Health Care Issues and Cost

1. Health Care Issues
• Cost – To Society
• Access
• Quality

2. Health Care Market
• Competition
large number of buyers and sellers
• Information
buyer and seller have full information
• Externalities
third parties do not bear costs or benefits

3. Competition
• Licenses limit number of suppliers
• Patents on pharmaceuticals create
monopolies
• Increasing number of health insurance
providers limits bargaining power
all this increases costs

4. Information
• Doctors, not patients, have most of the
information
• Doctors (providers) make the major decisions,
but do not bear the costs

5. Externalities
• Socialized costs: Insurance (government and
private).
• Socialized benefits: communicable diseases.
• Government tax benefits subsidize expensive
insurance.
• Cost of care for uninsured passed on to the
insured.

6. Health Care: Europe and US
Europe
• National Health
Service, or
• National Health
Insurance
 Covers 80-100% of
pop
 Covers 70-90 of
costs
United States
• Medicare (elderly) {Parts A & B}
• Medicaid (poor)
• Tax exclusion for employer
coverage (middle class)
• Indian Health Services
• CHIPS (working poor,
children)
• Veterans Health Care
• More………….

7. US Programs (continued)
• Black Lung Health Benefits
• Municipal Hospitals
• Community Health Clinics
• Community Mental Health
• Kidney dialysis program
 Covers 45% of population
 Covers 45% of cost
(excluding tax benefits)