85). Not only is the price of medical services inelastic, the demand curve for health care is increasing, forcing upward pressure on the price of the care.
Increasing Incomes of American families have been one of the major factors in the increase of the demand curve. Economists theorize that spending on health care increases in proportion to the amount of income families" gain, meaning that for an increase of 2% in income, families spend 2% more on health care. An aging population has also increased the demand curve. Although people are living longer, healthier lives there are still a lot of elderly people in need of medical care. In most cases older people become ill more frequently and stay ill longer. Health Insurance has also attributed to the trend. People who have Health Insurance are also more likely to seek medical attention for smaller more minor problems but get help nonetheless because it doesn't cost them much. Insured people are also likely to choose highly complex procedures to solve there medical needs. Both of these results of health insurance have great effect on the increasing demand for health care. Physicians also have an affect on demand because physicians tend to recommend extra procedures for their procedures, essentially taking measures to prevent malpractice lawsuits. The extra medical attention they prescribe for their patients causes an increase in demand for doctors and their time.
Supply issues have also played a large role in the increase of health care services. Although supply has not increased as much as demand, it has increased nonetheless. For example, the amount of doctors has increased from 435,000 in 1980 to 700,000 in 2000, an increase of more than 60% (Contemporary Economics, p.86). The supply of doctors tends to be inelastic, since doctors go through such rigorous training, and medical associations purposely try to keep the number of doctors admitted to medical school artificially low in order for doctors to increase the price of services they provide.
