1
Chapter 2
Organization of healthcare systems
2.1 Introduction
A healthcare system can be defined as a collection of interdependent organizations that,
together, produce healthcare services. The list of organizations includes healthcare
insurers, hospitals, doctor practices, diagnostic facilities, nursing homes, and homecare
providers, self-regulation colleges for doctors and nurses, and pharmacies. While each
such organization exhibits its own structures, incentives and personnel selection
mechanisms, the system is typically configured with specific structures and incentives
that bind its components together to varying levels of success. In general, the structure
and the incentives interact and there are compatibility issues. For instance, if the system
incorporates competition in its various parts, i.e. the structure will allow many
organizations for the same function, incentives must be such that those organizations
are motivated to compete.
Unlike in a great majority of markets, a healthcare system embodies both the demand
and supply sides of the market except when patients access the system at first with
some symptoms. Once in the system, a patient’s demand for services takes shape
through interactions with doctors who also happen to be the providers. Therefore, a
major challenge for system architecture (including incentives and selection problems) is
to solve doctors’ problem of split loyalty.
Moreover, since insurance is desirable in the presence of uncertain and lump-sum
expenditures as is the case in serious illness episodes, individual demands are typically
integrated into group demands. Most countries go further and establish public health
insurance in which case demand and supply for healthcare are integrated through the
whole electorate’s willingness to pay for healthcare which determines the system
capacity to deliver. Once, however, political processes determine resource allocation
within the system, it is inevitable that equity and access issues have to be addresses
whereas such issues are external to market allocation of resources. Thus: “Discussions
about healthcare reform are inseparable from redistributive politics, … some level of
access to healthcare will be determined by the choice of a healthcare system.” (Besley &
Goouveia [1994], p.205)
In light of the above definition, the analysis of healthcare systems can be described by
an organizational chart, as in Figure 2.1 below, where the essential building blocks are
the patients, the major providers, i.e. doctors and hospitals, and the insurers. Of course,
the existence of public insurance invokes a political economy analysis as the patient-
insuree votes to determine first the constitutional structure or the governance of the
system and, then, its capacity by choosing investments into physical and human capital
2
...
hapter 5What Are the Governmental AlternativesThe United StatJeanmarieColbert3
hapter 5
What Are the Governmental Alternatives?
The United States has tried an alphabet soup of health policy options: HSAs, HMOs, IPAs, PPOs, POS plans, ACOs, and so on. Health care analysts often must look beyond specific organizational and financial alternatives and address issues at a higher level and deal with the threads of economic and political thought behind different proposals while considering the overall criteria of access, cost, and quality of care.
Politicians and businesspeople from outside the health care sector advocate many alternatives. To offset their tendency to ignore professional issues, in this chapter we discuss alternatives affecting professional status and roles and institutional responses to them. Table 5-1 presents an array of federal alternatives organized by their primary criteria—access, quality, or cost—and then by the economic philosophies behind them. The items in this array are not intended to be either mutually exclusive or collectively exhaustive; rather, the table provides a framework for looking at both the broad policy picture and specific health care actions taken at various times and places. Later in the chapter, another table (Table 5-3) summarizes policy alternatives added by state and local governments. Many of these alternatives were included as provisions of the Affordable Care Act (ACA). They are still included here, partly because they may be subject to reconsideration in the future.
Table 5-1 Illustrative Federal Government Health Policy Options
Access to Care
• Administered systems
• Universal coverage
• Expand or reduce eligibility or benefits
• Mandate coverage and services
• Captive providers
• Control insurance industry practices
• Mandate employer-based insurance coverage
• Consumer-driven competition
• Implement insurance exchanges
• Encourage basic plans with very low premiums for low-income workers and “young invincibles”
• Mandate individual coverage
• Allow states flexibility to reallocate federal funds for vouchers
• Oligopolistic competition
• Expand or contract coverages in entitlement and categorical programs
• Allow states to reallocate federal uncompensated care funds
• Eliminate ERISA constraints on the states
• Expand the capacity of the system
Quality of Care
• Administered system
• Mandate participation in quality improvement efforts in federal plans and programs
• Add more pay-for-performance incentives
• Select providers and programs on the basis of quality excellence
• Consumer-driven competition
• Encourage or mandate transparency of quality reporting in federal plans and programs
• Oversee licensure and credentialing of foreign-trained providers
• Oligopolistic competition
• Work reporting of quality care and adverse events into purchasing specifications for federal programs and disseminate to the public
• Encourage wider use of health information technology
Cost of Care
• Administered system
• Use full bargaining power in negotiation of ...
Market Power, Transactions Costs, and the Entryof Accountabl.docxinfantsuk
Market Power, Transactions Costs, and the Entry
of Accountable Care Organizations in Health Care
H. E. Frech III.1 • Christopher Whaley2 •
Benjamin R. Handel3 • Liora Bowers4 •
Carol J. Simon5 • Richard M. Scheffler6
Published online: 15 July 2015
� Springer Science+Business Media New York 2015
Abstract ACOs were promoted in the 2010 Patient Protection and Affordable
Care Act (ACA) to incentivize integrated care and cost control. Because they
involve vertical and horizontal collaboration, ACOs also have the potential to harm
competition. In this paper, we analyze ACO entry and formation patterns with the
use of a unique, proprietary database that includes public (Medicare) and private
ACOs. We estimate an empirical model that explains county-level ACO entry as a
function of: physician, hospital, and insurance market structure; demographics; and
other economic and regulatory factors. We find that physician concentration by
organization has little effect. In contrast, physician concentration by geographic
Earlier versions of this paper were presented at the International Industrial Organization Conference in
Boston, the International Health Economics Association meeting in Sydney, the Allied Social Science
meetings in Philadelphia, the ACO Workshop in Berkeley, and the Bates White Health Care and Life
Science Seminar in Washington, D.C. Thanks are due to the participants of those meetings, especially
Martha Starr, Dean Rice, and Martin Gaynor for helpful comments. Thanks are also due to Sandra
Decker, Abe Dunn, Robert Obstfeldt, Jim Rebitzer, Michael Morrisey, Jessica Foster, and Lee Mobley
for helpful comments on earlier versions and to the referees and editor of this journal for more recent
useful comments.
& H. E. Frech III.
[email protected]
Christopher Whaley
[email protected]
Benjamin R. Handel
[email protected]
Liora Bowers
[email protected]
Carol J. Simon
[email protected]
1
Department of Economics, University of California, Santa Barbara, Santa Barbara, CA 93106,
USA
123
Rev Ind Organ (2015) 47:167–193
DOI 10.1007/s11151-015-9467-y
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
site—which is a new measure of locational concentration of physicians—discour-
ages ACO entry. Hospital concentration generally has a negative effect. HMO
penetration is a strong predictor of ACO entry, while physician-hospital organiza-
tions have little effect. Small markets discourage entry, which suggests economies
of scale for ACOs. Predictors of public and private ACO entry are different. State
regulations of nursing and the corporate practice of medicine have little effect.
Keywords Health care competition � Antitrust � Entry � Integration � Accountable
care organizations � Transactions costs � Obama plan
JEL Classification L 14 � I11 � L44 � I18 � L41
1 Introduction and Overview
The US health car ...
Managed Care within Health Care covers a variety of information from nursing homes, policies, Medical, Medicare, out of pocket, and partial payment, management, contracts, government, and the Social Security State Fund. Within this working paper I will discuss a few of these mechanisms that are applied and utilized within ‘Managed Care’ today. A system within a system that brings in 25% of the United States debt.
Healthcare QualityPolicy and LawChapter 121ChaSusanaFurman449
Healthcare Quality
Policy and Law
Chapter 12
1
Chapter Overview
(1 of 2)
Discusses licensure and accreditation in the context of healthcare quality
Describes the scope and causes of medical errors
Describes the meaning and evolution of the medical professional standard of care
Identifies and explains certain state-level legal theories under which healthcare professionals and entities can be held liable for medical negligence
Chapter Overview
(2 of 2)
Explains how federal employee benefits law often preempts medical negligence lawsuits against insurers and managed care organizations
Describes recent efforts to measure and incentivize high-quality health care
Quality Control Through
Licensing and Accreditation
(1 of 3)
Licensing of healthcare professionals and institutions is an important function of state law, as it filters out those who may not have the requisite knowledge or skills to practice medicine
State licensure laws define the qualifications required to become licensed and the standards that must be met for purposes of maintaining and renewing licenses
Quality Control Through
Licensing and Accreditation
(2 of 3)
Historically, licensing has been used in the promotion of healthcare quality in only the bluntest sense. This is because the only method by which to promote quality through licensure is the granting or denial of the license to practice medicine—no real middle ground.
Private professional and industry ethical and practice standards exist, though their effect on day-to-day quality is debatable.
State licensing schemes were designed not with healthcare quality per se in mind, but rather with an eye toward protecting the medical professions from unscrupulous or incompetent providers and bad publicity.
5
Quality Control Through
Licensing and Accreditation
(3 of 3)
Licensure plays an important role in defining the permissible “scope of practice” of the various types of healthcare providers.
It is one thing for state legislators to define the meaning of practice for various broad medical fields, but quite another for legislators to define, for example, the lawful activities of doctors as compared to physician assistants as compared to nurses.
6
Medical Errors
(1 of 3)
Although medical errors are not a new problem, framing the issue as a public health problem is a relatively new phenomenon.
Overall, more people die each year from medical errors than from motor vehicle accidents, breast cancer, or AIDS.
Medical Errors
(2 of 3)
Causes of medical errors may include the failure to complete an intended medical course of action, implementation of the wrong course of action, use of faulty equipment or products in effectuating a course of action, failure to stay abreast of one’s field of medical practice, health professional inattentiveness, the fact that optimal treatments for many illnesses are not yet known, and the culture of medicine itself.
Medical Errors
(3 of 3)
Policy makers have begun shifting their ...
hapter 5What Are the Governmental AlternativesThe United StatJeanmarieColbert3
hapter 5
What Are the Governmental Alternatives?
The United States has tried an alphabet soup of health policy options: HSAs, HMOs, IPAs, PPOs, POS plans, ACOs, and so on. Health care analysts often must look beyond specific organizational and financial alternatives and address issues at a higher level and deal with the threads of economic and political thought behind different proposals while considering the overall criteria of access, cost, and quality of care.
Politicians and businesspeople from outside the health care sector advocate many alternatives. To offset their tendency to ignore professional issues, in this chapter we discuss alternatives affecting professional status and roles and institutional responses to them. Table 5-1 presents an array of federal alternatives organized by their primary criteria—access, quality, or cost—and then by the economic philosophies behind them. The items in this array are not intended to be either mutually exclusive or collectively exhaustive; rather, the table provides a framework for looking at both the broad policy picture and specific health care actions taken at various times and places. Later in the chapter, another table (Table 5-3) summarizes policy alternatives added by state and local governments. Many of these alternatives were included as provisions of the Affordable Care Act (ACA). They are still included here, partly because they may be subject to reconsideration in the future.
Table 5-1 Illustrative Federal Government Health Policy Options
Access to Care
• Administered systems
• Universal coverage
• Expand or reduce eligibility or benefits
• Mandate coverage and services
• Captive providers
• Control insurance industry practices
• Mandate employer-based insurance coverage
• Consumer-driven competition
• Implement insurance exchanges
• Encourage basic plans with very low premiums for low-income workers and “young invincibles”
• Mandate individual coverage
• Allow states flexibility to reallocate federal funds for vouchers
• Oligopolistic competition
• Expand or contract coverages in entitlement and categorical programs
• Allow states to reallocate federal uncompensated care funds
• Eliminate ERISA constraints on the states
• Expand the capacity of the system
Quality of Care
• Administered system
• Mandate participation in quality improvement efforts in federal plans and programs
• Add more pay-for-performance incentives
• Select providers and programs on the basis of quality excellence
• Consumer-driven competition
• Encourage or mandate transparency of quality reporting in federal plans and programs
• Oversee licensure and credentialing of foreign-trained providers
• Oligopolistic competition
• Work reporting of quality care and adverse events into purchasing specifications for federal programs and disseminate to the public
• Encourage wider use of health information technology
Cost of Care
• Administered system
• Use full bargaining power in negotiation of ...
Market Power, Transactions Costs, and the Entryof Accountabl.docxinfantsuk
Market Power, Transactions Costs, and the Entry
of Accountable Care Organizations in Health Care
H. E. Frech III.1 • Christopher Whaley2 •
Benjamin R. Handel3 • Liora Bowers4 •
Carol J. Simon5 • Richard M. Scheffler6
Published online: 15 July 2015
� Springer Science+Business Media New York 2015
Abstract ACOs were promoted in the 2010 Patient Protection and Affordable
Care Act (ACA) to incentivize integrated care and cost control. Because they
involve vertical and horizontal collaboration, ACOs also have the potential to harm
competition. In this paper, we analyze ACO entry and formation patterns with the
use of a unique, proprietary database that includes public (Medicare) and private
ACOs. We estimate an empirical model that explains county-level ACO entry as a
function of: physician, hospital, and insurance market structure; demographics; and
other economic and regulatory factors. We find that physician concentration by
organization has little effect. In contrast, physician concentration by geographic
Earlier versions of this paper were presented at the International Industrial Organization Conference in
Boston, the International Health Economics Association meeting in Sydney, the Allied Social Science
meetings in Philadelphia, the ACO Workshop in Berkeley, and the Bates White Health Care and Life
Science Seminar in Washington, D.C. Thanks are due to the participants of those meetings, especially
Martha Starr, Dean Rice, and Martin Gaynor for helpful comments. Thanks are also due to Sandra
Decker, Abe Dunn, Robert Obstfeldt, Jim Rebitzer, Michael Morrisey, Jessica Foster, and Lee Mobley
for helpful comments on earlier versions and to the referees and editor of this journal for more recent
useful comments.
& H. E. Frech III.
[email protected]
Christopher Whaley
[email protected]
Benjamin R. Handel
[email protected]
Liora Bowers
[email protected]
Carol J. Simon
[email protected]
1
Department of Economics, University of California, Santa Barbara, Santa Barbara, CA 93106,
USA
123
Rev Ind Organ (2015) 47:167–193
DOI 10.1007/s11151-015-9467-y
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
site—which is a new measure of locational concentration of physicians—discour-
ages ACO entry. Hospital concentration generally has a negative effect. HMO
penetration is a strong predictor of ACO entry, while physician-hospital organiza-
tions have little effect. Small markets discourage entry, which suggests economies
of scale for ACOs. Predictors of public and private ACO entry are different. State
regulations of nursing and the corporate practice of medicine have little effect.
Keywords Health care competition � Antitrust � Entry � Integration � Accountable
care organizations � Transactions costs � Obama plan
JEL Classification L 14 � I11 � L44 � I18 � L41
1 Introduction and Overview
The US health car ...
Managed Care within Health Care covers a variety of information from nursing homes, policies, Medical, Medicare, out of pocket, and partial payment, management, contracts, government, and the Social Security State Fund. Within this working paper I will discuss a few of these mechanisms that are applied and utilized within ‘Managed Care’ today. A system within a system that brings in 25% of the United States debt.
Healthcare QualityPolicy and LawChapter 121ChaSusanaFurman449
Healthcare Quality
Policy and Law
Chapter 12
1
Chapter Overview
(1 of 2)
Discusses licensure and accreditation in the context of healthcare quality
Describes the scope and causes of medical errors
Describes the meaning and evolution of the medical professional standard of care
Identifies and explains certain state-level legal theories under which healthcare professionals and entities can be held liable for medical negligence
Chapter Overview
(2 of 2)
Explains how federal employee benefits law often preempts medical negligence lawsuits against insurers and managed care organizations
Describes recent efforts to measure and incentivize high-quality health care
Quality Control Through
Licensing and Accreditation
(1 of 3)
Licensing of healthcare professionals and institutions is an important function of state law, as it filters out those who may not have the requisite knowledge or skills to practice medicine
State licensure laws define the qualifications required to become licensed and the standards that must be met for purposes of maintaining and renewing licenses
Quality Control Through
Licensing and Accreditation
(2 of 3)
Historically, licensing has been used in the promotion of healthcare quality in only the bluntest sense. This is because the only method by which to promote quality through licensure is the granting or denial of the license to practice medicine—no real middle ground.
Private professional and industry ethical and practice standards exist, though their effect on day-to-day quality is debatable.
State licensing schemes were designed not with healthcare quality per se in mind, but rather with an eye toward protecting the medical professions from unscrupulous or incompetent providers and bad publicity.
5
Quality Control Through
Licensing and Accreditation
(3 of 3)
Licensure plays an important role in defining the permissible “scope of practice” of the various types of healthcare providers.
It is one thing for state legislators to define the meaning of practice for various broad medical fields, but quite another for legislators to define, for example, the lawful activities of doctors as compared to physician assistants as compared to nurses.
6
Medical Errors
(1 of 3)
Although medical errors are not a new problem, framing the issue as a public health problem is a relatively new phenomenon.
Overall, more people die each year from medical errors than from motor vehicle accidents, breast cancer, or AIDS.
Medical Errors
(2 of 3)
Causes of medical errors may include the failure to complete an intended medical course of action, implementation of the wrong course of action, use of faulty equipment or products in effectuating a course of action, failure to stay abreast of one’s field of medical practice, health professional inattentiveness, the fact that optimal treatments for many illnesses are not yet known, and the culture of medicine itself.
Medical Errors
(3 of 3)
Policy makers have begun shifting their ...
In the coming years the United States will find themselves going through a number of changes within the Social Security Administration which will affect the Health Care Industry as we know it “Hospital size has long been an area of discussion and debate in the U.S. healthcare industry. Questions have consistently focused on cost management or efficiency in large versus small hospitals. A persistent question among researchers is whether efficiencies are associated with larger facilities through economies of scale, or if there are alternate scenarios that play a significant part in hospital cost and efficiency” (2009, JHM). Since the Affordable Health Care Act was established it made obtaining health care much more affordable and accessible, but at the same time there has to be some cut back.
QUESTION 11. What do you think the Respiratory Therapist of the .docxmakdul
QUESTION 1
1. What do you think the Respiratory Therapist of the Future should look like (education level, duties) and why do you think this would be beneficial for the health care community as a whole?
QUESTION 2
1. During class we investigated what it is like to work as an RT in other countries. We discussed the UK health model and the US health model. Briefly describe the difference between the two (i.e. who performs the duties of an RT in the UK model vs US model).
QUESTION 3
1. What steps do you have to take to work as a Respiratory Therapist in Ohio once you graduate here on May 7th?
QUESTION 4
1. In class we investigated what the licensing process is in other states. Which state has no licensing requirement? For those states that do require a license, name 4 documents that need to be submitted to gain licensure.
QUESTION 5
1. What is one leadership trait that you think is most important and why?
QUESTION 6
1. Why do you think it's important to develop a system for establishing RT workloads?
QUESTION 7
1. Explain the difference between a HMO, a PPO, and a POS health insurance plan.
QUESTION 8
1. When it's time to choose a health insurance policy, what features or costs of the various options will you prioritize and why?
Reimbursement
Health Insurance in the US
Health insurance:
You pay a company a monthly fee
When you get sick, the hospital/physician/etc sends a bill to your insurance company and they pay for the services provided
If there is any portion of the bill left you pay for the remainder out of pocket or the physician/hospital waives the remainder
Typically, regular services (i.e. physician visit) have a “co-pay” which is a set fee ($10, $20, etc) that you pay for each visit
Health Insurance in the US
MOST US citizens fall into one of the following categories:
Employer plan
Your employer pays a portion of your monthly fee for you, to ensure they have healthy employees who can work
Typically these plans offer good coverage and you only pay $50 to $100 per month, which is taken right out of your pay check
COBRA: if you leave your job/are fired, your employer is legally obligated to offer you the ability to keep your health insurance at full price (you pay your share AND your employers share, typically upwards of $500 per month)
Private plan
VERY EXPENSIVE for the patient
Either you don’t have an employer or your employer does not offer insurance, you have to find your own plan which can run upwards of $500 per month
Government plan
Medicare: covers people 65 and older
Medicaid: covers people with disabilities and in certain low-income groups
History of Health Insurance in the US
So how did we end up with our current health insurance system?
1800s: Most workers were tradesmen, working in extremely dangerous industrial environments (i.e. steel mills)
By 1907, death and dismemberment were causing a 10% loss in the workforce
The industry recognized that people were risking their lives and livel ...
Chapter 18 Private and Government Healthcare Systems PriMorganLudwig40
Chapter 18
Private and Government Healthcare Systems
Private and Government Healthcare Systems
In the United States, health insurance coverage is generally classified as either private (non-government) coverage or government-sponsored coverage.
Healthcare Coverage vs. Uninsured
The National Center for Health Statistics defines health insurance as public and private payers who cover medical expenditures incurred by a defined population in a variety of settings.
In the United States, the risk of becoming uninsured increases significantly for those earning low wages, the unemployed, and when employers are unable to provide insurance to workers.
Table 5-2 presents the trend of declining health insurance coverage.
Private Health Insurance
The concept of insurance is to combine the healthcare experiences of many enrollees in order to reduce expenses for any one individual to a manageable prepayment amount.
Employment-Based Plans is coverage offered through one’s own employment or a relative’s employment.
It may be offered by an employer or by a union.
Private Health Insurance Continued
Direct-Purchase/Fee-For-Service Plans are the traditional type of healthcare policy.
The physician sets a price for each type of service delivered, and then the client or insurance company pays the fee.
This type of health insurance provides the most choices of doctors and hospitals.
Private Health Insurance Continued
The two kinds of fee-for-service coverage are basic and major medical.
Basic covers some hospital services and supplies, such as X-rays and prescribed medicine.
Major medical insurance covers the cost of long-term, high-cost illnesses or injuries plus whatever basic did not cover.
Private Health Insurance Continued
Group Contract Insurance—to make hospitals and physicians products and services affordable to ordinary people in the United States.
With unmanaged care (fee-for-service) payments, healthcare providers could increase the number of single services they deliver in order to increase profit.
Private Health Insurance Continued
Managed Care—manages the cost and delivery of healthcare services, the quality of that healthcare, and access to care.
Managed care influences how much healthcare clients can use.
Health Maintenance Organizations (HMOs) are prepaid health plans.
The goal of an HMO is to provide affordable, well-organized healthcare by allowing clients to prepay (capitation payment) on a regular monthly basis for all services provided.
Private Health Insurance Continued
Including physicians’ visits, hospital stays emergency care, surgery, laboratory (lab) tests, X-rays, and therapy for all members and their families.
There may be a small co-payment for each office visit, such as $15 for a doctor’s visit or $50 for hospital emergency room treatment.
Private Health Insurance Continued
Point-of-Service Plans (POS) offer enrollees the option of receiving services from participating or nonparticipating prov ...
DQ 3-2Integrated health care delivery systems (IDS) was develope.docxelinoraudley582231
DQ 3-2
Integrated health care delivery systems (IDS) was developed to initiate excellence health care access and quality of care to entire populations and community by collaborating and coordinating diverse healthcare professionals. Main driving force of IDS is patient centered care by using resources such as collaborating care from physicians and allied health care professionals to construct continuum of care, to deliver care in the most cost-effective way, utilize trained and competent providers by utilizing evidenced -based practice and combine innovation such as EHR (Electronic Health Records) system and team work to produce improved healthcare system.
Excellence in care is attainable by incorporating allied healthcare professional, as high quality care is possible when coordination is unified and covers all areas of responsibilities. For an example-combining resources and coordination of care by involving physicians, dietitian, physical therapy or occupational therapy to work with patient diagnosed with obesity by promoting teamwork approach and ultimately delivering endurance in care and utilizing various resources.
Barriers to IDS can be a huge block in delivering quality care. Among many one limitation is physicians not participating in integrated healthcare system, which disconnect physicians from team based approached by deterring continuous quality improvement (essentialhospitals.org, n.d). This is because, system such as EHR or new innovative quality assurance programs are time consuming and overwhelming, thus decline in physicians support in IDS programs. By implementing user friendly system approach, enforcing focused based care and accepting the necessity of evidenced based practice can improve these barriers. Hence, increasing clinical expertise to produce better service and quality of care in integrated delivery system.
Essentialhospitls.org (n.d). Retrieved from: http://essentialhospitals.org/wp-content/uploads/2013/12/Integrated-Health-Care-Literature-Review-Webpost-8-22-13-CB.pdf
Dq 3-1
1.
In the US, there is not one type of health care system but rather a subset of systems, some of them catering to specific populations. These subsystems include managed care, military, and vulnerable populations. Managed care is a health care delivery system that seeks to achieve efficiency by integrating the basic functions of health care delivery, employs mechanisms to control utilization of medical services, and determines the price at which the services are purchased and how much the providers get paid, military health care system is available free of charge to active duty military personnel and covers preventative and treatment services that are provided by salaried health care personnel and this system combines public health with medical services, and vulnerable population subsystem offers comprehensive medical and enabling services targeted to the needs of vulnerable populations and government health insurance programs provide.
This is a presentation , which broadly explains the different strategies of Health Financing, as described and developed by World Health Organisation. Apart from the different strategies, this ppt also includes the report of the National Health Accounts (NHA), GOI, which helps in getting a better understanding of the current scenario, when we may compare what we have to reach upto, as per the new National Health Policy 2017 !!!
3.1 INTRODUCTION
When the health community makes reference to patients having access to care, the reference is
generally limited. The concept of access is too often described as individuals getting to and from
health services and having the ability to pay for the services either by virtue of a third party or
out-of-pocket. We believe access to be much more than this and suggest that a redefinition of
access is long overdue. True access means being able to get to and from health services, having the
ability to pay for the services needed, and getting your needs met once you enter the health system.
This text introduces a framework for assessing the strengths and weaknesses of selective healthcare
systems, and determining if the system is providing true access to health care. The framework is
called “The Eight Factor Model.”
The comparison of health systems is made by utilizing The Eight Factor Model, which was
developed by the authors, and has “true access” as the driving value. As illustrated in Figure 3-1 ,
the model has true access at its core, and eight surrounding factors that are important for health
systems to demonstrate in order to provide that true access. A solid directional arrow from the
factor to the core depicts a system that has demonstrated evidence to support that it is providing
true access. A broken directional arrow from the core to the factor suggests the system is not
providing true access, and much work must be done to achieve it. Table 3-1 (a format for assessing
true access) provides a template for learners to formulate their own opinions about the extent to
which countries discussed in this text provide true access. Table 7 in Chapter 16 , The Eight Factor
Model for True Access, summarizes author observations regarding the extent to which each of the
11 countries discussed in the “Health Care in Industrialized (Developed) Countries and “Health
Care in Developing Countries” sections of this text have addressed true access. This will hopefully
enable the learner to briefly review it against the Eight Factor Model illustrated in Figure 3-1 . Table
7, The Eight Factor Model for True Access, which appears at the end of Chapter 16 (Comparative
health perspectives) should be fully reviewed as the l ...
· 7.4 Assignment Comparing Between-subjects and Within-subjects R.docxgerardkortney
· 7.4 Assignment: Comparing Between-subjects and Within-subjects Research
Design or locate a published study that illustrates application of between and within subjects design. Explain the merits of each and the limitations of each (between and within). Indicate which you believe is more informative of the results.
· Demonstrate understanding of the task and be able to address requirements using creativity and application of research design knowledge.
· Must demonstrate ability to analyze existing research to compare strengths and limitations of between-subjects and within-subjects analysis.
1
Course Learning Outcomes for Unit I
Upon completion of this unit, students should be able to:
1. Compare and contrast health services organizations within the healthcare system.
1.1 Explain the primary organizational components of the healthcare system and the
commonalities and differences among health services organizations.
Reading Assignment
Chapter 2:
Why and How Health Care Organizations Need to Change, pp. 13-34
Chapter 11:
Leading Change: First Steps in Employing Strategic Intelligence to Get Results, pp. 259-310
Unit Lesson
The Ideal Health System
Imagine you are now the Secretary of Health and Human Services; you have a magic wand and you can
create the perfect healthcare system. What components would it have? Would it include:
1. improving health outcomes for individuals, families and communities,
2. defending your population against threats to their health,
3. protecting your population against financial the consequences of bad health,
4. providing access to all with equality and no disparity, and
5. making it possible for people to make decisions in their own plans of care as well as have input into
the decisions that affect your country’s overall health system?
If you answered yes to these components, your definition matches the World Health Organization’s
Components of a Healthcare System (2010).
How This Course & Content Have Real-Word Application
We are witness to history and are living in one of the most active times in our country’s history for healthcare
reform. In 1966, the Medicare Act was signed into law by President Johnson, the most significant piece of
healthcare legislation in our country to that point. Fast forward from 1966 to 2010 and the passing of the
Affordable Care Act, which arguably is the second most impactful piece of legislation on U.S. health care
since the Medicare Act.
Medicare has grown significantly since 1966 and is now about 14% of our national budget, covering 47 million
Americans (Kaiser Family Foundation, 2015). Government health plans (Medicare, Medicaid, Tri-Care,
Veteran’s Administration) are growing and are on pace to insure more lives in the near future than lives
covered by commercial plans (Cigna, United, Blue Cross, etc.)
Speaking of this growth, Sylvia Burwell, Health & Human Secretary Director, announced that by 2018 the
Centers for Medicar.
Understanding Healthcare Delivery Systems A Healthcare Diploma Perspective.pdfHealthcarediploma
Healthcare delivery systems are complex networks of organizations and individuals that provide healthcare services to patients. These systems involve a wide range of stakeholders, including healthcare providers, payers, government agencies, and patients themselves. Understanding healthcare delivery systems is essential for healthcare professionals who wish to improve patient outcomes and promote health equity. In this blog post, we will explore the topic of healthcare delivery systems from the perspective of a healthcare diploma student.
Running Head HEALTHCARE STAKEHOLDER CONFLICTS1HEALTHCARE .docxcowinhelen
Running Head: HEALTHCARE STAKEHOLDER CONFLICTS
1
HEALTHCARE STAKEHOLDER CONFLICTS
5
Stakeholder Conflicts in Healthcare Visions
Kendra Smith
Grand Canyon University: HCA 675
Introduction
The stakeholders in the healthcare service in any jurisdiction entail the government, the healthcare providers or the physicians, the payers, the patients as well as healthcare professional organizations.
These stakeholders work hand in hand to ensure efficiency and professionalism in healthcare delivery (Blair et al, 1988). They do this by developing succinct policies and effectively implement them for the sole purpose of improving healthcare services. However, there have been serious conflicts in opinion regarding enhancing healthcare service practices and proper administrative mechanisms for the achievement of better services, among the stakeholders.
Conflicts in Health Vision
One of the major health reform visions which have generated considerable debate concerns the accommodation of evidence-driven healthcare service practice, which the government of the United States has instructed all healthcare service providers or organizations to adopt. The major emphasis on this aspect of medicine is the requirement by the government that all healthcare service providers or organizations should document which healthcare services they provide and why they provide such healthcare services to the communit
y.
The argument behind this requirement is that it will enable the government, or it will be generally helpful in gauging the benefits the community gains from such healthcare services. In addition, establishing evidence-driven healthcare practice according to healthcare practitioners will help in identifying specific health problems within a community, and subsequently, design the most appropriate medical response. Some healthcare stakeholders also believe that this is an avenue that the government intends to use in creating and forging a closer working relationship between private and public healthcare providers. However much most stakeholders, both private and public, appreciate this evidence-based healthcare practice, as a vital component in improving healthcare services, the major concern is about how such data should be obtained. Some healthcare providers have reasoned that these data should be generated from the already existing data, due to the costs associated with activities that may lead to acquiring and establishing sound data or information domain. In response to this requirement, most of the healthcare organizations have established community-based information or data collection and management mechanisms, which enable them to collect data concerning community health concerns and threats, then define effective ways of response.
With the introduction and implementation of a series of healthcare reforms in the United States, such as the Obamacare and Trumpcare, there is general expectation that there will be enhanced access to healthcare service ...
In a 250-300 word response, critically examine your personal level o.docxjoyjonna282
In a 250-300 word response, critically examine your personal level of intercultural communication competence. Is it important for you to achieve a certain level of intercultural communication competence? Would enhanced intercultural communication competence help you personally? Professionally? Academically? Include examples in your submission and use at least one resource to support your key points. Respond to at least two of your fellow students' posts.
.
In a 10 –12 page paper, identify and analyze the benefits and challe.docxjoyjonna282
In a 10 –12 page paper, identify and analyze the benefits and challenges that are associated with biometric evidence in the criminal justice system. Include at least 3 techniques in your paper, and use at least 2 case studies to support your position. Consider the following questions when drafting your paper:
How do courts determine if evidence is reliable and valid before allowing it into testimony?
What is the role of the Frye standard or Daubert standard in determining whether or not the courts will accept biometric evidence?
What rules does your state use in this regard?
How reliable is fingerprint evidence? Consider examples of its use in criminal courts.
How do other biometrics compare to the reliability and validity of fingerprint evidence?
What are some of the challenges associated with lower forms of biometrics, such as facial recognition, and acceptance as evidence in court?
What is the role of the expert witness related to biometric evidence in court?
Be sure to provide in-text citation and references
.
In a 1-2 page Microsoft Word document, discuss the following case st.docxjoyjonna282
In a 1-2 page Microsoft Word document, discuss the following case study:
When Alexander and Deborah married, Alexander owned a duplex in a community property state. They lived in one side of the duplex. They saved their money and bought a lake lot as tenants by the entirety. Deborah failed to pay the loans she took out from Savings Bank prior to her marriage to pay for college. The bank claimed the duplex, the lake lot and their savings.
Discuss the likelihood of success on the bank's claims against the properties.
.
In a 16–20 slide PowerPoint presentation (excluding title and refere.docxjoyjonna282
In a 16–20 slide PowerPoint presentation (excluding title and reference slides) provide information as well as analyze the roles of the following areas in criminal justice leadership strategies and practices:
Organizational culture
Behavioral theory
Planning
Community relations
Your presentation should include, at a minimum, 4 slides, with speaker notes, for each topic.
.
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In the coming years the United States will find themselves going through a number of changes within the Social Security Administration which will affect the Health Care Industry as we know it “Hospital size has long been an area of discussion and debate in the U.S. healthcare industry. Questions have consistently focused on cost management or efficiency in large versus small hospitals. A persistent question among researchers is whether efficiencies are associated with larger facilities through economies of scale, or if there are alternate scenarios that play a significant part in hospital cost and efficiency” (2009, JHM). Since the Affordable Health Care Act was established it made obtaining health care much more affordable and accessible, but at the same time there has to be some cut back.
QUESTION 11. What do you think the Respiratory Therapist of the .docxmakdul
QUESTION 1
1. What do you think the Respiratory Therapist of the Future should look like (education level, duties) and why do you think this would be beneficial for the health care community as a whole?
QUESTION 2
1. During class we investigated what it is like to work as an RT in other countries. We discussed the UK health model and the US health model. Briefly describe the difference between the two (i.e. who performs the duties of an RT in the UK model vs US model).
QUESTION 3
1. What steps do you have to take to work as a Respiratory Therapist in Ohio once you graduate here on May 7th?
QUESTION 4
1. In class we investigated what the licensing process is in other states. Which state has no licensing requirement? For those states that do require a license, name 4 documents that need to be submitted to gain licensure.
QUESTION 5
1. What is one leadership trait that you think is most important and why?
QUESTION 6
1. Why do you think it's important to develop a system for establishing RT workloads?
QUESTION 7
1. Explain the difference between a HMO, a PPO, and a POS health insurance plan.
QUESTION 8
1. When it's time to choose a health insurance policy, what features or costs of the various options will you prioritize and why?
Reimbursement
Health Insurance in the US
Health insurance:
You pay a company a monthly fee
When you get sick, the hospital/physician/etc sends a bill to your insurance company and they pay for the services provided
If there is any portion of the bill left you pay for the remainder out of pocket or the physician/hospital waives the remainder
Typically, regular services (i.e. physician visit) have a “co-pay” which is a set fee ($10, $20, etc) that you pay for each visit
Health Insurance in the US
MOST US citizens fall into one of the following categories:
Employer plan
Your employer pays a portion of your monthly fee for you, to ensure they have healthy employees who can work
Typically these plans offer good coverage and you only pay $50 to $100 per month, which is taken right out of your pay check
COBRA: if you leave your job/are fired, your employer is legally obligated to offer you the ability to keep your health insurance at full price (you pay your share AND your employers share, typically upwards of $500 per month)
Private plan
VERY EXPENSIVE for the patient
Either you don’t have an employer or your employer does not offer insurance, you have to find your own plan which can run upwards of $500 per month
Government plan
Medicare: covers people 65 and older
Medicaid: covers people with disabilities and in certain low-income groups
History of Health Insurance in the US
So how did we end up with our current health insurance system?
1800s: Most workers were tradesmen, working in extremely dangerous industrial environments (i.e. steel mills)
By 1907, death and dismemberment were causing a 10% loss in the workforce
The industry recognized that people were risking their lives and livel ...
Chapter 18 Private and Government Healthcare Systems PriMorganLudwig40
Chapter 18
Private and Government Healthcare Systems
Private and Government Healthcare Systems
In the United States, health insurance coverage is generally classified as either private (non-government) coverage or government-sponsored coverage.
Healthcare Coverage vs. Uninsured
The National Center for Health Statistics defines health insurance as public and private payers who cover medical expenditures incurred by a defined population in a variety of settings.
In the United States, the risk of becoming uninsured increases significantly for those earning low wages, the unemployed, and when employers are unable to provide insurance to workers.
Table 5-2 presents the trend of declining health insurance coverage.
Private Health Insurance
The concept of insurance is to combine the healthcare experiences of many enrollees in order to reduce expenses for any one individual to a manageable prepayment amount.
Employment-Based Plans is coverage offered through one’s own employment or a relative’s employment.
It may be offered by an employer or by a union.
Private Health Insurance Continued
Direct-Purchase/Fee-For-Service Plans are the traditional type of healthcare policy.
The physician sets a price for each type of service delivered, and then the client or insurance company pays the fee.
This type of health insurance provides the most choices of doctors and hospitals.
Private Health Insurance Continued
The two kinds of fee-for-service coverage are basic and major medical.
Basic covers some hospital services and supplies, such as X-rays and prescribed medicine.
Major medical insurance covers the cost of long-term, high-cost illnesses or injuries plus whatever basic did not cover.
Private Health Insurance Continued
Group Contract Insurance—to make hospitals and physicians products and services affordable to ordinary people in the United States.
With unmanaged care (fee-for-service) payments, healthcare providers could increase the number of single services they deliver in order to increase profit.
Private Health Insurance Continued
Managed Care—manages the cost and delivery of healthcare services, the quality of that healthcare, and access to care.
Managed care influences how much healthcare clients can use.
Health Maintenance Organizations (HMOs) are prepaid health plans.
The goal of an HMO is to provide affordable, well-organized healthcare by allowing clients to prepay (capitation payment) on a regular monthly basis for all services provided.
Private Health Insurance Continued
Including physicians’ visits, hospital stays emergency care, surgery, laboratory (lab) tests, X-rays, and therapy for all members and their families.
There may be a small co-payment for each office visit, such as $15 for a doctor’s visit or $50 for hospital emergency room treatment.
Private Health Insurance Continued
Point-of-Service Plans (POS) offer enrollees the option of receiving services from participating or nonparticipating prov ...
DQ 3-2Integrated health care delivery systems (IDS) was develope.docxelinoraudley582231
DQ 3-2
Integrated health care delivery systems (IDS) was developed to initiate excellence health care access and quality of care to entire populations and community by collaborating and coordinating diverse healthcare professionals. Main driving force of IDS is patient centered care by using resources such as collaborating care from physicians and allied health care professionals to construct continuum of care, to deliver care in the most cost-effective way, utilize trained and competent providers by utilizing evidenced -based practice and combine innovation such as EHR (Electronic Health Records) system and team work to produce improved healthcare system.
Excellence in care is attainable by incorporating allied healthcare professional, as high quality care is possible when coordination is unified and covers all areas of responsibilities. For an example-combining resources and coordination of care by involving physicians, dietitian, physical therapy or occupational therapy to work with patient diagnosed with obesity by promoting teamwork approach and ultimately delivering endurance in care and utilizing various resources.
Barriers to IDS can be a huge block in delivering quality care. Among many one limitation is physicians not participating in integrated healthcare system, which disconnect physicians from team based approached by deterring continuous quality improvement (essentialhospitals.org, n.d). This is because, system such as EHR or new innovative quality assurance programs are time consuming and overwhelming, thus decline in physicians support in IDS programs. By implementing user friendly system approach, enforcing focused based care and accepting the necessity of evidenced based practice can improve these barriers. Hence, increasing clinical expertise to produce better service and quality of care in integrated delivery system.
Essentialhospitls.org (n.d). Retrieved from: http://essentialhospitals.org/wp-content/uploads/2013/12/Integrated-Health-Care-Literature-Review-Webpost-8-22-13-CB.pdf
Dq 3-1
1.
In the US, there is not one type of health care system but rather a subset of systems, some of them catering to specific populations. These subsystems include managed care, military, and vulnerable populations. Managed care is a health care delivery system that seeks to achieve efficiency by integrating the basic functions of health care delivery, employs mechanisms to control utilization of medical services, and determines the price at which the services are purchased and how much the providers get paid, military health care system is available free of charge to active duty military personnel and covers preventative and treatment services that are provided by salaried health care personnel and this system combines public health with medical services, and vulnerable population subsystem offers comprehensive medical and enabling services targeted to the needs of vulnerable populations and government health insurance programs provide.
This is a presentation , which broadly explains the different strategies of Health Financing, as described and developed by World Health Organisation. Apart from the different strategies, this ppt also includes the report of the National Health Accounts (NHA), GOI, which helps in getting a better understanding of the current scenario, when we may compare what we have to reach upto, as per the new National Health Policy 2017 !!!
3.1 INTRODUCTION
When the health community makes reference to patients having access to care, the reference is
generally limited. The concept of access is too often described as individuals getting to and from
health services and having the ability to pay for the services either by virtue of a third party or
out-of-pocket. We believe access to be much more than this and suggest that a redefinition of
access is long overdue. True access means being able to get to and from health services, having the
ability to pay for the services needed, and getting your needs met once you enter the health system.
This text introduces a framework for assessing the strengths and weaknesses of selective healthcare
systems, and determining if the system is providing true access to health care. The framework is
called “The Eight Factor Model.”
The comparison of health systems is made by utilizing The Eight Factor Model, which was
developed by the authors, and has “true access” as the driving value. As illustrated in Figure 3-1 ,
the model has true access at its core, and eight surrounding factors that are important for health
systems to demonstrate in order to provide that true access. A solid directional arrow from the
factor to the core depicts a system that has demonstrated evidence to support that it is providing
true access. A broken directional arrow from the core to the factor suggests the system is not
providing true access, and much work must be done to achieve it. Table 3-1 (a format for assessing
true access) provides a template for learners to formulate their own opinions about the extent to
which countries discussed in this text provide true access. Table 7 in Chapter 16 , The Eight Factor
Model for True Access, summarizes author observations regarding the extent to which each of the
11 countries discussed in the “Health Care in Industrialized (Developed) Countries and “Health
Care in Developing Countries” sections of this text have addressed true access. This will hopefully
enable the learner to briefly review it against the Eight Factor Model illustrated in Figure 3-1 . Table
7, The Eight Factor Model for True Access, which appears at the end of Chapter 16 (Comparative
health perspectives) should be fully reviewed as the l ...
· 7.4 Assignment Comparing Between-subjects and Within-subjects R.docxgerardkortney
· 7.4 Assignment: Comparing Between-subjects and Within-subjects Research
Design or locate a published study that illustrates application of between and within subjects design. Explain the merits of each and the limitations of each (between and within). Indicate which you believe is more informative of the results.
· Demonstrate understanding of the task and be able to address requirements using creativity and application of research design knowledge.
· Must demonstrate ability to analyze existing research to compare strengths and limitations of between-subjects and within-subjects analysis.
1
Course Learning Outcomes for Unit I
Upon completion of this unit, students should be able to:
1. Compare and contrast health services organizations within the healthcare system.
1.1 Explain the primary organizational components of the healthcare system and the
commonalities and differences among health services organizations.
Reading Assignment
Chapter 2:
Why and How Health Care Organizations Need to Change, pp. 13-34
Chapter 11:
Leading Change: First Steps in Employing Strategic Intelligence to Get Results, pp. 259-310
Unit Lesson
The Ideal Health System
Imagine you are now the Secretary of Health and Human Services; you have a magic wand and you can
create the perfect healthcare system. What components would it have? Would it include:
1. improving health outcomes for individuals, families and communities,
2. defending your population against threats to their health,
3. protecting your population against financial the consequences of bad health,
4. providing access to all with equality and no disparity, and
5. making it possible for people to make decisions in their own plans of care as well as have input into
the decisions that affect your country’s overall health system?
If you answered yes to these components, your definition matches the World Health Organization’s
Components of a Healthcare System (2010).
How This Course & Content Have Real-Word Application
We are witness to history and are living in one of the most active times in our country’s history for healthcare
reform. In 1966, the Medicare Act was signed into law by President Johnson, the most significant piece of
healthcare legislation in our country to that point. Fast forward from 1966 to 2010 and the passing of the
Affordable Care Act, which arguably is the second most impactful piece of legislation on U.S. health care
since the Medicare Act.
Medicare has grown significantly since 1966 and is now about 14% of our national budget, covering 47 million
Americans (Kaiser Family Foundation, 2015). Government health plans (Medicare, Medicaid, Tri-Care,
Veteran’s Administration) are growing and are on pace to insure more lives in the near future than lives
covered by commercial plans (Cigna, United, Blue Cross, etc.)
Speaking of this growth, Sylvia Burwell, Health & Human Secretary Director, announced that by 2018 the
Centers for Medicar.
Understanding Healthcare Delivery Systems A Healthcare Diploma Perspective.pdfHealthcarediploma
Healthcare delivery systems are complex networks of organizations and individuals that provide healthcare services to patients. These systems involve a wide range of stakeholders, including healthcare providers, payers, government agencies, and patients themselves. Understanding healthcare delivery systems is essential for healthcare professionals who wish to improve patient outcomes and promote health equity. In this blog post, we will explore the topic of healthcare delivery systems from the perspective of a healthcare diploma student.
Running Head HEALTHCARE STAKEHOLDER CONFLICTS1HEALTHCARE .docxcowinhelen
Running Head: HEALTHCARE STAKEHOLDER CONFLICTS
1
HEALTHCARE STAKEHOLDER CONFLICTS
5
Stakeholder Conflicts in Healthcare Visions
Kendra Smith
Grand Canyon University: HCA 675
Introduction
The stakeholders in the healthcare service in any jurisdiction entail the government, the healthcare providers or the physicians, the payers, the patients as well as healthcare professional organizations.
These stakeholders work hand in hand to ensure efficiency and professionalism in healthcare delivery (Blair et al, 1988). They do this by developing succinct policies and effectively implement them for the sole purpose of improving healthcare services. However, there have been serious conflicts in opinion regarding enhancing healthcare service practices and proper administrative mechanisms for the achievement of better services, among the stakeholders.
Conflicts in Health Vision
One of the major health reform visions which have generated considerable debate concerns the accommodation of evidence-driven healthcare service practice, which the government of the United States has instructed all healthcare service providers or organizations to adopt. The major emphasis on this aspect of medicine is the requirement by the government that all healthcare service providers or organizations should document which healthcare services they provide and why they provide such healthcare services to the communit
y.
The argument behind this requirement is that it will enable the government, or it will be generally helpful in gauging the benefits the community gains from such healthcare services. In addition, establishing evidence-driven healthcare practice according to healthcare practitioners will help in identifying specific health problems within a community, and subsequently, design the most appropriate medical response. Some healthcare stakeholders also believe that this is an avenue that the government intends to use in creating and forging a closer working relationship between private and public healthcare providers. However much most stakeholders, both private and public, appreciate this evidence-based healthcare practice, as a vital component in improving healthcare services, the major concern is about how such data should be obtained. Some healthcare providers have reasoned that these data should be generated from the already existing data, due to the costs associated with activities that may lead to acquiring and establishing sound data or information domain. In response to this requirement, most of the healthcare organizations have established community-based information or data collection and management mechanisms, which enable them to collect data concerning community health concerns and threats, then define effective ways of response.
With the introduction and implementation of a series of healthcare reforms in the United States, such as the Obamacare and Trumpcare, there is general expectation that there will be enhanced access to healthcare service ...
In a 250-300 word response, critically examine your personal level o.docxjoyjonna282
In a 250-300 word response, critically examine your personal level of intercultural communication competence. Is it important for you to achieve a certain level of intercultural communication competence? Would enhanced intercultural communication competence help you personally? Professionally? Academically? Include examples in your submission and use at least one resource to support your key points. Respond to at least two of your fellow students' posts.
.
In a 10 –12 page paper, identify and analyze the benefits and challe.docxjoyjonna282
In a 10 –12 page paper, identify and analyze the benefits and challenges that are associated with biometric evidence in the criminal justice system. Include at least 3 techniques in your paper, and use at least 2 case studies to support your position. Consider the following questions when drafting your paper:
How do courts determine if evidence is reliable and valid before allowing it into testimony?
What is the role of the Frye standard or Daubert standard in determining whether or not the courts will accept biometric evidence?
What rules does your state use in this regard?
How reliable is fingerprint evidence? Consider examples of its use in criminal courts.
How do other biometrics compare to the reliability and validity of fingerprint evidence?
What are some of the challenges associated with lower forms of biometrics, such as facial recognition, and acceptance as evidence in court?
What is the role of the expert witness related to biometric evidence in court?
Be sure to provide in-text citation and references
.
In a 1-2 page Microsoft Word document, discuss the following case st.docxjoyjonna282
In a 1-2 page Microsoft Word document, discuss the following case study:
When Alexander and Deborah married, Alexander owned a duplex in a community property state. They lived in one side of the duplex. They saved their money and bought a lake lot as tenants by the entirety. Deborah failed to pay the loans she took out from Savings Bank prior to her marriage to pay for college. The bank claimed the duplex, the lake lot and their savings.
Discuss the likelihood of success on the bank's claims against the properties.
.
In a 16–20 slide PowerPoint presentation (excluding title and refere.docxjoyjonna282
In a 16–20 slide PowerPoint presentation (excluding title and reference slides) provide information as well as analyze the roles of the following areas in criminal justice leadership strategies and practices:
Organizational culture
Behavioral theory
Planning
Community relations
Your presentation should include, at a minimum, 4 slides, with speaker notes, for each topic.
.
In a 1-2 page Microsoft Word document, using APA, discuss the follow.docxjoyjonna282
In a 1-2 page Microsoft Word document, using APA, discuss the following case study:
When Alexander and Deborah married, Alexander owned a duplex in a community property state. They lived in one side of the duplex. They saved their money and bought a lake lot as tenants by the entirety. Deborah failed to pay the loans she took out from Savings Bank prior to her marriage to pay for college. The bank claimed the duplex, the lake lot and their savings.
Discuss the likelihood of success on the bank's claims against the properties.
.
In a 1-2 page paper, discuss how the government, the media, and the .docxjoyjonna282
In a 1-2 page paper, discuss how the government, the media, and the public affect a health care organization's integration of data. Give specific examples of all three entities influencing the integration of data.
Include at least two research sources in your paper and cite them in a References page at the end in APA format. As in all writing assignments, follow standard mechanics in writing, grammar, punctuation, and spelling.
Submit your completed assignment to the drop box below. Please check the
Course Calendar
for specific due dates.
.
In 2010, plans were announced for the construction of an Islamic cul.docxjoyjonna282
In 2010, plans were announced for the construction of an Islamic cultural center, named Cordoba House, in lower Manhattan in the vicinity of where the September 11, 2001 attacks on the World Trade Center occurred. This announcement stirred up a storm of activity by groups and individuals supporting and opposing the proposal, and in early 2011, a plea by the American Center for Law and Justice was entered in the New York State Supreme Court to stop the construction. In this Discussion Board please respond to the following questions:
In 5–6 paragraphs, address the following:
What are the complaints and concerns of those who oppose construction of this building in its proposed location?
Do you agree? Why, or why not?
What are the counter-claims being made by those who support construction of this building in its present location?
Do you agree? Why, or why not?
What is the specific issue in the court case?
What activities (protests, letters to the editor, blog posts, petitions, opinion polls, etc.) are underway related to this issue? Explain.
Do you think these activities are likely to have an impact on the Court’s decision? Why, or why not?
.
In 2011, John Jones, a middle school social science teacher began .docxjoyjonna282
In 2011, John Jones, a middle school social science teacher began a unit on the American election process. He began with an introduction of political parties from the revolution to present day. At the end of the politically-balanced unit, students participated in mock debates as candidates from each party and ultimately held a mock presidential election in his classroom.
After the votes were counted and a winner determined, one of his students asked Mr. Jones who he was planning to vote for in the “real” election. He answered the question in age-appropriate language and, when prompted, explained why. He reminded his students that voting was not only a reflection of personal beliefs, but a responsibility as a citizen of the United States.
When Janie Johnson got home from school that day, she noticed – for the first time – signs in her neighbor's front yards supporting one of the presidential candidates. At dinner she asked her parents who they planned to vote for. Their choice differed significantly from her teacher’s. Janie’s father was quite upset at Janie’s explanation of the other candidate. To him, it was not Mr. Jones’ job as her teacher her to “put those kinds of ideas in her head.” The next day he called the principal demanding that Mr. Jones be removed from the classroom.
You are the principal.
1. What do you tell the father? Why?
2. What, if anything, do you say to Mr. Jones, the teacher? Why?
You are Mr. Jones.
1. Have you done anything wrong?
2. What court case(s) would you cite in your behalf? Be specific. Cite the case name, court ruling, or law.
Answer the following questions:
1. Who was Pickering and why is he important?
2. A teacher speaks out at a rally against FCAT. This is not the first “FIRE FCAT” rally held in this community. Can her statement be protected by the First Amendment? Under what circumstances?
3. A student sees a picture of math teacher James Johnson in his KKK garb that Johnson posts on his facebook page. Can Johnson be fired because of his KKK membership? Why or why not?
4. After their honeymoon Jane Jones and her new husband Jason return to their teaching jobs at JFK Middle School. At lunch that day the principal informs them that one of them must transfer to a new school. Can the principal do this? Why or why not?
Chapter 10 covers several topics, chief among which is teachers’ rights. There are three main court cases which address free speech:
· Pickering v. Board of Education
· Connick v. Myers
· Garcetti v. Ceballos
In order to respond to the questions, you will have to do some research on your own.Ask yourself this question: “Is the employee speaking as a private citizen or as an employee?”
Question 1 : What is the main difference between the Pickering decisions and the Garcetti decision? Where does the Connick decision fit in?
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In 2004 the Bush Administration enacted changes to the FLSA and the .docxjoyjonna282
In 2004 the Bush Administration enacted changes to the FLSA and the way overtime is paid. These changes are said to have impacted millions of working Americans. The Act addresses who and how overtime is paid. It is also felt that more changes are still needed.
Using an Internet search, find the enactment highlights of 2004 and future proposed changes. Who is impacted, positively or negatively? How do you feel this impacts you? Were these changes long overdue, or do you think this is just a way for workers to work more hours without the employer being responsible for premium pay?
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*****In 200-250 words****
Given the rate of technological change and global market pressures, there is considerable change and uncertainty in many organizations. Organizational value is determined more by knowledge (intellectual capital) rather than the traditional factors of productions (land, labor and capital).
1.
Review the concept of knowledge management and how human resources can create the conditions for the effective sharing of knowledge within and throughout the organization.
****Please use one reference which includes in-text citation****
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in 200 words or more..
1/ do you use twitter ?if so , how often do you tweet , and what do you tweet about ? if not , explain why you chose not to participate in this social medium
2/ when you post something online , do you think carefully about what you are about to post and how it might sound to others ? do you and react to your post ? or do you shoot from the hip , writeing whatever comes to mind ? explain
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In 200 words or more, answer the following questionsAfter reading .docxjoyjonna282
In 200 words or more, answer the following questions
After reading David Mitchel's "Branding in Pop Culture" discuss how pop culture "brand" certain products. Do you find that you gravitate toward one product over another, similar one because of the pop culture branding associated with it? Explain.
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In 2005, serial killer Dennis Rader, also known as BTK, was arrested.docxjoyjonna282
In 2005, serial killer Dennis Rader, also known as BTK, was arrested and convicted of murdering 10 people in Kansas between the years of 1974 and 1991. Further research this incident using quality and reputable resources.
Write a two to three (2-3) page paper in which you:
Explicate how digital forensics was used to identify Rader as a suspect and lead to more concrete physical evidence.
Describe in detail the digital evidence that was uncovered from the floppy disk obtained from Rader. Discuss why you believe it took so many years to find concrete evidence in order to build a case against Rader.
Explain how the acquisition of digital evidence aided the investigation and whether or not you believe Rader would’ve been a person of interest if the floppy disk evidence wasn’t sent.
Identify the software that was used by the authorities to uncover the evidence and summarize how this software can be used for digital forensics and evidence collection.
Use at least two (2) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
.
In 2003, China sent a person into space. China became just the third.docxjoyjonna282
In 2003, China sent a person into space. China became just the third country to do so. It sent a spaceship to go around Earth 14 times. It took less than a day. It was very important. China had never tried this before. Most countries do not send people into space. It costs a lot of money. China wanted to show the world that it could do it. China was proud to send people into space.
The trip to space was _________ for them.
.
In 250 words briefly describe the adverse effects caused by exposure.docxjoyjonna282
In 250 words briefly describe the adverse effects caused by exposure to radiation. Include some specific exposure levels associated with these significant health effects. Lastly, give some examples of measured radiation levels associated with the Three Mile Island incident in the U.S. and in the Chernobyl incident in the Soviet Union. Provide your reference source(s). (Wikipedia is not an accepted reference source.)
.
In 2.5 pages, compare and contrast health care reform in two differe.docxjoyjonna282
In 2.5 pages, compare and contrast health care reform in two different states. Your paper should include a minimum of three specific examples of similarities or differences in health care reform in the two states.
Example:
One possibility would be to compare Maine's health care reform in 2003 to Tennessee's 1994 health care reform known as "TennCare."
APA FORMAT
APA REFERENCES
.
In 2014 Virginia scientist Eric Betzig won a Nobel Prize for his res.docxjoyjonna282
In 2014 Virginia scientist Eric Betzig won a Nobel Prize for his research in microscope technology. Since receiving the award, Betzig has improved the technology so that cell functions, growth and even movements can now be seen in real time while minimizing the damage caused by prior methods. This allows the direct study of living nerve cells forming synapses in the brain, cells undergoing mitosis and internal cell functions like protein translation and mitochondrial movements.
Your assignment is to write a Python program that
graphically
simulates viewing cellular organisms, as they might be observed using Betzig’s technology. These simulated cells will be shown in a graphics window (representing the field of view through Betzig’s microscope) and must be animated, exhibiting behaviors based on the
“Project Specifications” below
. The simulation will terminate based on user input (a mouse click) and will include two (2) types of cells,
Crete
and
Laelaps
, (
pronounced
KREET
and
LEE
-
laps
).
Crete
cells should be represented in this simulation as three (3) small green circles with a radius of 8 pixels. These cells move nonlinearly in steps of 1-4 graphics window pixels. This makes their movement appear jerky and random.
Crete
cells cannot move outside the microscope slide, (the ‘
field
’), so they may bump along the borders or even wander out into the middle of the field at times. These cells have the ability to pass “through” each other.
A single red circle with a radius of 16 pixels will represent a
Laelaps
cell in this simulation.
Laelaps
cells move across the field straight lines, appearing to ‘bounce’ off the field boundaries.
Laelaps
sometimes appear to pass through other cells, however this is an optical illusion as they are very thin and tend to slide over or under the other cells in the field of view.
Project Specifications: ====================
Graphics Window
500 x 500 pixel window
White background
0,0 (x,y) coordinate should be set to the lower left-hand corner
Crete
Cells
Three (3) green filled circles with radius of 8 pixels
Move in random increments between -4 and 4 pixels per step
Movements are not in straight lines, but appear wander aimlessly
Laelaps
Cells
One (1) red filled circle with a radius of 16 pixels
Move more quickly than Crete cells and in straight lines
The Laelaps cell should advance in either -10 or 10 pixels per step
TODO #1: Initialize the simulation environment ========================================
Import any libraries needed for the simulation
Display a welcome message in the Python Shell. Describe the program’s functionality
Create the 500 x 500 graphics window named “
Field
”
Set the
Field
window parameters as specified
TODO #2: Create the
Crete
cells –
makeCrete()
========================================
Write a function that creates three green circle objects (radius 8) and stores them in a list
Each entry of the list represents one
Crete
cell
The.
In 200-300 words - How is predation different from parasitism What.docxjoyjonna282
In 200-300 words - How is predation different from parasitism? What structures and behavior aid the predaceous insect to be successful? Please give an example.
In 200-300 words-
Why is an understanding of metamorphosis crucial to identifying adult insects? Provide examples where knowing development patterns can prevent incorrect identification.
.
In 3 and half pages, including a title page and a reference page, di.docxjoyjonna282
In 3 and half pages, including a title page and a reference page, discuss various methods of establishing the identity of a murder victim.
In your discussion include an explanation of methods used to identify the dead when only teeth and bones of the victim are available for examination.
Use materials from the text and/or any outside resources to support your response.
.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
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Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Digital Artifact 2 - Investigating Pavilion Designs
1 Chapter 2 Organization of healthcare systems .docx
1. 1
Chapter 2
Organization of healthcare systems
2.1 Introduction
A healthcare system can be defined as a collection of
interdependent organizations that,
together, produce healthcare services. The list of organizations
includes healthcare
insurers, hospitals, doctor practices, diagnostic facilities,
nursing homes, and homecare
providers, self-regulation colleges for doctors and nurses, and
pharmacies. While each
such organization exhibits its own structures, incentives and
personnel selection
mechanisms, the system is typically configured with specific
structures and incentives
that bind its components together to varying levels of success.
In general, the structure
and the incentives interact and there are compatibility issues.
For instance, if the system
incorporates competition in its various parts, i.e. the structure
will allow many
organizations for the same function, incentives must be such
that those organizations
are motivated to compete.
Unlike in a great majority of markets, a healthcare system
2. embodies both the demand
and supply sides of the market except when patients access the
system at first with
some symptoms. Once in the system, a patient’s demand for
services takes shape
through interactions with doctors who also happen to be the
providers. Therefore, a
major challenge for system architecture (including incentives
and selection problems) is
to solve doctors’ problem of split loyalty.
Moreover, since insurance is desirable in the presence of
uncertain and lump-sum
expenditures as is the case in serious illness episodes,
individual demands are typically
integrated into group demands. Most countries go further and
establish public health
insurance in which case demand and supply for healthcare are
integrated through the
whole electorate’s willingness to pay for healthcare which
determines the system
capacity to deliver. Once, however, political processes
determine resource allocation
within the system, it is inevitable that equity and access issues
have to be addresses
whereas such issues are external to market allocation of
resources. Thus: “Discussions
about healthcare reform are inseparable from redistributive
politics, … some level of
access to healthcare will be determined by the choice of a
healthcare system.” (Besley &
Goouveia [1994], p.205)
In light of the above definition, the analysis of healthcare
systems can be described by
an organizational chart, as in Figure 2.1 below, where the
3. essential building blocks are
the patients, the major providers, i.e. doctors and hospitals, and
the insurers. Of course,
the existence of public insurance invokes a political economy
analysis as the patient-
insuree votes to determine first the constitutional structure or
the governance of the
system and, then, its capacity by choosing investments into
physical and human capital
2
6. Patient/Insuree
Malpractice insurer
Agency
In MD practice
In hospital
Public or Private;
For-π or Non-π
Healthcare system
Care
3
inputs. The constitutional structure of the system corresponds to
the public-private
balance in the two main areas in the system, financing and
delivery. In fact, real world
systems are customarily classified using these two broad
components.
A useful method of understanding healthcare systems may be
the supplementation of
the above organizational picture in Figure 2.1 with feasible
choices. If an organization
can be schematically represented by a combination of its three
7. pillars, i.e. structure,
incentives and personnel selection, then various choices will
generate a menu of
systems. However, since not all combinations of options are
compatible, the number of
systems available is strictly less than the formal number of
combinations. For example,
gatekeeping by the general practitioner will only function if
patients’ access to
specialists is restricted.
There are many dimensions to available choices under a
healthcare system: (a) the
insurance and delivery are public, private or hybrid; (b)
insurees can opt out and/or
supplement the publicly covered bundle of services; (c) there is
insurance and/or
delivery competition; and, finally, (d) whether individuals have
choices within the first
three dimensions. Normally, under all systems, individuals can
complement the publicly
covered bundle of services, i.e. they may purchase private
insurance for such services.
Insurance choice Provider choice Treatment
Collective Individual Collective Individual choice
• Yes or no • First contact • Refuse
treatment
• Public/private • Public/private • First contact
gatekeeper?
• Gatekeeper
choice
9. • Doctor
choice
• Facility
•
Participate
in trials
Table 2.1 Choice taxonomy in a healthcare system
4
First, insurance choice corresponds to demand choice for
individuals who cannot afford
a pay-as-you-go private healthcare system whereas under some
systems public
insurance restricts the coverage and imposes compulsory
insurance packages on
insurees. For instance, the Canadian provincial healthcare
insurance is compulsory,
comes with a fixed coverage for all without free
supplementation and, hence, restricts
individual choice to complementary procedures not covered
under the public insurance
packages. Second, public insurance is a collective choice yet, in
many countries,
individual supplementation is allowed. Thus, public coverage
can be individually
supplemented by private coverage and, also, opting out of the
10. public system is an
option. Curiously, in Germany, high income individuals may opt
into the “public”1
coverage, especially in retirement when their incomes may not
be sufficient to afford
private insurance.
Of course, more choice is preferable to less but it is also
costlier to provide the diversity.
Chapter 13 studies real-world healthcare systems in terms of
access, choice and cost
whereas the following provides a generic comparison based on
fundamental
components.
2.2 Healthcare systems typology
The combination of structures and incentives, which typically
defines an organization,
also defines a system because, after all, a system is also an
organization, but of more
complicated components. The generic structure presented in
Figure 2.1 will now be
revisited to yield the variety of healthcare systems observed.
The conventional
classification of healthcare systems, simple and easily
understandable to non-specialists,
debuts with a distinction of financing from delivery. In terms of
Figure 2.1, financing
corresponds to the payer and delivery to providers, including
doctor practices and
hospitals. A myriad of other providers complete the system
design.
A coarse but useful healthcare system classification is provided
11. in Besley & Gouveia
[1994]. Differentiating between financing (mostly the demand
side) and delivery
(supply) systems are classified into three types, as in Table 2.2
below.
Public delivery Private delivery
Public financing Type III Type II
Private financing Type II Type I
Table 2.2 A simple classification of healthcare systems
1 The German sickness funds can be better described by private
non-profit although government
regulation is overbearing. Originally covering various
professions, late reforms freed them from
corporatism. They are funded in small part by governments but
mostly by insuree contributions via
payroll deductions and employer contributions.
5
Of course, one would find scant few examples to fill in the Type
I and Type III boxes as
all countries have mixtures of private and public components.
The classification must,
then, surely be interpreted with an eye to operational relevance.
Thus, countries where
public financing (delivery) is dominant ought to be classified as
12. characterized by public
financing (delivery) and vice versa. For instance, the existence
of US Federal-State joint
programs of Medicaid (insurance coverage for the poor) and
Medicare (insurance
coverage for the elderly) do not make it a mixed system in this
operational classification.
On the other hand, if one were to classify the Canadian
healthcare system with mostly
public insurance, the classification of delivery is tricky.
Although doctors are private
entrepreneurs and hospitals predominantly private non-profit,
the heavy regulation
under government monopsony locates the Canadian delivery
midway between fully
private and public extremes. By adapting the above Table 2.1,
the Canadian system can
be better described, as in Table 2.3 below.
Insurance choice Provider choice Treatment
Collective Individual Collective Individual choice
• Public
insurance
compulsory
• First
contact:
Family MD
or Emergency
• Can refuse
treatment if
legal adult
13. • Public for all
plus
complementary
• Extensive
complementary
plus US
supplementary
• Family MD as
gatekeeper
• Gatekeeper
choice
(restricted if
shortage)
• Treatment
choice
• Public for a
given bundle
• Complement,
no Canadian
supplement
• No specialist
self-referral
• Specialist
choice, yes
somewhat
• Timing
14. somewhat,
location
• Public funds • No fund
choice, tax
based
• No hospital
self-referral
• Hospital
choice, yes
somewhat
• Timing
somewhat,
location
• Private
complementary
coverage
• Coverage and
premia
• Hospital
doctor choice
somewhat
• Doctor
choice
somewhat
• Facility
somewhat
15. •
Participate
in trials
Table 2.3 Choice taxonomy in Canadian healthcare systems
6
The generic Canadian healthcare system may well be described
as a Type III system,
rather than a formal Type II, by virtue of public financing and
heavily regulated private
delivery. For instance, financing as well as quantitative controls
impose heavy
restrictions on private providers. Though private, most
hospitals’ board members are
appointed or approved by provincial authorities, a process that
substantially restricts
the range of decisions. Moreover, provinces typically
micromanage hospital budgets, so
much so that there are different regulations and processes
governing operating and
capital budgets. As for doctors, beyond the fee negotiations,
provinces regulate location
choices through licensing as well as fee structures. Thus,
although they are mostly
private, Canadian providers face steep financial incentives and
rigid quantitative
controls that induce them to act within the parameters imposed
by provincial
governments.
16. 2.3 Complementary and supplementary insurance
Since premia must be correlated with coverage, both in breadth
and depth, the
complementation and supplementation of a given coverage may
be represented rather
simply using an individual choice framework.
Voluntary and compulsory insurance can be understood by a
simple public choice
analysis of collective decisions. However, the first step is to
understand the two types of
transfers to (and from) individuals: Per-unit and lump-sum
subsidies. Per-unit subsidies
lower the effective price of the good subsidized whereas lump-
sum subsidies are
unconditional transfers that increase the receiver’s income.
Below, in Figure 2.2, the
generic individual has an income of y0 and the price of good q
is p0. The individual’s
budget constraint is given as y0 = c + p0q where c represents
the total expenditure on all-
other-goods. The optimal bundle chosen is then (q0,c0). When
the individual receives the
18. q0 q1=q2
q
Figure 2.2 Lump-sum and per-unit subsidies
lump-sum transfer S1, his budget constraint becomes y0 + S1 =
c + p0q and the bundle
chosen is (q1,c1). More of q is chosen because it is a normal
good. Needless to say, the
composite good c is necessarily a normal good. When, instead
of the lump-sum transfer
S1, the individual receives a per-unit subsidy σ1, the budget
constraint becomes
y0 = c + (p0 – σ1)q and the bundle chosen is constructed as
(q2,c2). We then note that,
under the per-unit subsidy, the total subsidy reaches σ1q1, an
amount smaller than the
lump-sum that produced the same quantity increase (q1-q0) for
the subsidized good q.
Thus the per-unit subsidy produces the desired increase at a
lower cost. This outcome is
due to the fact that a lump-sum subsidy does not lower the
opportunity cost of q
whereas the per-unit subsidy precisely does that.
Compulsory insurance results from a collective decision. In
reality, there exist broadly
two types of compulsory insurance. The first is the requirement
that individuals have to
purchase some minimum insurance, not necessarily the same
coverage. Usually known
under the title of social insurance, various examples can be
found in Europe, from
19. German sickness (or better described as solidarity) funds to
Dutch hybrid insurance
8
markets and Swiss private insurance markets. The second
variety is public insurance
where coverage is identical for all, with different varieties
according to
complementation and supplementation rules. For example, with
no supplementation
but unconstrained complementation, the Canadian system is one
example whereas
Britain and Australia exhibit different supplementation and
complementation rules. The
US Medicare can be interpreted as falling into the same
category.
As depicted below in Figure 2.3, compulsory insurance is a
collective decision. On the
diagram, the level provided is qM
0. Since the system is required to serve three users L, M
and H, three units of service have to be provided. Given the unit
price p0, the total
provision costs 3p0qM
0. We note that, by construction, p0qM
0 = 1/3yM. whereas the total
cost of provision 3p0qM
0 = 3(1/3yM) =
1/3(yL + yM + yH). Thus
20. 1/3 is the required income tax
rate to finance the system.
Given that each individual consumes qM
0 and is taxed at the rate 1/3, their bundles are
respectively (qM
0, 2/3yL), (qM
0, 2/3yM) and (qM
0, 2/3yH). If these same individuals were free
to purchase q in the market, their bundles would have been (qL
0,cL
0), (qM
0,cM
0) and
(qH
0,cH
0) where cM
0 = 2/3yM. These choices are consistent with the normality of
healthcare.
The social consequences of public insurance are favourable
(unfavourable) to individual
L (H) because his utility is higher (lower) due to the lump-sum
income transfer under
public insurance. Since it is a flat rate (at 1/3) taxation system,
individual H contributes a
higher amount into the provision budget than either of the other
21. individuals whereas L
receives a lump-sum subsidy. In Figure 2.3, the high-income
individual would have
achieved the utility UH
PR on his own in the marketplace yet he remains at UH
PUB as there
is no opt-out of insurance. By contrast, the low-income
individual could only have
achieved the utility UL
PR on his own in the marketplace yet he achieves UL
PUB under
public insurance with the transfer from individual H.
Of course, as to why qM
0 is the level of provision requires an explanation. In this
community of three individuals endowed with majority voting,
the level of provision qM
0
would always win against any alternative by two votes to one.
The high-income voter
would prefer qM
0 over a lower level of provision whereas the low-income voter
would
prefer qM
0 over a higher level. Thus various proposals would have to
locate very close to
23. 2/3yM = cM
0
yL UM
PR = UM
PUB
2/3yL
UL
PUB
cL
0
UL
PR
qL
1
q
qL
0 qM
0 qH
0
Figure 2.3 Public provision and political
equilibrium
24. qM
0 or risk losing. In public choice analysis, this simple
observation is known as the
median voter theorem. Given this collective choice, as resolved
by majority-voting, high-
income voters are left wanting for more, ready to opt out of
insurance or supplement
(top-up) the level offered under public insurance. Yet, low-
income voters achieve a
bundle outside their budget constraints by virtue of the transfer.
With one-third of their
incomes allocated to q, low-income voters could only afford to
buy the quantity qL
1.
Figure 2.4 below (where, for clarity’s sake, the tax rate is
constructed to be one-half)
represents the incentives faced by high-income individuals. The
bundle (qM
0, ½ yH) in
Figure 2.4 corresponds to (qM
0, 2/3yH) in Figure 2.3. Since, by normality of q, the high-
10
income individual prefers (qH
0,cH
0) over (qM
25. 0, 2/3yH) in Figure 2.3, (qM
0, ½yH) is not the
preferred
c
yH
cH
0
½yH D
cH
1
sD
E
F
26. qM
0 qH
S qH
0 q
Figure 2.4 Public provision, opt-out and
supplementation (S)
bundle, in Figure 2.4, i.e. at (qM
0, ½yH) the high-income individual’s marginal willingness
to pay, as given by the slope of his indifference curve, exceeds
p0, the slope of the
budget constraint starting at (qM
0, ½yH) as imposed by public insurance and representing
the opportunity cost of q. The high-income individual would,
short of enjoying the
freedom to choose (qH
0, cH
0), would prefer supplementation (or top-up) up to qH
S or the
bundle (qH
0,cH
1). Thus, in addition to the healthcare tax ½yH, the high-income
individuals
would spend the amount p0(qH
S - qM
27. 0) = cH
1 - cH
0 on supplementation. The quantity
demanded of supplementation is denoted by sD in Figure 2.4.
Figure 2.5 below integrates complementary and supplementary
insurance into the
individual’s choice problem under public provision of
healthcare insurance. The
individual’s budget constraint is given as
11
y – T = cmax = c + ps + rk
where y is income, T taxes, c other consumption, q the publicly
covered healthcare, s
supplementation, and k healthcare that’s not covered publicly
thus complementation.
The after-tax income is given as y – T = cmax, i.e. the
individual can choose to consume
the bundle (cmax,0,0) with no insurance coverage beyond the
public package qPUB. If the
individual spent all after-tax income (y – T) on complementary
coverage k at price r, the
maximum size is kmax whereas the maximum supplementary
coverage, should it be
allowed, would have been smax at price p. Figure 2.4 represents
the two-dimensional
tradeoff between consumption c and supplementary coverage s.
Figure 2.5 below generalizes Figure 2.4 to choice over the
28. (triangular) budget set DFG
where the tradeoff between complementary and supplementary
insurance packages is
allowed. We note that under mixed systems with some public
provision, individuals face
varying degrees of constraints on supplementation. With a
complete ban on
supplementation, the individual’s choice set would be reduced
to the triangle DEG
C
cmax
D
k
kmax
E
G
qPUB
90
0 F
29. qPUB+s
max q = qPUB+s
Figure 2.5 Interaction of complementation and
supplementation
12
whereas a tooth-to-toe coverage under public insurance, leaving
no demand for
complementary insurance, the choice set would be DEF as
individuals might demand
higher quality as represented by supplementation.
We note, above in Figure 2.4, that the high-income individual
demands supplementary
insurance. Technically stated, her marginal willingness-to-pay
(marginal rate of
substitution) for services in the public package at qM
0 exceeds the price p. If, however,
public package isn’t complete or, in other words,
complementary insurance will be
considered by individuals, her marginal willingness-to-pay
(marginal rate of substitution)
for services excluded from the public package may exceed their
price r at qM
0 and the
demand for complementary insurance would also be positive.
The individual would then
choose a bundle strictly in the interior of the budget set DFG,
30. i.e. strictly positive
amounts of s and k at the expense of c.
The top-up demand lies at the source of the impending political
pressure by retiring
baby-boomers in Canada and elsewhere whenever public
insurance is restrictive enough
to ban supplementation (Courchene [2003]). For such groups,
top-up (through
supplementary insurance or by plain out-of-pocket payments) is
somewhat an
alternative to opt-out while for the society as a whole it may
serve as an allegiance
preserving mechanism. However, in particular, availability of
supplementary insurance
coupled with private provision is often called a parallel private
or two-tiered system, i.e.
public insurance supplemented by private insurance. We
discuss various related
phenomena in the next section.
2.4 Systemic organizational issues
The presence of public insurance poses multiple challenges.
From the scope of coverage
to the dynamics of coverage, a host of issues arise not only due
to changing social,
political and economic circumstances but also due to
technological change, both in
medical technology but also in pharmaceuticals. A challenge
arising from a need for a
change in coverage is the required organizational architecture
for deciding on services
to be covered by public funds. Of course, any such
organizational architecture has to
31. address the twin questions of who decides and by what process
(Awad et al. [2004]).
As a particular government level or a government agency takes
these decisions
concerning the scope of the bundle and the process, serious
questions arise as to how
to build accountability in the absence of market discipline.
There is another facet to public insurance in healthcare. If
financing is structured to
come out of general taxes, public insurance is also social
insurance, i.e. a wider net than
health insurance because whereas this latter envisages transfers
from healthy to sick
social insurance also includes transfers from high-income to
low-income individuals, the
extent
13
Private
Delivery
Public insurance Multi-payer
(single or multi insurance
and
payer) and competition
in
competition in delivery
delivery
Public
32. Private
Financing
Financing
Government Unobserved
provision (except in
minor
cases)
Public
Delivery
Figure 2.6 Financing and delivery taxonomy
of the transfer depending on the taxation system in place. The
fact that this particular
aspect does not explicitly appear in Figure 2.6 is another
weakness of the simplistic
financing/delivery classification of systems. Since public
financing is embedded within
the given taxation system, this latter imposes the transition from
public healthcare
insurance to social insurance. Mandated-insurance systems,
where individuals have to
purchase insurance, are not intrinsically social insurance
systems unless supplemented
by transfers. The desirability of social insurance (Besley &
Coate [1991]) depends on
factors beyond the healthcare insurance framework.
An example should illustrate many of the concepts we have just
33. developed. The US
healthcare sector exhibits a most complex system. Medicare and
Medicaid (Centers …
[2009]) constitute large chunks of public financing together
with Veterans’
Administration that provides healthcare to US veterans.
However, the system is mostly
privately financed insurance and private delivery but only
partially necessarily for-profit.
The part of the system relating intimately to our current
discussion is the interaction
between the public and private insurance provision in the case
of Medicare. This fairly
comprehensive insurance scheme for seniors is typically a
shared program between the
federal government and states. It consists of public financing
and private delivery.
Interestingly, its coverage is incomplete in both breadth and
depth, implying it exhibits
14
gaps that can be complemented and weaknesses in quality and
quantity that can be
supplemented. For these reasons, eligible individuals may
purchase Medigap coverage
in tightly-regulated markets. This regulation takes the form of
strictly commensurable
coverage contracts to enable seniors to compare different
products easily. Thus
Medigap policies consist of both complementation and
supplementation of Medicare.
34. References
Awad, M., J. Abelson & C.M. Flood [2004], “The Boundaries of
Canadian Medicare:
The Role of Medical Directors and Public Participation in
Decision Making”,
CHSRF-OMHLTC Research Project "Defining the Medicare
Basket" IRPP WP Series
no. 2004-05
Besley, T. & S. Coate [1991], “Public provision of private
goods and the redistribution
of income”, Amer. Econ. Rev. 81(4), 979-984.
Besley, T. & M. Gouveia [1994], “Alternative systems of health
care provision”,
Economic Policy, October, 200-258
Centers for Medicare and Medicaid Services [2009], “Medicare
and You 2009”,
http://www.medicare.gov/Publications/Pubs/pdf/10050.pdf
Courchene, T.J. [2003], “Medicare as a moral enterprise: The
Romanow and Kirby
Perspectives”, IRPP Discussion Paper, vol. 4, no. 1
http://www.medicare.gov/Publications/Pubs/pdf/10050.pdf
15
35. 1
Chapter 4 Health Insurance
Healthcare demand is inextricably associated with insurance
demand due, fundamentally,
to individual risk aversion that reflects willingness to pay for
reducing the financial risk
one faces. Since the financial burden of an episode of illness is
often large with respect to
most individuals’ incomes and the illness itself unpredictable,
individuals demand
insurance, i.e. they want to spread and smooth out such random
variations in their wealth.
Moreover, since this illness-related financial burden is mostly
invariant to one’s income1,
health insurance is regularly provided publicly as part of social
insurance in a large
number of countries. Public health insurance is also motivated
by the fact that, by
increasing coverage and hence producing a positive impact on
the workforce, it may
boost earning power. Ironically, as higher incomes positively
affect health, there exists a
simultaneity (Lynch [2004]). Yet, in many countries that build
universal coverage health
insurance systems, coverage is neither uniform nor publicly
provided.
36. This chapter includes a simple but rigorous presentation of
individual demand for
insurance while deferring the details of healthcare provision as
social insurance to the
part on healthcare system analysis. Both aspects of healthcare
insurance were first
rigorously analyzed in Arrow [1963]. Whereas personal demand
for insurance arises from
individuals’ concern for sharp variations in their wealth, social
insurance is a social
solidarity phenomenon. Although there may be economic
efficiency reasons, such as a
healthier workforce (Deaton [2002]) and economies of scale in
administration, favouring
social insurance (Hussey & Anderson [2003]), the insurance
affordability prevails as the
main reason for public provision (Besley & Gouveia [1994]).
Many countries have
developed differing institutional arrangements and varying
amounts of coverage in the
provision of health insurance.
a. Demand for insurance
Risk-averse individuals facing risky prospects demand
insurance. We will first break
down this loaded statement into its four components. Firstly, a
risky prospect is simply
the possibility that a decision-maker will face mutually
exclusive future financial states of
the world, i.e. any one of those states may turn out to be the
case. These may be, for
example, a state where one continues to possess his car as is and
another where the car is
stolen or subject to an accident as a result of which the owner
37. incurs a financial loss. A
loss state implies a significantly different financial state than
the one in which the owner
continues to possess his car. In the case of health, a serious but
curable illness possibility
implies different financial prospects as the unhealthy individual
will have to pay for
medical care and his financial situation is significantly worse
than in a healthy state.
Secondly, in both cases, the difference in financial outcomes
implies that the individual
would have enjoyed different levels of wealth in the two states
and, correspondingly,
different marginal utilities of wealth, higher with lower wealth
and vice versa. If neither
state can be ruled out ex ante, i.e. neither is assigned zero
probability, then the
1 There exists, however, some evidence that there is an “income
gradient”, i.e. higher income means better
health (see Deaton [2002], Lynch et al. [2004]).
2
individual’s expected utility2 will be higher if some wealth can
be transferred from the
high to low wealth state. This happens because the marginal
utility of low wealth is
higher than that of high wealth (see Figure 4.1). If a dollar is
transferred from a high to
low wealth state, the marginal utility lost from the former
exceeds that gained from the
latter. This, then, is a net increase in the individual’s total
38. utility. Thus, thirdly, the risk-
averse3 individual would be willing to pay for a transfer of
wealth across states because
the transfer increases her total utility. This transfer requires
contracting with a third party
that could assure the individual that, in return for a sure fee (i.e.
a fee paid regardless of
the state), compensation will be available in case of financial
loss. The availability of
such a contract turns the demand for insurance into a market
insurance contract. Finally,
there is evidently a strong link between demands for healthcare
and for healthcare
insurance (Dusansky & Koc [2006]), i.e. those who are to
demand healthcare (and that
would be all of us) do demand health insurance beyond the pure
insurance motivations.
As we saw in the previous chapter, the health stock is desirable
in itself as well as it
enables one’s earning capacity. Combined with the inherent
unpredictability of healthcare
expenses, not only demand for healthcare influences
individuals’ healthcare insurance
contract choices but also a feedback phenomenon exists in the
form of the terms of
insurance contracts and affects the demand for healthcare.
It goes without saying that the availability (that insurers are
willing to offer contracts) and
affordability (that insurance is available at prices lower than the
price at which demand is
choked) of insurance also depends on the supply side. Since
insurance is a transfer of risk
from insuree to insurer, insurers’ profitability will determine
the existence of market
provision to which we will return below.
39. We now consider Figure 4.1, below, where the utility function
reflects decreasing
marginal utility by its concavity. As explained below, this
property of individuals’ utility
functions will yield risk aversion and, hence, demand for
insurance. The wealth levels
wB0 = W – L and wG0 = W are, respectively, the individual’s
wealth in loss and no-loss
states of the world. Correspondingly, she would derive utilities
u(wB0) and u(wG0) in the
respective states. However, none of these states are to occur
with certainty when, ex ante,
the individual is making an insurance decision. Of course, ex
post, the individual is in one
of the two mutually exclusive states. The likelihoods of the ex
post states, whether
computed objectively or subjectively4, are p for the loss state
and (1 – p) for the no-loss
state. The loss is given by L = wG0 – wB0 whereas we = pwB0
+ (1 – p)wG0 is the expected
wealth and w0 the certainty equivalent of the risky prospect
because u(w0) = pu(wB0) + (1
2 The expected utility consists of the weighted average of her
utilities in the two states. Since the insurance
decision precedes the knowledge of the exact state of the world,
economic analysis typically postulates that
individuals maximize their expected utility, the weights
representing the likelihood of a state’s occurrence.
These weights may be endogenous (or at least partially
determined by the decision-maker) or exogenous,
and objective or subjective. See any microeconomics textbook
for a discussion of the expected utility
hypothesis.
40. 3 A risk-averse individual strictly prefers the expected value of
a risky prospect to the risk. In the current
case for health insurance, it amounts to u(we) > pu(wB
0) + (1 – p)u(wG
0) in Figure 4.1.
4 The objective determination of these probabilities is simply
based on count data on past group
occurrences. Insurers use this information in designing and
supplying contracts. Individuals, on the other
hand, form their own subjective evaluations of the states’
occurrences when forming their demands for
insurance contracts.
3
–p)u(wG0), the utility provided by w0 is equal to the expected
utility from the risky
prospect. In fact, the difference (we – w0) is called the risk
premium.
u
u(wG0)
u(w)
EU0 EU0 =
pu(wB0) + (1 – p)u(wG0)
41. u(wB0)
wB0 w0 we
wG0 w
we = pwB0 + (1 – p)wG0
wG
wG0
w0 EU(wB,wG;p)
= u(w0) = EU0
slope = –
p
p
−1
42. 450
wB0 w0
wB
Figure 4.1 Derivation of state-space indifference
curves
4
Figure 4.1 graphically displays the concept of risk aversion.
Those individuals who
exhibit a positive risk aversion have positive demands for
insurance. They are willing to
pay to transfer the financial risk onto others. In fact, such a
transfer would be acceptable
if the contract premium is low enough that the individual attains
at least the expected
utility EU0 she would have had on her own, facing the risky
prospect. This means that the
choking price for coverage L would be exactly equal to (wG0 –
W) because, for a higher
premium, she would do better on her own. Thus any premium
lower than (wG0 – W)
combined with the full coverage L would leave the individual
better off with insurance.
The economic analysis of insurance is best represented
43. graphically in a state-space
diagram that allows the explicit representation of the demand
and supply prices5 of
insurance or, in other words, of indifference curves and a
budget constraint. Moreover,
the analysis of informational problems of adverse selection, ex
ante and ex post moral
hazard finds intuitive representations in state-space diagrams.
Figure 4.1 explains the transition from the introductory
explanation, above, of risk-
aversion and demand for insurance to a state-space diagram.
The individual’s initial
bundle or endowment is (wB0,wG0). The slope of the
indifference curve passing through
this bundle is evidently very steep as the marginal utility of
wB0 far exceeds that of wG0.
Note how wG0 in the bottom panel is derived from the top by
using the 450 line as the
reflector. The slope of the indifference curve when it crosses
the 450 line is equal to –
p/(1 – p) (as explained in Appendix 4A) and of course much
flatter than at (wB0,wG0).
This graphically yields the convexity of the indifference curves
towards the origin.
Intuitively, the convexity of the indifference curves corresponds
to risk aversion. Since a
risky prospect in the current context is where wealth is
significantly different in the two
states, the marginal utilities will likewise be different, a high
marginal utility for low
wealth in the loss state and a low marginal utility for high
wealth in the no-loss state. The
high marginal utility in the bad state with low wealth (the
numerator of the slope) will
44. quickly fall whereas the marginal utility in the good state with
high wealth (the
denominator of the slope) will slowly increase when the gap
closes towards full
insurance. These opposite changes in marginal utilities indicate
that the slope becomes
flatter and converges to – p/(1 – p) along the 450 line where
wealth is equalized across
states or, in other words, no risk exists any longer. In Figure 4.2
below, two full coverage
contracts are shown, w0 and w1. The former yields as much
utility as the individual would
have enjoyed without insurance at the initial situation whereas
the latter strictly increases
her utility above the initial level.
An individual’s demand price6 for an extra dollar of coverage is
then simply the slope of
his indifference curve as the slope represents the maximum
amount the individual is
willing to sacrifice in the no-loss state in order to buy the one-
dollar coverage in the loss
5 Keeping with conventions, the price of insurance, as different
from the contract premium, is defined as the
unit price for insurance, i.e. the amount payable per dollar of
coverage.
6 The demand price is the maximum unit price that a potential
buyer is willing to pay for a given quantity of
a good. The willingness to pay is also constrained by the ability
to pay. The collection of demand prices, as
a schedule, constitutes a demand curve.
5
45. state. Consistent with standard demand curves, the convexity of
the indifference curve
towards the origin ensures a decreasing demand price or
marginal willingness to pay for
extra coverage.
wG
w0
wG0 •
Complete
coverage
wFI
slope = –
p
p
−1
π = 0
U(wB,wG) = U0
450
46. wB0 wFI
wG0 wB
Figure 4.2 Complete coverage insurance contract
The budget constraint in Figure 4.2, originating at the
individual’s initial endowment and
with slope – p/(1 – p), is called a fair odds line and represents
an actuarially fair transfer
of funds from the good to the bad state. It reflects competitive
insurance provision under
the rather strong assumption that insurance companies face no
administrative costs.
Competitive insurance provision implies that any demanded
contract will be supplied by
some company provided it makes a non-negative profit. In such
an environment, an
insurance company’s expected profit can be formulated as a
function of the loss
probability, the premium R7 and the coverage Q as
πe = p(R – Q) + (1 – p)R.
7 The premium can always be expressed as a fraction r of the
chosen coverage Q without affecting the
derivation.
6
47. Noting that (Q – R) = dwB and (– R) = dwG and, also, under
perfect competition,
expected profits will be driven down to zero8, one obtains
πe = – pdwB – (1 – p)dwG = 0
and the slope of the budget constraint is thus obtained as
B
G
dw
dw
= –
)1( p
p
−
.
Given that the initial endowment point is part of the budget set,
the budget line is hence
obtained. Returning to Figure 4.2, facing such a budget
constraint, the individual will
choose Q = L, i.e. full coverage and the corresponding premium
R1 will be equal to the
actuarially fair cost of the coverage, i.e. R1 = pL = wG0 – w1.
This corresponds to a
premium of p per dollar covered. Note that, if the full coverage
48. contract happened to be
w0, then the premium would have been equal to R0 = pL + (w1
– W) = wG0 – W. As seen
in Figure 4.2, this latter contract leaves the individual
indifferent between remaining
uninsured at {W – L, W} and purchasing full coverage at w0,
with the high premium R0.
The last incremental step towards the demand curve for
insurance is the addition of
loading costs, i.e. the costs of actually running the insurance
firm. Although theoretically
simple, loading costs constitute a significant proportion of
premia in general9. In case
loading costs are proportional to coverage, the actuarially fair
premium per dollar of
coverage is just augmented by the unit loading cost r = p + t.
We note that, as above, [Q – R] = dwB and [– R] = dwG.
Thence, the slope of the budget
line, as developed in Appendix 4B and shown in Figure 4.3
below, is steeper and
individuals will purchase incomplete coverage and the loading
cost imposes a lower
utility on insurees.
The zero expected profits requirement for the existence of
insurance10 implies that the
addition of loading cost t reduces the demand for insurance as
individuals facing a
premium exceeding the actuarially fair rate choose less than
complete coverage.
The intuition for the incomplete coverage solution hinges on the
individual’s willingness
to pay for extra coverage or, simply, her demand price for
49. insurance. As the supply price
of insurance is higher with loading costs added (i.e. p+t rather
than just p), the
individual’s demand price falls to p+t faster in terms of
coverage demanded. In other
words, the demand price falls below the supply price well
before full coverage Q = L.
8 If any insurance contract is expected to yield strictly positive
profits, it will be offered. And, of course,
loss contracts will be withdrawn.
9 American private insurance loading costs have been estimated
at 24 cents in the dollar. See Wolf [2007].
10 See Appendix 4B. The dissipation of expected profits is,
however, to be qualified because, in reality,
insurance firms are also risk-averse and they would build risk
premia into their pricing. However, for a first
approximation, the expository and pedagogical gain to assuming
zero expected profits outweighs the lack
of realism therein.
7
wG
w0
wG0
Incomplete
51. Figure 4.3 Loading cost and incomplete coverage
Insurer loading costs consist of overheads and other
administrative costs. It must be noted
that insurees incur loading costs averaged over the number of
insurees rather than their
individual coverage. Consequently, if the loading cost
component of an individual’s
premium is taken as constant, it provides some incentive for the
individual to spread it
over a larger coverage.
The demand for insurance is thus defined as the coverage
required in response to the
market premium that is the price for dollar of coverage. Tracing
the amount of coverage
demanded in response to changes in premia thus yields the
demand curve for insurance,
as drawn in Figure 4.4 below.
There is graphic congruence between this case and the two other
reasons why insurance
demand may fall short of complete coverage. The
incompleteness of coverage also arises
of informational problems in insurance markets. The budget
constraint introduced above
will be key to understanding the two informational problems of
adverse selection and
moral hazard that we now turn to.
8
53. a
pH
pL
QD
QFI Q
Figure 4.4 Insurance coverage demand
9
b. Insurance markets and information problems
The economics of information has found perhaps its most fertile
application in insurance
because, plainly, insurance markets are inextricably grounded in
elicitation and
integration of information into contract design. The information
54. in question relates to the
identification of different pools of insurees with similar
characteristics and, once in the
pools and covered, to their behaviour that is costly to observe.
Insurers’ two fundamental
concerns are the matching of contracts to potential insurees and
the design of contract
incentives so as to affect insuree behaviour upon being covered.
The first concern is the
self-selection (or adverse selection) problem and the second the
moral hazard problem. In
turn, the moral hazard problem has the ex ante and the ex post
components. The first
refers to the insuree’s effect on the likelihood of a loss covered
under the contract and the
second on the size of the loss.
As an example of adverse selection, consider the case of the
chronically ill11. The self-
selection problem would arise if insurers offered premia based
on averages whereas
policies are purchased only by chronically ill who are normally
expected to make
frequent and large claims, if not for treatment but for
medications. Thus, insurers would
earn negative profits if a larger percentage of such people
purchased policies than
anticipated by insurers. Provided all buy the average contract,
the insurers would not lose.
However, if not, the marketplace would force insurers to try to
segment the general pool
of potential insurees into more homogeneous pools by designing
profitable contracts that
are relatively more attractive and specific to each pool. If any
pool supports profitable
contracts then the insurance market ought to work properly,
55. matching a particular pool of
insurees with corresponding insurance contracts. If not, a
market failure12 will arise due
to this first type of information problem.
The adverse selection problem thus arises when there is a
mismatch between the type of
insuree, not necessarily known to the insurer, and the contract
designed with a particular
insuree in mind. Surprisingly, this may occur as a result of ex
ante mismatch in which
wrong people joining a particular insurance plan or, simply, a
plan retaining only the
wrong people (Altman et al. [1998]).
To understand the problem, let us consider Figure 4.5a below
and assume, temporarily,
that the insurer has complete information on potential insurees,
i.e. the insurer knows
their risk types. To simplify the exposition, we will henceforth
consider two risk types
represented by illness probabilities pL and pH corresponding,
respectively, to low-risk and
high-risk insurees. As in Figure 4.4, these two homogeneous
groups, whose members
11 This is an interesting category because, quietly, most types
of cancer joined the chronic illness category
where the ill carry the illness at bay for the long term.
12 A market failure is a market outcome that is an equilibrium
but a suboptimal one in that the market
allocation can be improved upon had it not been for reasons
impeding the proper functioning of markets.
These reasons typically include non-competitive behaviour
arising from such sources as market entry and
56. exit restrictions that induce market power, lack and/or
asymmetry of information on tastes and technology
of market participants, ill-defined property rights leading to
public goods and externalities, transactions
costs that prevent a market’s functioning and, finally,
technologies that induce large scale economies.
10
being perfectly known to the insurer, are offered the complete
coverage contracts
{wL,wL} and {wH,wH} with respective premia rL = wG0 – wL
and
rH = wG0 – wH such that rH > rL simply because pH > pL.
Thus the riskier class members
pay a higher premium. We note that both complete coverage
contracts yield zero
expected profits, an outcome consistent with perfect
competition.
If insurer information is incomplete, i.e. the insurer no longer is
able to identify members
of a risk group, the high-risk group members adversely self-
select into purchasing the
contract {wL,wL}, the one designed for the low-risk group and
that would break even
only if low-risk members purchased it. Understandably, the
threat of negative profits
from high-risk members purchasing low-risk type contracts
would have insurers
anticipate this adverse selection phenomenon and respond.
While we will return to the
impossibility of pooling (or blending) contracts below in Figure
57. 4.5b, we now consider
an attempt at separating risk groups. In Figure 4.5a, {wH,wH}
and {wBL,wGL} allow
separation, the first weakly preferred by high-risk types and the
second strongly preferred
by low-risk types. We note that the market fails due to
incomplete information (as the
insurer has less information than individual risk group members
on their own risk
categories) in that the overall welfare is lower than in the case
of complete information.
Although the high-risk group members do not suffer a welfare
loss, their presence
imposes negative externalities on the low-risk members whose
loss of utility is equal to
(UL1 – UL2).
wG
UL2 UL1
(wB0,wG0) •
wGL
πL = 0 and
slope = –
L
L
58. p
p
−1
UH1
UHADVERSE
slope = –
H
H
p
p
−1
450 and πH =
0
wBL wH wL
wB
Figure 4.5a Adverse selection and incomplete coverage
11
A set of uniform-premium contracts or a pooling one (identical
59. for all) for all will not
arise under competitive market conditions because cream-
skimming insurers will break
ranks and pry away healthy individuals with lower premia in
return for accepting some
risk. Consider Figure 4.5b below with uniform-premium case
illustrated, {wH1,wH1}
chosen by high risks as more than complete coverage will not be
available and
{wBL1,wGL1} for low risks. The wedge-shaped area enclosed
by the two individuals’
indifference curves and the fair premium budget line for low
risks includes profitable
contracts that attract only low risks. Thus the market will be
segmented and the emerging
equilibrium can only be of a separating type where low and high
risks pay different
premia13.
wG
UH Cream-
skimming contracts
UL
(wB0,wG0) •
wGL
wH
slopeL = –
L
60. L
p
p
−1
UH
and πL = 0
slopeAVERAGE
and πAVERAGE = 0
slopeH =
–
H
H
p
p
−1
450 and πH =
0
wBL wH
wB
Figure 4.5b Adverse selection and community rates
61. We can now proceed to analyze the case of incentives in health
insurance. As an example
of ex ante moral hazard, consider the behaviour of an insuree
vis-à-vis lowering the
12 A separating equilibrium may not exist if the proportion of
low risk types is so large that separation may
break down due to insurers offering a pooling contract that
would trade off low risks’ low premium for
lower risk in such a way to make them better off pooling with
high-risk types. Thus, in Figure 4.5a, the
pooling budget line would be closer to that for low risks’ and
allow them an increase in utility.
12
likelihood of ill health by improving one’s diet and physical
activity (AAFP [2007]).
Eating well necessarily imposes a constraint thus requires some
effort and physical
activity not only requires effort but also is typically costly. In
the absence of positive
incentives (or strong inner motivation) lowering the cost of
taking these preventive
measures, individuals would normally choose suboptimal levels.
The failure therein of an
individual to undertake these preventive measures upon
purchasing insurance that would
mitigate some of the harmful consequences through medical
care leads to the ex ante
moral hazard problem. In other words, complete coverage over
the consequences of one’s
62. actions tends to impel complacency, in particular if one is
predisposed to have an
inadequate diet and lead a sedentary lifestyle14. The very
existence of health insurance
coverage generates, ironically, a disincentive for conditions
conducive to good health
(see Osterkamp [2003] for incentives under public insurance).
This, in turn, increases the
cost of insurance on the average as illness becomes more likely.
Law of the unintended
consequences at work!
Figure 4.6 below depicts the ex ante moral hazard problem with
the potential insuree
facing the initial allocation {wB0,wG0} in which case, on her
own, she would have chosen
a high level of effort as we will see from the following
reasoning. The insurer lacks
information on the potential insuree’s health-enhancing effort
choice, either plain
impossible or too costly to observe. The consequence of this
asymmetry in information is
that complete coverage would simply induce a suboptimal
allocation because the insuree
would choose a lower than optimal level of effort. To see this,
first consider the complete
coverage contract w1. Clearly, this contract would give a higher
utility to the low effort
choice by virtue of the fact that a low effort costs less whereas,
in terms of benefit
consequences, no difference exists because the contract is one
of complete coverage at
{w1,w1}. Thus, adopting the simpler notation U(wB,wG) =
p(e)u(wB) + (1 – p(e))u(wG),
UL1 = U(w1,w1) – v(eH) < U(w1,w1) – v(eL) = UH1
63. simply because low effort is less costly whereas the benefits are
equal due to complete
coverage. Since high effort is desired and the uninsured
individual would have chosen a
high level of effort, a movement along the budget line with
slope equal to slopeL from
{w1,w1} towards the original non-insured allocation
{wB0,wG0} makes high effort more
and more attractive over low effort because such a movement
corresponds to increasing
risk via incomplete insurance. Thus a higher effort starts
dominating the low effort when
incompleteness reaches a certain level where the incremental
cost of high effort is more
than compensated by its beneficial effect in reducing the
likelihood of illness. That point
is {wB2,wG2} in Figure 4.6 below. As for the insurer, it can
afford to offer that allocation
as a zero-profit and incomplete coverage contract with premium
equal to (wG0 – wG2),
which corresponds to a premium rate of pL/(1 – pL), and a
deductible of (wG2 – wB2) or a
14 Regular exercise is well known to bring about numerous
health benefits. It lowers high blood pressure,
reduces obesity and abates the risk of heart disease,
osteoporosis and diabetes. It keeps joints, tendons and
ligaments flexible so it is easier to move around. It contributes
to your mental well-being and helps treat
depression, and helps relieve stress and anxiety. It improves
sleep. It boosts one’s metabolism (the rate of
of burning calories) and thus helps maintaining a normal
weight. It reduces some of the effects of aging. It
increases endurance and the energy level. (AAFP [2007]) In
64. short, all consequences of regular exercise
lower the probability of ill health.
13
co-insurance rate of (wG2 – wB2)/L0 = (wG2 – wB2)/(wG0 –
wB0).
wG UL2 = UH2
(wB0,wG0)
wG0 • UL1 < UH1
wG2
w1 w1
slope = – pL /(1 – pL)
slope = – pH
/(1 – pH)
65. 450
wB0 wB2 w1 wG2
wB
Figure 4.6 Ex ante moral hazard and incomplete coverage
With ex ante moral hazard, the behavioural incentives are
combined with the partially
endogenous risk. Consequently, the insuree’s health status is
not entirely determined by
her behaviour but some randomness as well. Despite the fact
that nobody would desire
bad health, the presence of insurance, desirable in its own right
against risk and lumpy
expenditure upon illness, may induce a change in behaviour for
the worse resulting in a
higher probability of a poor health outcome. Contrastingly, the
ex post moral hazard
concerns the ex post behaviour in seeking treatments whose
marginal costs may exceed
their marginal benefits or, in other words, seeking unnecessary
treatments. Thus the ex
post moral hazard problem arises in succession to a partial
resolution of the uncertainty
surrounding the health status of the insuree. For example, when
the insuree is ill, the
illness vs. health dichotomy is resolved. However, if completely
covered, she has an
incentive to consume all medical services with positive benefits
whether her net benefits
are positive or not. This behaviour generates the ex post moral
hazard with hidden
knowledge as the seriousness of the illness is not precisely
66. known to the insurer (Koc
14
[2005]). The presence of this information asymmetry causes the
moral hazard problem
and the resulting sub-optimality.
Technically, this case can be understood with the exact tools we
used to explain adverse
selection. Under complete coverage, the insuree has no
incentive to economize on
medical resources. This can be thought of as, whereas an
insuree with a heavy illness
need not economize, the presence of one with a light case who
would mimic the heavy
case would then engender the moral hazard with hidden
information15, formally akin to
adverse selection. The insurer, however, possesses less
information on the insuree’s ex
post health status (i.e. the severity of illness once the insuree is
ill)16. The behavioural
problem is to get the insuree to choose the treatment
corresponding to her illness level
rather than having a light case choosing the treatment
corresponding to a heavy case or,
in other words, exaggerating the required treatment. The light
and heavy cases require
treatments costing mL and mH as in Figure 4.7 below. As
higher treatment expenditure is
better and higher coinsurance rate worse, the two types’ utilities
increase in the southeast
direction.
67. If the insurer possesses complete information on the claimant’s
illness status then the
allocation is optimal in the sense that light and heavy cases
receive the proper treatments.
What distinguishes the two cases is that, whereas the light-case
insuree wouldn’t benefit
much from extra treatment and hence wouldn’t be willing to pay
in terms of coinsurance,
the heavy case would benefit and hence be willing to pay more.
Graphically, the marginal
willingness to pay (or the subjective price of insuree for extra
coverage) is given by the
slope of the indifference curves in Figure 4.7. In the complete
information case, (mL,0)
and (mH,0) are, respectively, the optimal allocations for the
light and heavy cases. These
allocations yield Yet, if the insurer is asymmetrically informed
and can’t distinguish
between types, the light-case insuree will benefit by declaring
he is a heavy case and,
correspondingly, choosing the treatment mH. This is
misallocation of resources and
suboptimality.
Though the misallocation problem may be resolved through
coinsurance, suboptimality
will remain due to information asymmetry. Since coinsurance is
costlier to the light-case
insurees, the imposition of the rate c0 deters them from taking
up mH. Thus, their utility
remains at uL*. However, their presence costs the heavy-case
insurees in terms of utility
as the bundle (mH,c0) yields them uH1, a lower level of utility
than under complete
information.
68. Related to ex post moral hazard, there are three issues
remaining to be discussed. First,
insurance contracts typically provide incomplete coverage,
whether to solve the adverse
selection and the moral hazard of the ex ante variety or the ex
post moral hazard.
15 Moral hazard with hidden information arises when,
originally endowed with symmetric information
under uncertainty, one of the parties to the contract gains an
informational advantage upon the resolution of
uncertainty. This is certainly the case in the present problem as,
when the insuree is ill, he alone knows
whether the illness is light. In this latter case, the insuree has an
incentive to pretend to be a heavy case.
16 A related case of ex post moral hazard in which ex ante
behaviour has an alleviating effect on ex post
damages would be handled by inducing the insuree to commit to
ex ante preventive measures that would,
should the illness state arise, result in lower damages. These
preventive measures are typically verifiable
thus contract enforcement would be easy.
15
Deductibles and/or coinsurance appear as insurers’ standard
tools for reducing coverage
for purposes of sharing risk with insurees and providing
incentives to reduce moral
hazard. The choice between the two types of risk-sharing tools
is crucial depending on
the nature and the interactions of the problems (The Economist
[1995]). An eminent
69. c uH1
uH*
uL*
uL0
c0
mL mH
m
Figure 7 Ex post moral hazard and incomplete coverage
feature of healthcare is the progressive nature of many known
illnesses and, hence, the
importance of early detection and intervention. Since early
intervention is significantly
less costly, contractual disincentives to contact one’s physician
(such as a copayment or
user fee17) may be counterproductive when the patient chooses
to delay reporting the
symptoms and the illness progresses to a level where substantial
70. intervention becomes
necessary. Moreover, the determination of contractual coverage
with incentive
considerations also depends on whether the insuree is able to
affect the likelihood of an
illness and the costs of treatment should she develop it.
As opposed to adverse selection and ex ante moral hazard, the
existence of an ex post
moral hazard problem is essentially questionable. Once an
insuree with an average
understanding of medicine enters the health care system with
some symptoms and
channeled by the primary care physician, he then is under the
care of physicians.
Therefore, the choice set before the patient is characteristically
defined by medical
norms18 with little patient leeway although the patient selects
options from choice sets
along the way. That the patient is restricted reduces the
relevance of ex post moral hazard
17 As opposed to a deductible, a user fee is a fixed amount per
use whereas the deductible is a fixed amount
for use of insurance benefits per contract period.
18 One must bear in mind the “small area variations”, an
awkward term to translate the idea that medical
norms are not uniform spatially and that different treatments
may be the preferred choice of the local
medical profession in response to same symptoms and
diagnostics.
16
71. but, in turn, increases the importance of physician agency
problems, in the first as
patient’s agent and in the second as the payer’s agent.19 Thus,
the alleviation of the ex
post moral hazard problem is more intimately related to the
physician’s role as agent than
the patient herself. As such, the institutions and incentives
surrounding the physician will
have to be the primary focus of analysis.
Second, when the insurer designs insurance contracts, three ex
ante states of nature are
consistent with the above discussion of asymmetric information
problems. However,
when the first uncertainty unfolds, the insuree is either healthy
or unhealthy. If she is
unhealthy the seriousness of illness becomes a matter of
information asymmetry and
generates a problem of moral hazard with hidden knowledge.
Methodologically, the
insurance contract design will take as given the coinsurance
necessary to solve this ex
post moral hazard problem and then choose the risk-sharing and
incentives to address the
ex ante problems. Thus the contract design proceeds backwards
whereas parties to the
contract are forward-looking. We note that risk-sharing and
contract incentives influence
insurees’ healthcare demands in various ways. First, the initial
self-selection induced
through a menu of contracts aims at alleviating adverse
selection. Second, the premium
and coverage in each contract target stronger preventive effort
on the part of insurees thus
targeting the ex ante moral hazard problem. Finally, the
coinsurance rate20 provides a
72. strong incentive for the insuree, if ill, to self-select into the
correct illness pool thus
zeroes in on the ex post moral hazard problem.
Finally, ex post moral hazard is intimately connected to social
considerations. If
healthcare insurance is unaffordable to an individual in the
absence of social insurance
and he accesses healthcare in its presence, technically speaking
he is generating ex post
moral hazard. Thus the presence of insurance changes his
behaviour in such a way that
his consumption of healthcare rises above the uninsured level.
This is, of course, an
expected response to changing incentives. Since insurance
works by lowering the price of
insured services by transferring funds from non-claimants (or
insured but healthy) to
claimants (insured but ill), the affordability of such services
increases. To claim that this
is a net welfare loss is to ignore the increase in benefits the
extra service consumption
provides and that would not have been available to the
uninsured, who would be willing
to pay but cannot21. This case is an example of second-best
welfare analysis where
departures from what would have been the first-best do not
necessarily worsen social
welfare. In fact, as claimed in Nyman [2004], the net welfare
gain of social insurance, by
increasing the number of insured, may be positive.
c. Social insurance and public provision of insurance
The healthcare insurance issue reveals to be deeper and more
73. controversial than the fairly
technical individual health insurance framework presented
above. For, the powerful and
justifiable social solidarity consideration retains the issue of
universal healthcare
insurance in policy agendas, if not for its introduction always
for various modifications to
19 These agency problems are analyzed in the next two
chapters.
20 See Zeckhauser [1995] for a discussion of copayments and
coinsurance.
21 Economic theory has been largely quiet on this till recently
(see Nyman [2004]) yet the problem was first
identified by Pauly [1983]. Bundorf & Pauly [2006] revisits the
issue.
17
existing structures. This section will thus end the chapter with
an introduction to social
insurance that will be examined in detail in the later chapter on
alternative organizations
of healthcare systems.
The bumpy history of social healthcare insurance descends to
19th century German
unification under Bismarck22. The corporatist system
established by the 1883 legislation
in Germany was rooted in Illness Funds established along
vocational boundaries.
Workers in a trade became mandatory members of these
insurance funds based on cost
sharing by workers and employers. This structure continued, by
74. and large, till 1990s
when, in order to induce both horizontal and vertical
competition, mandatory
membership in one’s vocational fund was relaxed in favour of
mobility across funds. This
modification to the German health insurance system introduced
both horizontal and
vertical competition. It has relaxed the inefficient spatial and
vocational locks. Moreover,
it allows vertical competition in quality.
As part of the social insurance framework but at a wider scale
of universality, the newly
elected Labour government introduced the national health
insurance (and the NHS23) in
1948, based on the well-known Beveridge24 report of 1942
(Musgrove [2000]). As
opposed to the German system with regulated insurance markets
(Files & Murray
[1995]), the British system exhibits the government as the
primary insurer as well as a
small but significant private parallel insurance system
(Colombo & Tapay [2003], Tapay
& Colombo [2004]) for those who opt out (i.e. who want to
complement or supplement)
and even for those who ride the fence for rainy days when they
might need the swiftness
of private delivery. Until recently, NHS was a unitary system
with public funding and
public provision. Whereas public funding continues, NHS
recently started purchasing
services from the private sector providers (Csaba & Fenn
[1997]).
The Bismarck vs. Beveridge is important in the evolution of
healthcare systems as
75. historical benchmarks in the evolution of healthcare systems
with substantial regulation
and universal coverage of the population. However, the set of
real healthcare systems is
significantly richer as they combine public and private
provisions of insurance and
healthcare services to varying combinations (Besley & Gouveia
[1994]). Ironically, as the
recent NHS experiment demonstrates, a public system can even
relax the monopoly in
provision of services by introducing internal markets, i.e.
competition amongst providers
within the public system. A further dimension along which
healthcare systems can be
differentiated is the degree of incompleteness of the universal
public insurance coverage.
22 Otto von Bismarck (1815-1898), chancellor of Germany for a
long time, 1867 to 1890, introduced
components of the modern welfare state. The decentralized
health insurance was introduced in 1883 and it
worked locally through participation of employers and workers
in its administration and with cost sharing
by employers and, mostly, by workers themselves. This latter
phenomenon conferred majority
representation in insurance boards for workers with the
consequential political advantage accruing to
German Social Democrats and, eventually, setting an example to
other social democratic parties elsewhere.
23 The National Health Service (NHS) is a publicly funded
unitary provider of comprehensive healthcare
services.
24 William Beveridge (1879-1963) served as consultant to the
Liberal government (1906-1914) on old age
pensions and national insurance. After serving as the director of
76. LSE from 1919 to 1937, the wartime
Conservative government commissioned him, in 1941, to
produce a report on postwar social
reconstruction. He reported to parliament, in 1942, on social
insurance part of which was the new
comprehensive health insurance scheme.
18
This incompleteness may transpire in two forms, first services
that are simply not covered
and second the lack of complete insurance coverage for covered
services. The first
incompleteness potentially creates a complementary coverage
market and the second the
supplementary coverage market. For example, there is a
surprising and remarkable
resemblance between the essentially public French system with
its supplementary
coverage markets (Buchmueller & Couffinhal [2004]) and the
Medigap insurance market
in the US (Browne & Doerpinghaus [1994]) providing not only
complementary but also
supplementary coverage to essentially public Medicare
insurance system. For the rest of
US population above the official poverty level, private
insurance markets in different
markets cover a high percentage of the population with wildly
different baskets but leave
about 45 million without basic coverage (Vanness & Wolfe
[2002], Woolhandler &
Himmelstein [2002]). Whereas supplementary insurance is not
legal in Canada with
public insurance covering a substantial basket of healthcare
77. services25, complementary
insurance markets are reasonably thick (Emery & Gerrits
[2006], Gordon [1998]).
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25 This structure grants the insurer a monopsonistic purchasing
power over providers (Herndon [2002]). Of
course, the extent of the basket of services covered will in turn
affect the complementary insurance markets
(Stabile & Ward [2006]).
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Discussion questions
1. Why do societies include healthcare with social insurance?
2. Does the public provision of health insurance pose
institutional difficulties compared
to market provision?
3. Are there incentive and information problems specific to
81. public health insurance?
4. What is adverse selection in health insurance?
5. Does the fact that public insurance generates a single pool
really solve the adverse
selection problem?
6. What are the advantages and the disadvantages of public
over private health
insurance?
20
7. “Even if there were no informational problems in insurance
markets, complete
coverage would still be unavailable.” Why?
8. Are the social insurance concepts of Beveridge and Bismarck
different?
9. What is moral hazard in health insurance?
10. Distinguish between the concepts of ex ante and ex post
moral hazard.
11. Define and explain user fees, co-payments, deductibles and
co-insurance.
12. When should co-insurance replace deductibles?
13. Is there a friction between social insurance and incomplete
coverage insurance?
14. Does the fact that a household doesn’t buy health insurance
constitute market failure?
Problems
1. Show that the demand for insurance increases with the
illness probability or the cost
of treatment.
82. 2. Does an insuree’s demand for insurance increase when he
becomes more risk-averse?
3. Explain why an insurance contract ought to include a
deductible.
4. Explain risk-pooling, one of the principles on which
insurance is based, in the case of
just two individuals.
5. Explain why the presence of loading costs rules out complete
coverage.
6. Show that total welfare is decreased when, in a competitive
insurance market, the
presence of adverse selection prevents insurers offering
complete coverage.
7. Show that total welfare is decreased when, in a competitive
insurance market, the
presence of moral hazard prevents insurers offering
complete coverage.
8. Under what circumstances deductibles would dominate co-
insurance?
9. How would the co-insurance rate vary with the insurer’s
perception of the
composition of the insurees pool under ex post moral
hazard?
10. Is it possible that a deductible may generate perverse
incentives for moral hazard?
11. How would incompleteness of coverage reduce ex ante
moral hazard?
12. Carefully explain the relationship between coverage
incompleteness and the second-
best solutions to adverse selection and ex ante moral
hazard.
13. Why can’t insurers offer as many contracts as the number of
types of potential
insurees?
14. How does an increase in the co-insurance rate affect the
demand for healthcare?
83. 15. Does incomplete coverage due to loading costs depend on
insurer size?
Appendix 4A Slope of the indifference curves in state-space
diagrams
The slope of an individual’s indifference curves in a state-space
diagram is the subjective
(or demand) price for insurance as the slope yields what the
individual is willing to pay in
the good state for an extra dollar of coverage in the bad state.
The individual’s expected
utility function is given as
21
EU = pu(wB) + (1 – p)u(wG).
The derivation simply consists of taking the total derivative,
noting that utility is constant
along an indifference curve and obtaining the slope expression
on the right-hand-side of
the resulting equation. First, we take the total derivative and
equate it to zero:
dEU = pu’(wB)dwB + (1-p)u’(wG)dwG = 0
and solve for the slope:
84. B
G
dw
dw
= –
)(')1(
)('
G
B
wup
wpu
−
.
An important property of indifference curves in state-space
diagrams is that their slope
when they cross the 450 line is always equal to the slope of
fair-odds line
–
)1( p
p
85. −
.
This use of the property will prove crucial in the analysis of the
basic insurance problems
of adverse selection and moral hazard.
Appendix 4B Competitive premia and loading costs
Incorporating a loading cost T > 0 and rewriting a competitive
insurer’s expected profit
becomes
πe = p[R – T – Q] + (1 – p) [R – T]
and, assuming linear premia and loading costs,
= p[rQ – tQ – Q] + (1 – p) [rQ – tQ]
= [r – t – p]Q
which yields, due to profit dissipation (i.e. expected profits
reduced to zero) under perfect
competition, r = p + t. This implies that the potential insuree’s
budget line is now steeper.
To see this, consider the individual’s payoffs in the two states
of the world.
wG = W – rQ
wB = W – rQ + Q – L.
86. 22
Isolating Q in the second, substituting it into the first and
rearranging the resulting
equation yields the budget line
BG wr
r
LW
r
r
Ww
−
−
−
+=
1
)(
1
for wB ≥ W – L
87. that is represented in Figure 4.3 with the slope r/(1 – r) steeper
than p/(1 – p), the slope pf
the fair odds line at which the individual would have purchased
complete coverage, i.e.
Q = L. To see this, consider the individual’s expected utility
maximization problem
)()1()(max
}{
rQWupLQrQWpuU
Q
−−+−+−=
where W – rQ + Q – L = wB and W – rQ = wG. The first-order
condition for this
maximization is given as
0)(')1()1)((' =−−− rwuprwpu GB
which, rearranged, yields
p
p
r
r
wup
89. B
wu
wu
which, in turn, yields wB < wG. Thus, as shown in Figure 4.3,
the individual chooses
incomplete coverage.
Appendix 4C Moral hazard and health-enhancement costs
In the presence of moral hazard, as explained in the text,
individuals’ control over the
likelihood of healthy outcomes has to be explicitly treated, with
its benefits and its costs.
Individuals’ health-enhancing activities (from better eating
habits to good sleep to
physical exertion) are typically costly, not only in terms of time
allocated but also in
terms of the purchased inputs (from gym time to quality food)
into activities. The
benefits accrue as healthy time that can be used for work or
leisure, or simply enjoyed as
health. The utility function introduced in Appendix 4A can be
augmented to incorporate
these benefits and costs as follows.
EU = p(e)u(wB) + (1 – p(e))u(wG) – v(e).
90. 23
The first part of this utility function, p(e)u(wB) + (1 –
p(e))u(wG), is as above except that
the probabilities are now determined by the individual’s costly
effort e. An increase in
this effort increases the probability of the healthy state G (i.e. 1
– p(e)) but, of course, this
increase is slower than the increase in the effort. The second
and new part v(e) is the cost
of effort and it is increasing in effort. Consistent with typical
cost functions, the cost
increases faster than the effort.
For notational simplicity, we can interchangeably use
U(wB1,wG1;eL) = UL1 = p(eL)u(wB1) + (1 – p(eL))u(wG1) –
v(eL).
Of course, given the assumed structures, the individual would
choose an optimal
prevention level in the absence of insurance so as to maximize
his expected utility.
Appendix 4D Ex post moral hazard
Since the ex post moral hazard problem arises when and if the
insuree turns into a patient,
the health vs. illness dichotomy ceases to exist and illness turns
into shades of illness.
The informational problem is one of moral hazard with hidden
knowledge where the
patient, knowing her illness better than the insurer may choose
to exaggerate the level of
91. her illness by consuming medical care services with negative
net benefits.
Under symmetric information, the heavy-case and light-case
patients receive treatments
mH and mL respectively as in Figure 4.7. However, if the
insurer is unable to distinguish
cases, the light-case patient prefers the heavy-case treatment in
the absence of a screening
mechanism, as follows
uL* = uL(mL,w – R) < uL(mH,w – R) = uL0.
If a screening mechanism in the form of a coinsurance payment
c0 is chosen so as to
minimize the cost of separation of light and heavy cases,
separation would occur if the
light case prefers the treatment level corresponding to her
illness. Separation then
requires
uH(mH,w – R – c0mH) ≥ uH(mL,w – R – c0mH)
uL(mL,w – R) ≥ uL(mH,w – R – c0mH).
As shown in Figure 4.7, if the contract specifies a coinsurance
c0 applied to the heavy-
case treatment level, then proper separation takes place. In fact,
since the coinsurance
aims at forcing the light case to separate, the coinsurance rate is
solely determined by the
light-case patient’s willingness to pay for treatment.
Of course, this is just a demonstration that tools are available to
improve allocation. On a
separate note, note the negative externality imposed on the
92. heavy-case by the mere
presence of the light case as the heavy-case is worse off in
comparison to the symmetric
information case.
24
Discussion questionsProblems
1
Chapter 3
Demand for healthcare
3.1 Introduction
As we have already seen in chapter 1, to most of us healthcare
means visiting our family
doctor and taking medications, going for medical diagnostic
tests like blood-work or a
magnetic resonance imaging (MRI) session, and having to check
into the hospital for a
minor procedure or a serious operation. These components of
healthcare require the
efforts of doctors, nurses, various technologists and all other
inputs required to operate
the family doctor’s practice, the hospital and the diagnostic
clinic. Briefly, healthcare
93. includes services supplied by the medical profession or, in other
words, the medical care.
However, healthcare also includes health-enhancing activities,
from exercise and vitamin
intake to good sleep to eating well. These self-initiated
activities may also need market
services such as a gym and goods such as a good bed and
healthy food. Thus, as
healthcare requires the purchase of various goods and services,
economic analysis
classifies the purchasing need as demand for healthcare.
The demand for healthcare does not originate from primitive
preferences but, rather, it is
a demand derived from the more primitive demand for health.
However, it also differs
from most inputs in production where the output is also a flow.
Individuals directly
demand health1, a stock variable or the level of one’s health at
a given moment in time,
whereas the demand for healthcare is a flow or a certain amount
of healthcare over a
given time period. The healthcare demand is rather similar to a
worker’s demand for
human capital where training, education and on-the-job learning
are all flow inputs
combined with one’s time and effort to produce human capital.
Similarly, human capital
enhances the individual’s earning potential by boosting one’s
wages or salaries whereas
the health stock increases one’s healthy time available for work
and leisure. Taken in the
long run context, sustained periods of health positively affect
the individual’s earnings
both in terms of wages and his ability to work. Where the health
stock and human capital
94. differ is the direct demand for health stock. While human
capital may not be a
prerequisite for leisure activities, health stock necessarily is.
Since being healthy is a desired state by individuals under all
circumstances, work or
leisure, such a desire generates the first reason for the demand
for health stock. The
second reason is that, normally, individuals have to work for a
living and work is better
performed if the individual in question is healthy. Therefore,
the first reason is health
stock as consumption good whereas the second as an investment
good2.
Healthcare, as a produced good, exhibits the following
properties. First, as discussed
above, healthcare demand is a derived demand, i.e. health is
demanded and healthcare is
1 Or the flow of daily good health as is modeled in Grossman
[1972, 2000].
2 See Grossman [2000] for a technical analysis of these two
distinct cases.
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demanded because it produces health. Second, health is
produced by using various inputs,
95. one of them being healthcare in the larger sense and medical
care in the narrow. Finally,
the replenishment of the health stock introduces a dynamic
relationship between the
health stock and healthcare. The combination of healthcare and
other health inputs
produces the health investment. The individual’s health profile
over time can then be
represented as a stock adjustment model where the stock of
health varies for the better if
the individual positively contributes to his health over a given
period whereas reckless
behaviour lowers the stock. This relationship between one’s
stock of health and the flow
of health investment yields a simplified version of the health
stock model of healthcare
demand originally developed by Grossman [1972]. A graphic
summary of the model is
given in figure 3.1 below.
Individuals consume various goods and services by purchasing
them and allocating their
valuable time to consume them. Going to the movies as well as
jogging involve
substantial amounts of leisure time as well as purchased inputs
like movie tickets,
transport, and running shoes. The model lumps such goods and
services into home goods
represented by B and health investment goods by I. B is
consumed by combining one’s
time TB with the purchased inputs X and I by combining time
TI with inputs M. The
consumption of goods exhibits properties of production
functions in that the time and
purchased inputs are combined to yield the consumption. The
two production functions in
96. the simple model are B(X,TB;E) and I(M,TI;E) where E denotes
environmental variables,
such as noise and pollution that would, respectively, spoil the
production of home goods
B and health investment I. At the centre of figure 3.1 lies the
link between health
investments and the state of one’s health. The genetically
programmed erosion of human
health over time is represented by δH, i.e. humans lose a
varying fraction of their health
stock H over a given period of time. However, health
investment I contributes to the
stock. Therefore, the sum I - δH yields the rate of change of the
health stock. The health
stock is not only good in itself. The healthier the person, the
more healthy time is
available either for work or for leisurely activities B and I, the
latter being the critical
contributor to health stock. TH can thus be split between work
time TW and the time
allocated to the consumption of home goods and health
investment, respectively TB and
TI. We note that TW generates the income used to purchase
inputs X and M. Finally, since
individuals value their consumption of goods and services B as
well as their state of
health H, they allocate their resources between B and I, towards
B because it yields
utility, towards I because it contributes to the health stock. Now
that the Grossman model
has been intuitively introduced, the purchased inputs M can be
interpreted loosely as
healthcare.
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Figure 3.1 Health stock model of healthcare demand
schematically summarized
However, an important distinction must be drawn between
medical care and the more
comprehensive concept of healthcare. Often used
interchangeably, both are gross
investments into one’s health. Medical care is the collection of
health-restoring, health-
preserving and health-enhancing services provided by applied
medicine. As such,
medical care consists of the available medical technology,
running typically from
symptoms to diagnosis to treatments, but also including
preventive technologies. Thus it
can be preventive3 or curative. Healthcare, however, beyond
medical care involve layers
of individual choices over work, consumption and leisure. For
example, choices of
98. workplace, vocation, work tempo, consumption of healthy food
and the allocation of
3 Contrary to popular belief prevention is not uniformly less
costly and less invasive than treatment
(Laupacis [1996], Marshall [1996]).
Health stock
accumulation
HI
dt
dH δ−=
Individual preferences
over B and H
U(B,H)
Healthcare
investment
production
I = I(M,TI;E)
Consumption
production
B = B(X,TB;E)
T0 - TL = TH = TW + (TB + TI)
TW generates income
wTW = C = pMM + pXX
99. TB TI
TW
X M
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leisure time to health investment all fall into the healthcare
category without being
medical interventions. Moreover, these choices tend to be
overwhelmingly preventive
rather than the mostly curative modern medicine. Thus, whereas
all choices enhancing
one’s health constitute healthcare, a subset of services mostly
provided by medicine
constitute the medical care.
The second section of this chapter will progressively develop
the health stock model of
demand for healthcare. As summarized in figure 3.1, the model
internalizes the ability of
individuals to choose their health profile as well as the inherent
dynamics of one’s health
stock. The section will thus examine individuals’ preferences
for health as well as their
allocations of time and money towards healthy activities and
medical care in order to
derive their demand for healthcare and medical care. The third
section considers
examples. The effects of non-monetary and monetary factors on
100. the demand for
healthcare will be examined. For instance, the response of
healthcare demand to changing
preferences and rising wages will be analyzed. The fourth
section traces the effects of
user fees, a demand management tool. The conclusions section
reemphasizes the
fundamentals covered in the chapter and provides links to the
demand for healthcare
insurance covered in chapter four. .
3.2 The health stock model of healthcare
Individual’s preferences
When individuals enjoy various goods and services, this
enjoyment is normally translated
into a demand to purchase and consume. However, this
enjoyment is stronger, the better
the individual’s health. Technically speaking, demands for
goods and services are health-
state dependent. Thus, there exists some complementarity
between an individual’s state
of health and her consumption of goods and services through
this state-dependency. This
complementarity relationship does strongly suggest that health,
in itself, is desirable and,
hence, individuals would be prepared to allocate resources to
enhance health.
Yet, there definitely exists some substitutability between health
and consumption through
tradeoffs between health-enhancing goods vs. the rest. For
instance, over-exertion and
stress in pursuit of higher income frequently appear at the
101. expense of health or, simply, as
lower levels of health investment. This substitutability may
involve both dimensions of
health, as purely a consumption good as well as investment into
income-generating health
capital. For expositional purposes, we will henceforth refer to
health as a consumption
good entering an individual’s utility function alongside other
goods and services without
conditioning individuals’ utility functions by health status.
Thus, an individual’s utility function U(B,H) is defined over
ordinary goods and services
B (henceforth home-goods, consistent with Grossman [1972]
terminology) and health H4,
with utility increasing in both B and H and the utility function
yielding convex towards
4 We’ll simplify the Grossman [1972] notation that enters
health stock services, rather than the health stock
itself, into the utility function.
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the origin indifference curves representing diminishing
marginal rate of substitution
between B and H. Referring back to figure 3.1, this tradeoff
represents individuals’
preferences both current and intertemporal. Currently, enjoying
a certain level of income,
102. individuals can choose to marginally sacrifice health investment
goods (e.g. less sleep
causing short-term drop in alertness) for an increase in home-
goods. However, this is not
the full opportunity cost of the increase in home-goods because
current lower investment
in health would induce a long-term drop in the health stock with
the reduced healthy time
consequence. The present discounted value of the reduced
healthy time decrease in the
future combined with the current loss of health constitute the
opportunity cost of an
increase in home-goods consumption. Since individuals thus
decide over intertemporal
allocations, the modeling must intrinsically be intertemporal.
The dynamics (or the time profile) of the health stock requires
that the single-period
individual utility function U(B,H) be modified so as to reflect
individuals’ intertemporal
tradeoffs and their discounting of future utilities. Two other
intertemporal channels, in the
general optimization problem, beyond individuals’ valuation of
the future are the
depreciation of the health stock and the possibility of
countering such ultimately
inevitable depreciation through health investments. Health as
stock can be accumulated
or rather decumulated over time and health as consumption
good5 can be consumed at
different points in time; individuals characteristically take
account of their future health
for both these reasons. Health as consumption good then
necessitates all future
consumptions be taken into account and health as investment
good generates healthy time
103. required for work and hence income. The individual’s lifetime
utility can then be
modeled as the present discounted value of future utilities6 (as
the continuous version of
Ried [1998])
∫
−T t dtHBUe
0
),(θ
(3.1)
where t is the instantaneous time unit (or the moment in time), θ
is the time discount rate,
e-θt the discount factor (or, simply, the individual’s subjective
weight attached to every
moment in the future) and T the individual’s residual life
expectancy. The utility function
U(B,H) in equation 3.1 must be interpreted as the instantaneous
utility of the individual
and the whole expression then is the weighted sum of utilities
over the residual lifetime.
The weights decline over time, signifying that today’s
enjoyment is more valuable than in
a future period. Hence, the individual’s choice of current levels
of consumption and
health investment are, therefore, not independent of their future
expected values. For
instance, a lower health investment today may increase current
consumption without
lowering current health but its opportunity cost is a fall in the
future stream of health
stock in turn lowering not only the future consumption but also
104. the individual’s future
earning capacity and hence his future consumption. These
tradeoffs are moderated by the
discount weights e-θt that assign higher utility weights to
today’s health and consumption.
Thus, the maximand in equation 3.1 is fairly straightforward
except for the time horizon
T. There are two issues regarding T. The first is whether there
is an optimal length of
5 The health as consumption good in Grossman [1972] is
modeled as flow of services from stock.
6 Grossman [1972, 2000] uses a discrete time framework for the
individual lifetime problem.
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horizon. For example, euthanasia is an endogenous choice of
end-of-life whereas a
terminal illness is a relatively randomly-timed exogenous end to
life. Most individuals
choose their health investments considering a normal or average
residual life expectancy.
This optimality question links the time profile of the
depreciation rate to the individual’s
willingness to invest in health so as to aim at a health stock
perhaps well above the
survival minimum beyond a certain advanced age. Alternatively,
de-investment in the
form of harmful addictions or negligence today boost the health
105. depreciation rate (Becker
& Murphy [1988]). The second issue related to residual life
expectancy T involves a
modeling technicality. Whereas the time profile of the
depreciation rate is not
deterministic in so far as we scientifically know, the question
remains as to whether it
should be analyzed as such as. A random evolution of the
depreciation rate would add
considerable modeling complexity yet, with advances in
genetics, some of sources of
randomness are becoming predictable. We will return to the
discussion of the
depreciation rate below in the section entitled Health stock
profile and health investment.
Allocation of time and income
Every individual is endowed with the same amount of time T0
regardless of the unit of
time chosen for analysis. Though, for the sake of realism, T0
must be long enough to
allow days of morbidity as, typically, days can be characterized
as healthy or unhealthy.
A longer period chosen would then yield meaningful periods of
illness versus wellbeing.
The total time endowment will now be broken down into
components as
)(0 IBWL TTTTT +++=
(3.2)
where TL is the ill days time, TW the work time, TB the time
allocated to produce the
home good B and the time TI allocated to produce the health