In the beginning health insurance was provided by some businesses as an employee

Question

In the beginning health insurance was provided by some businesses as an employee benefit and it was not controlled by the government. In many other Western countries health care is not provided by employers but rather by the government and it is paid for through universal taxes.

When one of us visits our doctor, or has a medical procedure done - with supply and demand what do we base our purchase on- the actual cost or what is our co-pay? The price and demand to the recipient of health care is what comes out of their pocket at the time of purchase. The health insurance company provider is what is called a "third party payer".

Discuss what if there was not a third party payer. A patient was billed for the full medical service then sent the bill to the insurance company for reimbursement .

How would this system effect supply/demand and price?

Please write in own words. don't be very detailed.

Explanation / Answer

We base our purchase on the basis of co-pay as the insurance money is paid as an when an individual is medically examined. In case there is no third party who can actually provide financial assistance while availing medical service then :-
Health as Investment :- Everyone will prefer to have better health even though there is no medical help because health will lead to future benefits, income, etc.
Mortality decrease and productivity increase are some of the few reason due to which people's demand for health will be high even though there is no third party. Hence, we can say that in the event of no assistance from 3rd party the demand for better health will be high and supply of better health will be low as people wont be able to avail it due to no medical assistance from 3rd party.

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