PPD514 ECON FINAL
The denial of beneficial medical care for nonmedical reasons
rationing
for QALYs, each life year is assigned a value from _______________
0 to 1
PCORI was established by the ____________
ACA
-payment to an owner or factor of production in excess of the costs needed to bring that factor into production ("excess profits")
Economic Rents
allocatively efficient
MB = MC
allocatively efficient is where
MB = MC
consumers make choices on spending based on ____________ and ______________
MC, MB
what is the unit of measurement for cost effectiveness research?
QALY
what impacts sensitivity of price to quantity?
moral hazard, type of service, income
insurance company excludes those with pre-existing conditions
adverse selection
using unobserved attributes to select
adverse selection
one side (buyer or seller) has more information than the other side -- examples
adverse selection, moral hazard
setting a cost-QALY threshold is based on an assessment of:
affordability, societal assessment, opportunity cost
why have health care costs been rising?
aging population, higher income, insurance coverage, technology, increased prevalence of disease
Buyers with higher value goods gain access; buyers with value<price do not get the good
allocatively efficient
MB = MC
allocatively efficient
compares health interventions to assess what works best for improving health
comparative effectiveness research
•What ICER does -______________________ effectiveness -_________________ effectiveness also •A _____________ focused approach •A ______________ affordability approach
comparative, cost, qaly, budget
perfect markets have perfect _________________________
consumption efficiency
benefit compared to cost
cost benefit analysis
what are the three different types of cost effectiveness research?
cost benefit analysis, cost effectiveness analysis, cost utility analysis
Comparing alternative to achieve a single outcome
cost effectiveness analysis
analysis with the goal of obtaining the most health possible for the available resources
cost effectiveness research
compares the cost of medical intervention to a measure of the outcome's value
cost effectiveness research
what is the cost effectiveness ratio?
cost of intervention/improvement of a single outcome
Often simply called cost effectiveness research
cost utility analysis
cost effectiveness research can either raise costs or lower them -Implies all care with benefit should be __________________ -But has shown procedures with _________________ benefit -Also can identify procedures with no additional benefit compared to less ___________________ treatment
covered, negative, expensive
What does PCORI do? -Funds systems for ________________, ________________ development -Support _______________ effectiveness studies -No ______________ approach
data collection, method, comparative, QALY
distribution
equity
a spillover effect associated with production or consumption that extends to a third party outside the market
externalities
consumers and/or producers may not experience the actual MB or MC or a decision
externalities
market failures
externalities, public goods, market control, information failures
what problem do public goods create?
free rider
What's the alternative to markets?
government control
examples of non price rationing
government, time
is a direct input into our utility function
health
medical care is not valued; just in it's ability to produce value in _________________
health
•Evidence (RAND, Oregon) shows that insurance -Increases use of _______________ -Minimal improvements in most ______________________, except for _____________________ -Some new evidence suggesting reductions in _______________
health care, health outcomes, mental health, mortality
what is the unit of measurement for comparative effectiveness research?
health outcome
where is CE used? •Primary focus on the assessment of new technologies (__________________________) •Private sector plans use in making ____________________ decisions •_____________________ does not use CE
health technology assessment, coverage, medicare
•Cost-effectiveness analyses reveal the trade-offs involved in choosing among alternative interventions, with the goal of obtaining the most ________________ possible for the available ________________
health, resources
Why is spending the US higher?
higher prices of labor and pharma, higher administrative costs, differences in population
what does CBA ask?
if you spend a dollar, do you get a dollar or more of benefit?
types of budget constraints
income, time
solutions to moral hazard
increase the amount individuals have to pay, utilization management, provider incentives
one side (buyer or seller) has more information than the other side
information problems
ICER
institute for clinical and economic review
what is the purpose of health insurance?
insulate patients from financial risk
we want to spend the ____________ per QALY
least
productively efficient
least costly mix of inputs for a given level of output
a QALY incorporates what outcomes?
life years, quality of life
health care costs are often hidden by?
lost wages, taxes
production efficiency graphed
lowest point on AC curve
what are some restraints on increased spending?
managed care, HMOs, PPS and DRG, recession, technology slow-down, higher patient cost sharing, reforms to reduce use
the focus of cost effectiveness research is the ________________ analyses of health care interventions
marginal
either producer or consumer has some control over the price and quantity
market control
_________________ is a derived demand
medical care
inputs to the production function of health
medical care, education, age, consumption, time, environment
ways to measure the marginal productivity of inputs
medical spending, health behaviors, education
for cba, you express benefits in _____________________ value
monetary
imperfect monitoring of behavior
moral hazard
individuals use more because they have insurance
moral hazard
how do we measure health outcomes?
mortality, disease progression, disease prevention, quality of life
generate a cost to a third party without compensation
negative externality
when is a project worth investing for CBA?
net present value is positive or when benefit cost ratio is greater than 1
perfect (competitive) markets have:
no barriers to entry or exit, many firms, homogeneous goods, price takers, perfect information
supplier of that good cannot prevent people who do not pay from consuming it
non excludable
types of rationing
non price, price
the same unit of the good can be consumed by more than one person at the same time
non rival
what are public goods?
nonexcludable, nonrival
health is a _____________ good
normal
Issues with QALY: •Potential impacts on _______________ life quality •_______________ have fewer LY to work with •_____________________ based perspective •BIG ONE: How much is life ____________ -How much are we willing to ___________ for a QALY? -Important for assessing the _______________________ of an intervention
others, elderly, population, worth, spend, absolute value
point at which no one can gain without someone else being made worse off
pareto efficiency
PCORI
patient centered outcomes research institute
perspectives not captured through CE
patient, legal, cultural, budget, logistics
pareto efficiency is represented as:
point on the PPF
generate benefits to a third party without them having to pay for it
positive externality
demand for health - consumer side: 1. __________________ for health 2. willingness to pay for __________ and __________________ inputs 3. allocation of __________________
preferences, health, production, budgets
ICER is ___________________ (supported by _________________)
private, philanthropy
health is an input into the _________________________ in our utility function
production of other goods
Producers produce with least-costly mix of inputs for a given level of output
productively efficient
components of costs (for cost effectiveness research)
program costs, costs incurred by those affected, costs in other parts of health system
Concerns with CE?
quality of info, perspective, bias, time frame
solution to externalities
regulation, subsidies, taxes
why do we need to ration care?
scarcity
Characteristics of a market: buyer pays ______________ for goods/services _________________ determine how much to consume based on their _________________ relative to prices market prices coordinate ______________ preference for the role of markets over ____________________ markets can generate an _________________________
seller, consumers, valuation, decisions, central planning, efficient allocation
examples of negative externalities
smoking, pollution
what are the powers of the government?
spend, tax, regulate
consumers will spend more on health up to the point where their ___________________ does not bring them an equivalent amount of _______________
spending, benefit
Why isn't the healthcare market a perfectly competitive market? _____________________—insurers, governments—often have an interest in health care _____________. _________________ often don't know what they need and cannot _______________ the treatment they are getting. Health care providers are often paid not by the patients but by __________________ or __________________ health insurance. The rules established by these _______________, more than market prices, determine the _____________ of resources.
third parties, patients, evaluate, private, government, insurers, allocation
health impacts income in what ways?
time spent working, amount earned, prices
•Government management -Payments can be _________________ -Payment rates may be tied to ________________ (e.g., trading votes for higher Medicare hospital reimbursements) -_________________ lack expertise -Depends on __________________ of government •Make markets better -Improve market functioning through __________________
too high/too low, politics, legislators, efficiency, regulation
•Utility function (indifference curve) -Individuals value health but also value other things -Individuals are willing to make ________________________ between health and other goods, but at varying rates (based in some degree to their stock of health)
trade-offs
aka indifference curve
utility function
what are the 3 elements for the demand for health?
utility function, production function, budget constraint
examples of positive externalities
vaccines, medical research, information, technology
•Concerns with effectiveness research -Ignores _____________________ in effectiveness by patient type or provider skill -Role of _____________________ studies versus RCTs -Are demands for ______________ (baseline is no research) a cover for opposition? -____________________ care
variation, observational, purity, rationing
What's the problem with high spending in healthcare?
waste, worse health and economic disparities, crowds out other social priorities
how can health directly influence our budget constraint? impact on ______________/____________ (through time spent working and/or ability to work) impact on _________________ (medical spending to improve health)
wealth, income, spending
what are some techniques for setting a cost-QALY threshold?
willingness to pay studies, value of statistical life
