Review of the Last Lecture began our discussion of the production of health (section III of the course outline). discussed the production function, HS=HS(HC), the APP & MPP, shift variables, and the intensive and extensive margins
YES! Healthcare exerts both positive and negative effects (recall the concept of iatrogenic disease)
For initial quantities of HC applied to an ill segment of the population the positive benefits will outweigh the negative side effects, thus the positive benefits of additional care for this group (intensive margin) will outweigh any negative side effects.
The MPP of HC at the intensive margin will be negative if additional HC yields very little positive benefit for the group and continues to yield the same negative side effects. ///
The MPP of HC can also be negative at the extensive margin
This may occur if the population, to which a HC procedure is applied, is expanded to include an ever healthier group of people
At the margin, the positive benefits from applying the HC to an ever larger proportion of the population will become less and less until finally the negative side effects of additional HC outweigh the positive health effects and the MPP of HC at the extensive margin becomes negative. ///