McPake and Normand (2008) and McPake et al. (2013) present two main reasons why we should be concerned about the demand for health and healthcare. First, this would help us predict likely reactions and behaviour. Second, knowing something about people’s demand for healthcare may tell us something about how much they value health services (p.11).
The demand for healthcare has similarities and differences with the demand for other goods (ibid. p.11 and p13-15). The differences between the demand for healthcare and the demand for other goods are based on a set of four aspects: who chooses and uses the service; the degree of uncertainty; timing; and the degree of enjoyment (see Table 2).
a) Who chooses and uses the service: In relation to the demand for other goods/services, the individual makes the choice and uses the service. However, in healthcare, decisions are often made for the individuals because they are either extremely ill or have limited information about their illness. In some cases, the doctor and patient decide (ibid.)
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b) Degree of uncertainty: Uncertainty is a unique future of the need/demand for healthcare. Uncertainty arises from 1) the fact that the choice of treatment has been made on behalf of the patient who has little knowledge of their illness and the treatment. In this case, there is also uncertainty regarding the treatment outcome;
and 2) the inability of individuals to predict when they need healthcare, what healthcare will be needed and how much will be needed. Again, as indicated by McPake et al. (2013), such a scenario constitutes the basis for the need for insurance to cater for unforeseen future health needs. Ultimately, insurance breaks the direct link between the decision to use a service and the price charged.
c) Timing: McPake and Normand (2008) and McPake et al. (2013) note that timing between the incidence of illness and ability to pay/source for funds breaks the patterns of incomes determining the demand for services. They note that
In general, we are healthier when relatively young and relatively rich. These are times when we are least likely to need healthcare but most likely to be able to afford it […] yet, in general, we have medical needs when we are older and usually poorer. (P.11 and p.14)
In such a scenario, insurance as a payment option becomes more relevant, although, as noted earlier, it breaks the direct link between the decision to use a service and the price charged, which is experienced in the demand for other services.
d) Enjoyment: McPake and Normand (2008) and McPake et al. (2013) further note that we rarely enjoy using healthcare services, unlike other goods. McPake et al.
(2013) describe the experience with healthcare as having long-term gains at the expense of short-term pain or inconvenience.
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Table 2: Differences between the demand for healthcare and the demand for other goods
Dimension Demand for other goods Demand for healthcare 1. Choice and use of
service
The individual makes the choice and uses the service
The individual who makes the choice may not be the same using the service
Possibility of joint decision-making between doctor and patient
2. Degree of uncertainty
We are sure of what we need, when and how much
A high degree of uncertainty because of
• limited/no advance knowledge about what we need, when we will need it and how much we will need
• not being sure about treatment outcomes and results
Note: Some health interventions, e.g. immunisation and eye tests, are characterised by certainty in relation to timing and content
• Some individuals cannot afford to pay and therefore have no effective demand.
• Intervention of other parties to pay on behalf of others through insurance, subsidies, and charitable funding.
• Insurance breaks the link between the decision to use a service and the price charged.
4. Timing When we are young and relatively rich, we can pay; but
when we are old, we are less likely to afford healthcare.
Hence, much as we need healthcare more when we are old, we are less likely to afford it then.
Insurance breaks the link between the decision to use the service and the price charged
5. Degree of enjoyment of a service
We are more likely to enjoy what we have bought
We seldom experience enjoyment but enjoy long-term gains at the expense of short-term pain or
inconvenience
Source: Adapted from McPake and Normard (2008) and McPake et al. (2013)
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Despite the differences indicated in Table 2, there are two main similarities, and they are related to the demand curve and the issue of information asymmetry. First, the demand for healthcare is somehow like the demand for other goods. McPake et al.
(2013) note that despite the inefficiency of the markets to determine the allocations resources for healthcare, the behaviour of people seeking health services often reflects normal patterns of demand. For example, people may buy more when prices are low and when income rises. They may also buy less when prices are high and income falls. Hence, this scenario could explain the long queues and waiting times for treatment.
Second, just like the demand for other goods, the demand for healthcare also experiences information asymmetry (ibid.). Information asymmetry means that one party to a transaction has more information than another. For example, a professional may have more knowledge about the good/service while the health professionals are also better informed about the illness than the patients (McPake et al., 2013). They further add that such a scenario may lead the health professionals, as agents, to abuse their role to pursue their profit-seeking motive as a supplier. This is one of the justifications for the presence of institutions such as medical ethics and self-regulatory bodies (ibid. p.48).