Managerial Economics: Discussion, please respond to the following question:
Researchers at Stanford and the University of Pennsylvania estimated that a healthy human life isworth about $129,000. Using Medicare records on treatment costs for kidney dialysis as a benchmark, the authors tried to pinpoint the threshold beyond which ensuring another “quality” year of life was no longer financially worthwhile. The study comes amid debate over whether Medicare should start rationing health care on the basis of cost effectiveness.(Source: Time, June 9, 2008)
Why might Medicare ration health care according to treatment that is “financially worthwhile”as opposed to providing as much treatment as is needed by a patient, regardless of costs?