Health Economics, Elasticities, Market Structures, Grossman Model, RAND HIE, Adverse Selection, Moral Hazard, Optimal Insurance Contracts, Progressive and Regressive Taxes, Prospective Payment Systems, Medicare, Medicaid

Why is healthcare different from other economics?

-Information asymmetry -Externalities -Moral hazard -Complex due to non monetary measures

Indemnity Insurance

Reimburses a portion of medical expenses, more flexible

Diagnostic Related Group

Reimburses hospitals based on diagnosis and treatment

Production Function

Relationship between health investments and health outcomes

Deductibles and Co-Payments

Requiring policyholders to pay a portion of costs

Government Regulation

Rules to ensure broader access to insurance

Utility Maximization

Seeking to maximize overall well-being

Policy Limits

Setting maximum coverage thresholds

Monopoly

Single seller, unique product, significant market power

Market Failures

Situations where markets do not allocate resources efficiently

RAND Health Insurance Experiment

Study on the impact of health insurance plans on healthcare utilization and spending

Moral Hazards

additional health care that is purchased when persons become insured.

Regressive Taxes

Higher tax burden on lower incomes

Progressive Taxes

Higher tax rates for higher incomes

Adverse Selection

Higher-risk individuals more likely to purchase insurance

Optimal Insurance Contracts

-Balancing financial protection and moral hazard -No insurer will offer a contract above zero-profit line

RAND HI experiment outcome

-Cost-sharing led to reduced healthcare spending by individuals and insurers -The study found that when individuals had to pay a portion of their healthcare costs (cost-sharing), they tended to reduce their healthcare utilization, including doctor visits and hospital admissions.

How does insurers respond to moral hazard?

-Deductibles and co-payment -Policy limits -Risk assessment -Loss prevention programs -Claims regulation

How does insurers respond to AS?

-Underwriting -Risk-based pricing -Coverage restrictions -Government regulation to mandate insurance

Equity

Fairness in the distribution of healthcare resources

Marginal Analysis

Comparing additional health investments to costs

Health Insurance

Coverage that helps pay for medical expenses

Why GDP increase in HC share?

Demand: -Aging -Higher income -Moral hazard -Consumer preference Supply: -Tech advancements -HC workforce -Regulations -Consolidation providing

Resource-Based Relative Value Scale

Determines payments to physicians based on procedure values

Time Allocation

Distribution of time and resources among health-related activities

Risk Assessment

Evaluating risk profiles of policyholders

Cost-Utility Analysis

Evaluation of costs and outcomes in terms of quality-adjusted life years

Medicare

Federal health insurance program for people aged 65 and older

Grossman Model

Framework for analyzing health and healthcare decisions

Loss Prevention Programs

Incentives for safety and prevention, often given a ''prize'' for participating (gym membership).

Moral Hazard

Increased risk-taking when protected by insurance

what happens when individuals get older?

Increasing health-related expenditures as individuals age

Health Capital

Investments in health through preventive and curative measures

Government Intervention

Involvement of the government in healthcare systems

Medicaid

Joint federal and state program providing health coverage to low-income individuals

According to Grossman, higher Income and Education...

Makes an individual make better health decisions and can manage information better

Monopolistic Competition

Many firms, differentiated products, some market power

Perfect Competition

Many small firms, identical products, no market power

Pharmaceutical Markets

Markets for drugs and medications

Prospective Payment Systems

Methods for reimbursing healthcare providers

Ethics

Moral principles guiding healthcare decisions

Managed Care Plans

Organize and manage healthcare delivery, aims ro reduce healthcare cost

Information Asymmetry

Patients may not have full information about their medical condition

Cost-Sharing

Portion of healthcare costs paid by individuals

Risk Aversion

Preference for avoiding uncertainty and potential losses

Marketing and Segmentation

Targeting specific customer segments to balance risk pool

Externalities

The health of one person can affect others

Claims Investigation

Verifying legitimacy of claims so there is no foul play