Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Economics and Policy
Health Ec...
Health Economics and Policy
Questions and Answers
The Economic Perspective
✓ ~~~ Unique among the social sciences in that it establishes a context of scarcity and
uncertainty
Health economics
✓ ~~~ studies issues related to efficiency, effectiveness, value and behavior in the
production and consumption of health and healthcare. Broadly, it deals with how
healthcare systems function.
Arrow's "Uncertainty"
✓ ~~~ Arrow argues that healthcare doesn't fit the free market model. To Arrow, unless a
patient knows much about medicine as his/her doctor, the patient cannot evaluate the
quality of advice the doctor gives him/her. This, arrow calls "uncertainty."
Grossman's "Production on Health" Model
✓ ~~~ Grossman developed an economic framework for the study of medical care demand
in which medical care counts only as one of the many factors used to produce good
health.
Grossman's Determinants of Health
✓ ~~~ Grossman considers the determinants of health to include, income, wealth,
education, genetics, and public health.
Are Healthcare systems static or dynamic?
✓ ~~~ Health care systems are not static. Rather, they are dynamic in that policy makers
and planners are always looking for better ways to produce, deliver, and pay for a growing
menu of medical care services demanded by an insatiable public.
Healthcare facilities in the United States
, ✓ ~~~ predominantly owned and operated by the private sector. Government facilities are
relatively small in number.
Health insurance in the United States
✓ ~~~ now primarily provided by the government in the public sector. 60-65% of healthcare
provision and spending comes from such programs as Medicare, Medicaid, TRICARE,
and the Veteran's Health Administration.
Medicare
✓ ~~~ emerged in 1965 as a national social insurance program administered by the US
federal government. It guarantees access to health insurance for US citizens and resident
aliens, 65 and older, younger people with disabilities, and people with end stage renal
disease.
Medicaid
✓ ~~~ was created by the Social Security Amendments of 1965. As a health program, it
serves people and families with low incomes and resources. Jointly funded by the state
and federal governments, Medicaid is a means-tested program that is managed by the
states.
TRICARE
✓ ~~~ serves the military population by providing civilian health benefits for military
personnel, military retirees and their dependents, including some members of the
Reserve Component. It is managed by Tricare Management Activity (TMA) under the
authority of the Assistant Secretary of Defense (Health Affairs).
The Veterans Health Administration (VHA)
✓ ~~~ implements the medical assistance program of the VA through the administration
and operation of numerous VA outpatient clinics, hospitals, medical centers and long-term
health care facilities (i.e. nursing homes). The VHA is the component of the United States
Department of Veteran Affairs (VA) led by the Under Secretary of Veterans Affairs for
Health.
Uninsured people in 2009, 2010. 2011
, ✓ ~~~ 49.9 million people were without insurance in 2010. This accounted for 16.3% of the
US population.
In 2009, this figure was 16.1%.
In 2011,46.3 million Americans were uninsured.
The three broad and important issues regarding the current state of US Health Care
✓ ~~~ quality, access and affordability
Reasons for the need to reform US Health Care
✓ ~~~ - In the last decade, private health insurance coverage has gradually declined with
the number of uninsured rising at an alarming rate.
- Gaps in health insurance coverage combined with the astronomical rise in
spending on medical care.
- Concern over access to care for the uninsured and whether those who are currently
insured would continue to be insured.
- Whether the quality of medical care would suffer as managed care gradually
becomes the norm for the provision of medical care.
Americans without insurance coverage
✓ ~~~ find themselves relying on public assistance and private charity for their care. Many
people get insurance coverage through their place of employment so there is a genuine
concern that that coverage would be lost upon losing the job.
Health Care Crisis Causes
, ✓ ~~~ Experts on health care see the healthcare crisis as one that is borne out of the
astronomical rise in aggregate spending coupled with the problems the government is
experiencing in sustaining Medicare and Medicaid.
But there appears to be divergence of views from experts as far as the cause of the
crisis is concerned.
While some argue that the problem lies in the unrestrained use of medical
technology, others believe that the increased use of health insurance and tax
subsidies that encourage individuals to overinsure is driving the crisis.
The Unique Nature of Medical Care as a Commodity
✓ ~~~ 1. The demand for medical care is irregular
2. There are information problems associated with medical care transactions.
3. There is widespread uncertainty in medical transactions.
4. There is widespread reliance on not-for-profit providers especially in the provision
of hospital services.
The demand for medical care is irregular
✓ ~~~ With the exception of a small percentage of care that fall under the classification of
preventive, the demand for medical care follows an accidental injury or the onset of
illness. This is not the case for other commodities
There are information problems associated with medical care transactions.
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