Econ 402
Chapter 3 1. How can health production function allocate funds to improve health status? 2. Describe the health production function for decreasing deaths from coronary heart disease. 3. Describe the health production function for decreasing deaths among young adults.
1. A cost per life saved calculation can be performed and money should be allocated to the program that saves the most lives for the least amount of money. 2. To decrease deaths the most efficient way, lifestyle changes are the least expensive and life-changing. These changes are mostly only used by the most educated people, but advances in technology, drugs, and exercise has helped reduce these deaths. To do this most cost-effectively, more community care centers focused on prevention and early detection can help reduce these deaths further. 3. Increase spending on drivers education to reduce deaths caused by auto accidents.
Chapter 5: 1. What determines how many physician services an individual demands? 2. in what ways can moral hazard be limited? 3. Assume that medical services are free to everyone but that the government restricts the supply of services so that physician office visits are rationed by waiting time. Which population groups would far better? discuss: the high price sensitivity of insurance copremuims indicates that if employees had to pay out of pocket the difference between the lower-cost health plan and any other insurance, market competition among health plans would be stimulated.
1. Health, income, attitude towards seeking care, and they have to pay for care. 2. HMOs, utilization reviews, increased co-pays and deductibles, prior authorization for hospitalization. 3. The population group that would benefit the most would be people that need serious care or people that live in lower populated areas so fewer people are on the waiting list. Discuss: This statement is true because employees would consider the benefits of each plan before they would choose to buy it. Insurers would have to become more competitive and offer better services for lower prices to attract customers.
Chapter 25: 1. which factors have contributed most to the increase in drug expenditures? 2. Are rising drug expenditures necessarily bad? 3. What methods have managed care plans used to limit their enrollees' drug costs? 4. What are the likely consequences of the ACA closing the "donut hole"?
1. Increased aged and insurance coverage for RX has increased utilization. 2. Increase in drug prices. 3. changes in they type of drugs prescribes, for example, one that can be taken for decades to treat chronic conditions as opposed to drugs taken for a short period to treat an infection. 2. Rising drug expenditures are favorable when innovative drugs become available, substitute for more costly medical care, and improve the quality of life. More prescriptions per person can indicate better management of chronic diseases and a better quality of life. 3. They negotiate better prices with drug companies because an HMO will put the drug on their formulary sheet. if this means that a competitor will not be on the formulary, than this can mean deep discounts. Pharmacies must carry all drugs and competitors drugs so there is not incentive to give them discounts. 4. The likely consequences are likely to increase prescription drug utilization and Medicare drug expenditures
Chapter 30: 1. What were the dissatisfactions with the public-interest theory of government? 2. Why are concentrated interests and diffuse costs important in predicting legislative outcomes? 3. Evaluate the following policies according to the two differing theories: a. medicare and medicaid beneficiaries, taxation, and generosity of benefits b. the performance of state licensing boards in monitoring physician quality
1. Instead of only regulating monopolies, government began regulating competitive industries and professions. The government established entry barriers into regulated markets.????????????????? 2. Those who have concentrated interest which are those on whose profitability the legislation will have a large effect by affecting their revenue or costs are more likely to be successful in the legislative marketplace. While with diffuse costs, which is when one group has a concentrated interest in the legislation, that group is more likely to be successful if the costs to finance those benefits are not obvious and can be spread over a larger number of people 3. ECONOMIC -Medicare has higher more generous benefits that medicaid because they elderly have more political power and can provide more benefit to legislators -Taxation is progressive and is spread to and diffuse -generosity of benefits is based on the amount of political support a group may offer -state licensing boards are barriers to entry and prevent competition in a regulated field which drives up costs PUBLIC INTEREST - M/M is the right thing to do -Taxation should be progressive -better benefits for the poor -monitoring is done to keep population safe
Chapter 26: 1. How have the 1962 amendments to the Food, Drug, and Cosmetic Act affect the profitability of new drugs? 2. What is the difference between identifiable death and statistical death? 3. Why has the FDA's drug approval process sped up in recent years? 4. What are the advantages and disadvantages of greater reliance on pre-marketing test versus post-marketing surveillance?
1. It increases the research costs of drugs due to more clinical studies and delayed approval because of more regulation. 2. Identifiable death is when someone is publicized because a drug killed them. Statistical deaths is when people die when a lifesaving drug is unavailable. 3. The Prescription Drug User Fee Act of 1992 collects fees from drug manufacturers that are getting their drugs approved in order to increase FDA staff members that approve drugs. 4.Advantages- increased safety of drugs to the public. Disadvantages- Delayed drug approval, reduced profit, and more statistical deaths
Chapter 2: 1. why do economists believe the value of additional employer-paid health insurance is worth less than its full cost? 2. Why do rising medical expenditures cause concern? 3. Why are large employers and government concerned about rising medical expenditures?
1. It is purchased with pre-tax dollars. The price of the insurance is reduced by the employees tax-bracket. 2. Spending more on medical care means there is less to spend on other goods and services. Increased spending on healthcare is no longer optimal and will no provide less benefit than the cost. 3. The government pays for the care of the elderly and indigent and wants to keep prices low. The business sector's spending on health insurance is increasing due to increasing cost of care.
Chapter 13: 1. How effective is the deterrence function of the malpractice system? 2. Discuss the advantages and disadvantages of no-fault insurance. 3. Evaluate the possible effects of the following on deterrence and victim compensation. a. Limiting lawyers' contingency fees b. Special Health Courts c. Limiting the size of malpractice awards d. Placing the liability for malpractice on the healthcare organization to which the physician belongs
1. Not very. Only few negligence claims filed. Malpractice insurance insults some physicians from the costs of negligence. 2. Patients would be compensated whether to not negligence occurred and litigation costs would be lowered. No deterrence mechanism and compensating all patients could be very expensive because it can people to abuse the system. 3. a. Lawyers would be less likely to take claims that are not really negligence. b. More effective administration and quicker. More expertise about subject matter. More patients compensated, but probably less money rewarded per case. c. Decrease malpractices premiums. Patients may not receive full damages to make them whole. d. Incentivize HCOs to increase quality assurance measures and risk assessments.
Chapter 20: 1. why is it said that competition in medical care has failed? 2. what are the criteria for a competitive market? 3. Is it the responsibility of a competitive market to subsidize care for those with low income? 4. explain why the cost of the Medicare Part D drug benefit has been lower than its projections
1. Per capita health care spending is rising, middle-class families are finding insurance to be too expensive, life expectancy is lower and infant mortality is higher than some other countries with lower healthcare expenditures. 2. Information, consumer incentives, consumer choices, supplier incentives, price markups, redistribution. 3. No, it is the responsibility of the government to subsidize though who cannot afford healthcare. This can be achieved in the competitive market through the use of vouchers for health insurance. 4.Medicare Part D pays for 75% of the costs while patients pay 25%.
Chapter 4 1. Why do physicians play such a crucial role in the delivery of medical services? 2. What are some of the ways in which insureres seek to compensate for physicians' information advantage? 3. What forces currently limit supplier-induced demand?
1. Physicians control the use of medical services, such as admission to hospital, use of ancillary services, referrals and prescription medication. 2. Implemented second opinion requirements, creation of PPOs, and utilization reviews. 3. Patients may decide it is not worth their time to go back for additional treatments.
Chapter 10: 1. In what ways does the current physician payment system differ from the previous system? 2. What are the likely effects of Medicare's payment system on its patients' out-of-pocket expenses. Part B premiums, and access to physicians (Primary care versus specialists)? 3. What, if any, are the likely effects of Medicare's payment system on patients in the non-Medicare (private) sector? 4. What are the likely effects of Medicare's physician payment system on physicians (by specialty)?
1. RBRVS and DRGs, instead of cost plus reimbursement. SRG controlled fee for services prices and balance billing limits. 2. Decrease specialist incomes and lower medicare procedure expenditures. 3. Private sector patients have have to pay more due to cost shifting. If already at most profitable levels, may be reduced instead of increased to attract more patients. 4. Physicians may increase demand inducement to counter the lower reimbursement rates.
Chapter 7 1. What are the different components of a health insurance premium? If an employer wanted to reduce its employees' premiums, which components could be changed? 2. Why do insurers and HMOs have an incentive to engage in preferred-risk selection? 3. What are some methods by which insurers and HMOs try to achieve preferred-risk selection? 4. What is the difference between experience rating and community rating, and what are some consequences of using community rating? 5. What are some reasons the ACA is likely to cause premiums in the individual health insurance market to be higher than in the past? 6. Why have insurers developed narrow provider networks on the state and federal insurance exchanges?
1. The loading charge, about 15%, and the claims experience of the group, the other 85%. He could try to reduce the loading charge because the claims experience cannot be changed without changing the behavior of the employees. 2. Seeking out this who have lower than average risks because the risk is spread out more and there is a smaller chance of having to pay for medical services. 3. Try and enroll younger people with better than average claims experience. Locating clinic in areas with healthier populations. Emphasizes sports medicine and wellness to attract healthier people. 4. Community rating means charging the same premiums to everyone regardless of health and experience rating is charging premiums based on claims experience. Community rating causes preferred risk selection and reduces insurance companies incentives to promote healthier behaviors. 5. Made it so that you can't discriminate pre-existing conditions, set rules on insurance companies om how health insurers are permitted to vary their premiums. They are required to use a modified form of community rating. 6. To control costs by discouraging enrollees from using out-of-network providers, which are likely to be more expensive. This is because younger individuals are not expected to by insurance and older, higher-risk individuals are.