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Article Summary An Organisation for Economic Co-Operation and Development (OECD) Report

question 66

Multiple Choice

Article Summary
An Organisation for Economic Co-operation and Development (OECD) report states that administration costs for health care in the United States are the highest in the developed world, accounting for over 8 percent of spending in the health care sector, compared to a global average of about 3 percent. According to the report, expensive surgeries, high pharmaceutical costs, and corrupt practices increased global health care costs, and poor coordination between health care providers, duplication of tasks, and excessive time spent on paperwork all contributed to higher administrative costs. The report also noted that administrative costs are generally lower under government-managed health care systems than with private insurance, but governments could still significantly cut spending and improve patients' health.
Source: Alanna Petroff, "U.S. health care admin costs are double the average," money.cnn.com, January 11 2017.
-Basic supply and demand analysis indicates that having firms rather than the government provide health insurance to workers

Definitions:

Factor Prices

The costs associated with the inputs used in production, such as labor wages and capital rental rates.

Production Function

An economic model that describes how inputs are transformed into outputs by a firm.

Units Of Output

A measurement of productivity that represents the total quantity of goods or services produced by a firm or economy.

Labor

The human effort, including both mental and physical activities, employed in the production of goods and services.