An acceptable health care system should provide access to care for all citizens while keeping costs low through quality and effective services. The US system falls short of these goals, with most debate focusing on coverage and costs. Costs can be lowered by reducing demand or increasing supply in the partially private US system where prices are influenced by supply and demand. People demand healthcare to stay healthy, and this demand has grown due to changes like an aging population, higher incomes, and new medical technologies. Competition has reduced prices in the US healthcare market but consolidation among providers and insurers has limited this effect.

1. An acceptable health care delivery system should have two primary objectives:
(1) it must enable all citizens to access health care services, and (2) the services must be
cost-effective and meet certain established standards of quality. In many ways, the U.S.
health short of these ideals. Most discussion around healthcare these days focus on
covering all Americans and on lowering health care costs. In the partially private U.S.
health care system, prices are still somewhat subject to the law of supply and demand.
Healthcare prices (and therefore costs) can thus be lowered by either reducing demand of
increasing supply.
Economic is a behavioral science that begins with two propositions about human
behavior. First, human behavior is purposeful or goal directed, implying that people will
act to promote their own interest. Second, human desires and demands are unlimited:
however resources are limited and cannot meet unlimited demands. Thus, the basic
problem addressed by economics is how to allocate limited resources among unlimited
demands.
Why do people demand healthcare? The simple answer is that they want to be
healthy. This desire to remain health has led to a continuous growth in the demand for
health care. However, there are also a number of specific reasons why the demand for
healthcare has expanded so dramatically over the past few decades:
 Changes in the age structure
 Increasing real income
 Improvements in medical technology
The U.S. healthcare market has relied extensively on competition to control costs and
improve quality. Competition has fostered reductions in prices, but consolidation by
providers and, to a lesser extent, insurers, has tempered this effect. Discussion on
healthcare arouses great passion in us all—who gets healthcare and how much they get is
a moral and practical challenge to a civilized society.
The fundamental problem of scarcity requires choices. Even if our preference is to
spend more on healthcare, there are limits as to how much we can spend on it provision.
However much we do decide to spend, we want to spend it efficiently so that we get the
best quality of care for a given commitment of resources.
The consumption of healthcare is a complex process, driven by such diverse
factors as: the health status and demographics of the population, inflation, the prevalence
and level of medical insurance, the financial incentives of providers, and more recently,
intervention by third party payers. While some of these factors impact the
microeconomics decisions affecting the individual consumption of healthcare, other
factors affect the macroeconomics aspects of healthcare. Such factors include: increases
in wealth, price inflation, physician supply, benefit richness and the specialization of
physicians. Increases in wealth and income are leading indicators of healthcare
consumption. As the wealth of the population increases through economic growth, each
marginal dollar of income is allocated to some form of savings or consumption.
As physician supply grows, this creates an impact on the price, quality and
quantity of healthcare consumption. Increasing physician supply should work to hold
down prices, and increase quantity and quality by improved access to and usage of
medical technology. As the population ages, more healthcare is consumed due to natural
physical deterioration of the ageing process.