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The Grossman Model of Health Demand Essay Sample 

This essay sample shall highlight the Grossman Model of health demand, its predictions, and factors affecting the health care demand in Ireland.

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Michael Grossman was a health economist who developed the optimal control model of health demand and medical care in the year 1972.

The prime focus of the Grossman Model is health which is seen as a durable capital stock that produces an output of healthy time. It is being assumed that individuals inherit the initial stock of health that gets depleted with time and age and its value can only be increased through investment.

Such a health investment is very similar to the wage rate system in the human capital models.

A person’s stock of knowledge affects the market productivity while the health stock determines the total amount of time one can spend on earning money and resources. An Individual’s health depends upon the person’s stock of health and duration of life.

People can make their health better by dieting, exercising, healthy habits, sleeping enough, and through another natural process.

Taking care of health requires an investment in the form of money and time but all the time cannot be spent on improving health. Work is also required to generate income so that better goods and services can be consumed during the lifetime. Also, there will be no leisure time to enjoy one’s life.

Therefore, such an individual who cannot spend his time on health will focus more on the monetary aspect of spending on medicines and doctors.

According to the Grossman model, it is said that unlike human capital which is affected due to the wage rate and productivity, health does not get affected by productivity.

Health is determined on the basis of the number of days a person can work as it would ensure that such a person is not sick. It affects the salary of a person annually but not the wage per hour.

‘Shadow price’ of health depends upon other factors apart from the price of medical care. It rises with the age of the person as the health deteriorates.

An increase in the shadow price reduces the quantity of health demanded an increase in the quantity of medical care demand.

Predictions of Grossman Model of Health Demand 

  • The first prediction of the Grossman model of health demand is that people will start investing more in medical goods, medicines, and services as they age.

Their health starts depreciating fast as they start aging which makes the people start spending more on medicines and health-related activities. An increase in the depreciation rate will increase the gross investments and decrease the health stock capital.

  • It is predicted that whosoever is paid high wages shall invest more on the health through the medical goods and services instead of own time investments on health because the cost of time is higher.
  • It is predicted and assumed that the people with education are efficient producers of health and such people long for better health gains and invest more in health. They will demand larger optimal stock of health due to education.

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Factors affecting the Healthcare demand in Ireland 

  • High-income group families in Ireland tend to have higher use of health care services since they can afford it at any cost. They spend their money on preventive care to reduce the need for health services.
  • The price shall affect the health care demand services in a negative way. It affects the low-income group since they cannot afford such expensive health care services.

Price influences the choice of a person to use or not use the public or private health care services.

  • Health insurance is an effective method to help in financing any healthcare needs of a person. It reduces the cost of care and the ability to secure health services by the Irish citizens. It raises the expenditure and utilization of health care.
  • The presence of children and older adults increases the health risk and chances of an increase in health care services demand in an Irish household. Ireland’s majority of people comprises the old age group so the frequency of illness is higher.
  • Any form of sexual discrimination in Irish society has affected the female population who is in need of healthcare services. As women in many societies are considered to be of low economic value in the household so are not provided equal healthcare service.
  • A large family in Ireland that has many members have a high number of potential patients than other families. It may reduce the income per capita as large family health services use may get reduced due to low purchasing ability.
  • The physical distance between the health care facility and residential places (old age and sick people) is huge which makes it difficult to commute from home to the healthcare center. This is also seen as a major setback or factor affecting the health care demand in Ireland.

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The above sample highlights the Gross Model of health demand and its features.

Healthcare Support QQI Level 5, Careskills QQI Level 5, Wellbeing QQI, Care Assistant QQI Level 5, Diploma in Health and Economics students can study this sample to get an overview idea of the health economics topic.

We have a number of healthcare and economics assignments on our Ireland assignment help website to help the students with understanding concepts. If understanding such topics is a problem then students can hire a professional writer for the college assignments.

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