices with respect to a) the decision to enroll in health insurance and b) seeking health care when needed. Discuss the economic explanations.

Answer 1

Introduction

The availability of funds is an important factor that ultimately helps in deciding the healthcare requirements of any country. Over the years, countries have realized its importance and have laid wide level stress on medical fitness and overall health as it impacts any economy.

Due to the stress that governments have done on improving healthcare facilities across the globe, there has indeed been an increase in the average life span of people and their overall quality of life has increased gradually.

To reduce sudden burden on people most developed and developing countries have made it compulsory for employees to be enrolled to health insurance but yet the progress is far from over.

Healthcare costs have been steadily rising due to new diseases taking over mankind and the effective costs of research and development respectively. Poverty plays a huge role for people in this and has been described in the section as follows.

Case Specifics:-

Poverty and the decision to enroll in health insurance:-

While deciding on a factor like health insurance, premiums and availability of funds play a pivotal role. In underdeveloped or developing countries alike, people which live in poverty are relatively high. Due to this maximum amount of their individual funds goes towards basic needs such as food and clothing.

When such people do not have money to suffice for their daily needs, the question of buying an insurance policy does not exist. In countries with low per capita income thus, the penetration of insurance companies in the market is significantly low and most people living in poverty will never take an active decision to enroll in healthcare services.

The economic explanation to this is simple. Demand is a factor of income. As the income of people is low, the demand for the products requiring higher investment tends to be relatively lesser. People do not think of insurance of being important since, in case the people do not get ill the money they suppose goes waste.

b) Seeking Healthcare When Needed:-

Healthcare problems indeed require hospitalization or medical care which comes at an expense. In most countries where poverty prevails, a common sign is that people will opt for cheaper alternatives to healthcare such as government hospitals or charitable ones wherein the cost of healthcare is low and so is the quality generally.

Critical problems that require hospitalization to the tune of surgeries are often ignored since people then neither have insurance to cover their expenses, nor the required funds to get surgeries conducted. In this situation the overall healthcare begins to suffer.

The economic logic to this again is that without availability of funds or a backup like insurance, people would demand for those goods or services which relatively cost lesser. As a result their exposure to premium healthcare services is negligible and the economy tends to suffer.

Please feel free to ask your doubts in the comments section if any.