This document discusses the role of government in healthcare markets. It outlines different types of government intervention like informing, regulating, financing, and providing healthcare. It also discusses different types of goods like public goods and merit goods that are prone to market failures. The key reasons for government intervention are to address market failures from public goods, externalities, incomplete markets, and market power. However, the document also notes potential government failures from regulatory capture, bureaucracy, and lack of capacity. It concludes that the appropriate role of the public and private sectors depends on a country's income level and ideological beliefs around regulation versus market competition.
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 ...
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 ...
Read the Case Study The Whole Foods Alternative to ObamaCare, loc.docxniraj57
Read
the Case Study: The Whole Foods Alternative to ObamaCare, located on page 20 of the textbook.
Write
a paper of approximately 750 words that will include three separate writing projects:
The first will be a brief letter (approximately 250 words) in which you pretend to be John Mackey responding to a major supplier of Whole Foods that has threatened to terminate business dealings because of the controversial op-ed piece.
The second will be a statement (approximately 250 words) that you will read at the next Whole Foods board of directors meeting to explain your decision to write the op-ed piece and your subsequent handling of the resulting publicity.
The third will be your analysis (approximately 250 words) of whether Mackey's Op-ed article and his response afterward showed that he properly applied the four steps in the strategic communication process:
Identify the purpose
Analyze the audience
Consider the context
Analyze the method
Examine which steps (if any) he took and which (if any) he missed
Article of page 20 of textbook
Case Study:
The Whole Foods Alternative to ObamaCare
The Wall Street Journal
OPINION
AUGUST 11, 2009, 7:30 P.M. ET
“Eight things we can do to improve health care without adding to the deficit.”
—John Mackey
“The problem with socialism is that eventually you run out of other people’s money.”
—Margaret Thatcher
With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people’s money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.
While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:
Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.
Money not s ...
The process of analyzing health policy involves explaining the pri.docxoscars29
The process of analyzing health policy involves explaining the primary relationship between different institutions, interest areas and concepts (Walt et al., 1994). It is essential in order to establish historical policies, their successes or failure and help in planning for the design and development of current and future policies. The ever dynamic nature of the policy environment makes policy analysis to look more complicated.
The design, development and adoption or implementation of any health policy is heavily dependent on the financial position of any governing institution (Walt et al., 1999). A health policy entails the management of disease or infection outbreaks and disease causing factors or conditions. In managing disease outbreaks, a ruling organization has to establish sufficient structures where patients will be taken care of or treated, ensure the availability of sufficient health experts and treatment instruments, create public awareness about the disease, including its symptom causal factors and put in place mechanisms that will help manage the spread of the disease or infection. In the management of disease causal factors, it is necessary to finance campaigns to foster effective environmental management mechanisms (Merriam et al., 2001). It is also necessary to specify the minimum conditions under which human activities will be carried out in order to enhance safety and health.
Congresswoman Moody has to understand that the state she represents lies on an international border which experiences multiple socioeconomic interactions. This is particularly dangerous considering that the area is highly populated. The fact that the area has many undocumented workers also means that they are highly vulnerable to experiencing inadequate access to health services. The conditions under which these individuals work does not make it any better. They are highly prone to contracting occupational health problems which are usually the most complicated kind of infections to deal with. Moody does not have the capacity to stop the activities that take place in her state since it will spark global controversy and even affect the economic outlook of her state. In addition, her limited Medicaid budget and rate of unemployment is depressing issues.
The first option Moody should consider is to look at the possibility of borrowing funds from one of the internal management departments to help ease the predicament that exists in the medical department. It is necessary to accept the existing condition and try to reason on how it could be solved rather than concentrating on past challenges that remain unsolved. Solving this first challenge will provide room for the developments that will lead to solving the rest of the problems.
The second option would be to welcome or introduce investors into the health sector within the state. They could help residents in the state by either offering affordable care services or through provision of an insurance pol.
Overview - Health Care IssuesHealth Care IssuesOpposing .docxgerardkortney
Overview - Health Care Issues
Health Care Issues
Opposing Viewpoints Online Collection, 2015
In recent years, the availability and affordability of health insurance in the United States has become
the subject of much debate. The United Nations’ Universal Declaration of Human Rights lists medical
care among the basic human rights to which all people are entitled. In 2011, however, about 17
percent of Americans had no health insurance at all. For many people who are insured, the cost of
coverage is a financial hardship. This situation has led some people to call for the government to
provide health insurance for all citizens. Others, however, are skeptical of government’s ability to
efficiently manage health insurance and oppose any plans that involve government. The issue is made
more urgent by rapidly rising health care costs that threaten to overwhelm the country’s current
system of health insurance, and the national economy in general. Health care reform has become one
of the most important issues in contemporary American politics.
The Basics of Health Care
In most developed countries, health care systems involve government control or sponsorship. For
instance, in Great Britain, Scandinavia, and the countries of the former Soviet Union, the government
controls almost all aspects of health care, including access and delivery. For the most part, health
services in these countries are free to everyone; the systems are financed primarily by taxes. Other
countries, such as Germany and France, guarantee health insurance for almost all their citizens, but
the government plays a smaller role in managing health care. Both systems are financed at least in
part by taxes on wages.
The US government, by contrast, does not pay for most of its citizens’ health care. Generally,
Americans receive health care through employer-sponsored insurance, or they arrange to pay for
insurance on their own. Like all forms of insurance, health insurance operates by pooling the
resources of a group of people who face similar risks. This creates a common fund that members can
draw upon when needed. Each person in the group pays a certain amount, called a premium, every
month. These premiums are used to cover the medical expenses of group members who become sick
or injured.
Health Insurance in the United States
Today, most Americans receive health insurance through their place of work. Employers typically pay
for part of the premiums. Most employer-sponsored plans are administered through payroll
contributions. People who are self-employed and those whose employers do not provide health
insurance must purchase individual health insurance. Individual plans are generally more expensive
than group plans. Certain low-income individuals and families may be eligible for Medicaid, a form of
government-sponsored health insurance. In 1997, the US government introduced the Children’s
Health Insurance Program (CHIP) to assist the children of families who do not qualify f.
Carolyn Tuohy: The institutional entrepeneur – a new force in health policy Nuffield Trust
In this slideshow, Professor Carolyn Hughes Tuohy, School of Public Policy and Governance, University of Toronto, outlines the concept of the institutional entrepeneur, particularly in UK, Dutch and US contexts of health reform.
Professor Tuohy presented at the Nuffield Trust seminar: Sharing international experience: The institutional entrepeneur – a new force in health policy in July 2012.
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
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
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.
Read the Case Study The Whole Foods Alternative to ObamaCare, loc.docxniraj57
Read
the Case Study: The Whole Foods Alternative to ObamaCare, located on page 20 of the textbook.
Write
a paper of approximately 750 words that will include three separate writing projects:
The first will be a brief letter (approximately 250 words) in which you pretend to be John Mackey responding to a major supplier of Whole Foods that has threatened to terminate business dealings because of the controversial op-ed piece.
The second will be a statement (approximately 250 words) that you will read at the next Whole Foods board of directors meeting to explain your decision to write the op-ed piece and your subsequent handling of the resulting publicity.
The third will be your analysis (approximately 250 words) of whether Mackey's Op-ed article and his response afterward showed that he properly applied the four steps in the strategic communication process:
Identify the purpose
Analyze the audience
Consider the context
Analyze the method
Examine which steps (if any) he took and which (if any) he missed
Article of page 20 of textbook
Case Study:
The Whole Foods Alternative to ObamaCare
The Wall Street Journal
OPINION
AUGUST 11, 2009, 7:30 P.M. ET
“Eight things we can do to improve health care without adding to the deficit.”
—John Mackey
“The problem with socialism is that eventually you run out of other people’s money.”
—Margaret Thatcher
With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people’s money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.
While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:
Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.
Money not s ...
The process of analyzing health policy involves explaining the pri.docxoscars29
The process of analyzing health policy involves explaining the primary relationship between different institutions, interest areas and concepts (Walt et al., 1994). It is essential in order to establish historical policies, their successes or failure and help in planning for the design and development of current and future policies. The ever dynamic nature of the policy environment makes policy analysis to look more complicated.
The design, development and adoption or implementation of any health policy is heavily dependent on the financial position of any governing institution (Walt et al., 1999). A health policy entails the management of disease or infection outbreaks and disease causing factors or conditions. In managing disease outbreaks, a ruling organization has to establish sufficient structures where patients will be taken care of or treated, ensure the availability of sufficient health experts and treatment instruments, create public awareness about the disease, including its symptom causal factors and put in place mechanisms that will help manage the spread of the disease or infection. In the management of disease causal factors, it is necessary to finance campaigns to foster effective environmental management mechanisms (Merriam et al., 2001). It is also necessary to specify the minimum conditions under which human activities will be carried out in order to enhance safety and health.
Congresswoman Moody has to understand that the state she represents lies on an international border which experiences multiple socioeconomic interactions. This is particularly dangerous considering that the area is highly populated. The fact that the area has many undocumented workers also means that they are highly vulnerable to experiencing inadequate access to health services. The conditions under which these individuals work does not make it any better. They are highly prone to contracting occupational health problems which are usually the most complicated kind of infections to deal with. Moody does not have the capacity to stop the activities that take place in her state since it will spark global controversy and even affect the economic outlook of her state. In addition, her limited Medicaid budget and rate of unemployment is depressing issues.
The first option Moody should consider is to look at the possibility of borrowing funds from one of the internal management departments to help ease the predicament that exists in the medical department. It is necessary to accept the existing condition and try to reason on how it could be solved rather than concentrating on past challenges that remain unsolved. Solving this first challenge will provide room for the developments that will lead to solving the rest of the problems.
The second option would be to welcome or introduce investors into the health sector within the state. They could help residents in the state by either offering affordable care services or through provision of an insurance pol.
Overview - Health Care IssuesHealth Care IssuesOpposing .docxgerardkortney
Overview - Health Care Issues
Health Care Issues
Opposing Viewpoints Online Collection, 2015
In recent years, the availability and affordability of health insurance in the United States has become
the subject of much debate. The United Nations’ Universal Declaration of Human Rights lists medical
care among the basic human rights to which all people are entitled. In 2011, however, about 17
percent of Americans had no health insurance at all. For many people who are insured, the cost of
coverage is a financial hardship. This situation has led some people to call for the government to
provide health insurance for all citizens. Others, however, are skeptical of government’s ability to
efficiently manage health insurance and oppose any plans that involve government. The issue is made
more urgent by rapidly rising health care costs that threaten to overwhelm the country’s current
system of health insurance, and the national economy in general. Health care reform has become one
of the most important issues in contemporary American politics.
The Basics of Health Care
In most developed countries, health care systems involve government control or sponsorship. For
instance, in Great Britain, Scandinavia, and the countries of the former Soviet Union, the government
controls almost all aspects of health care, including access and delivery. For the most part, health
services in these countries are free to everyone; the systems are financed primarily by taxes. Other
countries, such as Germany and France, guarantee health insurance for almost all their citizens, but
the government plays a smaller role in managing health care. Both systems are financed at least in
part by taxes on wages.
The US government, by contrast, does not pay for most of its citizens’ health care. Generally,
Americans receive health care through employer-sponsored insurance, or they arrange to pay for
insurance on their own. Like all forms of insurance, health insurance operates by pooling the
resources of a group of people who face similar risks. This creates a common fund that members can
draw upon when needed. Each person in the group pays a certain amount, called a premium, every
month. These premiums are used to cover the medical expenses of group members who become sick
or injured.
Health Insurance in the United States
Today, most Americans receive health insurance through their place of work. Employers typically pay
for part of the premiums. Most employer-sponsored plans are administered through payroll
contributions. People who are self-employed and those whose employers do not provide health
insurance must purchase individual health insurance. Individual plans are generally more expensive
than group plans. Certain low-income individuals and families may be eligible for Medicaid, a form of
government-sponsored health insurance. In 1997, the US government introduced the Children’s
Health Insurance Program (CHIP) to assist the children of families who do not qualify f.
Carolyn Tuohy: The institutional entrepeneur – a new force in health policy Nuffield Trust
In this slideshow, Professor Carolyn Hughes Tuohy, School of Public Policy and Governance, University of Toronto, outlines the concept of the institutional entrepeneur, particularly in UK, Dutch and US contexts of health reform.
Professor Tuohy presented at the Nuffield Trust seminar: Sharing international experience: The institutional entrepeneur – a new force in health policy in July 2012.
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
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
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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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.
A Strategic Approach: GenAI in EducationPeter 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.
Safalta Digital marketing institute in Noida, provide complete applications that encompass a huge range of virtual advertising and marketing additives, which includes search engine optimization, virtual communication advertising, pay-per-click on marketing, content material advertising, internet analytics, and greater. These university courses are designed for students who possess a comprehensive understanding of virtual marketing strategies and attributes.Safalta Digital Marketing Institute in Noida is a first choice for young individuals or students who are looking to start their careers in the field of digital advertising. The institute gives specialized courses designed and certification.
for beginners, providing thorough training in areas such as SEO, digital communication marketing, and PPC training in Noida. After finishing the program, students receive the certifications recognised by top different universitie, setting a strong foundation for a successful career in digital marketing.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
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.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
2. Outline
Types of Government Intervention
Types of Goods
Reasons for Public Intervention
Government Failure
3. Recap
Last time talked about market failure
Markets are problematic in health care
because
1. Don’t provide goods efficiently
2. Don’t provide good equitably
4. Types of Government Intervention
1. Inform: or persuade
consumers/providers/suppliers to act in a
certain way.
Publicize health risks (smoking)
Disseminate information on disease patterns
(swine flu), or risks of medical procedures.
5. Types of Government Intervention
2. Regulation: determines how a private
activity may be undertaken.
At extreme gov’t can prohibit goods or activities.
Setting standards for doctors and drug trails
Regulate insurers to provide certain
interventions.
Includes mandates: obliges someone to do
something, and (usually, though not always)
pay for it.
E.g. employers of a certain size must provide health
insurance, children must be immunized at schools
6. Types of Government Intervention
Regulation and mandates appeals to legislators
b/c tackles problems without incurring
government spending.
Affects spending of those that are regulated e.g. two
day hospital days after delivery.
4. Finance: health care with public funds.
Delivery can still be public.
7. Types of Government Intervention
5. Provide: or deliver health services using
publicly-owned facilities and civil service
staff.
Usually publicly financed and provided
More typical of developing countries
Developed countries usually provide a lot of
autonomy if publicly provided (crown
corporations).
6. Taxes/subsides on goods e.g. cigarettes
With diabetes increasing so quickly should
certain foods be taxed more?
8. Types of Goods
Public Goods: 2 qualities
Nonrival: someone’s consumption does not
reduce the amount available for others to
consume.
Control of disease vectors (malaria)
Food and water safety
Non-excludable consumer cannot be excluded
from consuming the good either by having to pay
or through some other mechanisms.
Classic example national defense.
9. Types of Goods
Merit Goods: good that are thought to be good
for someone regardless of the person’s own
preferences.
Compulsory education.
Wearing seat belts or helmets on motor cycles.
Tobacco and drugs.
Market failure because don’t consume
enough of it.
10. Rational for government intervention
Government’s often try to correct market failures
(market distortions).
Remember the theory of the second best, fixing the
distortion won’t necessarily make people better off
(may or may not).
Need to think about when government intervention may be
appropriate.
Can sometimes be a value judgement.
In health care governments are not aiming for
perfect competition because not achievable for
much of health care. Instead use other mechanisms
than a price mechanism to ration health care.
11. Rational for government intervention
1. Public Goods:
Market failure because too little of the good is produced
in private markets.
Usually large number of individuals.
Individuals unlikely to cooperate to fund substantial
amounts of public goods through voluntary
contributions.
Free-riders: can’t exclude them from the benefits, but
free-ride b/c an voluntary contribution has a negligible
impact on availability.
Government takes responsibility for providing good.
E.g. control of disease vectors (malaria), clean air, food
and water safety, information, medical research (some
types), information, voluntary giving (redistribution)
12. Rational for government intervention
2. Externalities:
Goods that have third-part effects.
When a third party is affected by another
person’s consumption or production of a good.
And price mechanisms to compensate these
people.
E.g. neighbors loud music, smoke, air pollution,
contagious diseases (SARs, Bird Flu)
Problem is that externalities are not reflected in
the price of a good.
Factories don’t pay extra because they made the air
dirty (hopefully in the future they will).
13. Rational for government intervention
MC: Marginal Cost = Price
– Supply Curve
Price
Health Care
D: Demand curve or private
marginal benefit curve.
MEB: Marginal external benefit
MSB: Marginal Social Benefit
QmQopt
Case of immunizations
Efficient point for society
14. Rational for government intervention
MC
Price
Health Care
D
MEB
MSB
QmQopt
Case of immunizations
MC with subsidy
Policy Response:
Subsidize price of good.
15. Rational for government intervention
Are subsidies to producers passed onto
consumers?
Depends on the slope of the demand and supply
curves.
P1
P1-S
P2
S1
S2 : after subsidy
D
P
Q
P
Q
Consumer and producer benefits
Only consumer
benefits
16. Rational for government intervention
Policy Options for Externality:
For negative externalities (air pollution, dumping feces into
water supplies)
Subsidy
Regulation and mandates (laws).
Public provision/finance of some goods
immunizations in developing countries have vaccination campaign
days and weeks
disease surveillance
Charitable externality: can be sufficiently important
to justify large social insurance programs.
17. Rational for government intervention
3. Incomplete Markets:
E.g. Insurance companies don’t want to insure
you for pre-existing diseases (cancer, AIDS).
Can’t buy insurance.
Policy Options:
Could use mandates that make insurance
companies cover these people.
May need to subsidize drugs or care.
Could provide care.
18. Rational for government intervention
4. Merit Goods
Use argument everyone should have access to
health care.
Why many developing countries have free
access to medical care (even if can’t afford to
provide it).
Why you see universal health care systems.
19. Rational for government intervention
5. Market Power
Monopolies, oligopolies etc.
Any industry where the supply or marginal cost curve is
not flat (so are not price takers)
E.g. Hospital, drug companies (patents), specialists,
Often create market power by differentiating products. E.G
specializing in different kinds of operations.
Produce less and charge more than a competitive
market.
Due to economies of scale, production may be more
efficient if you have a monopoly (natural monopoly)
E.g. power sector, hospital, medical research
20. Rational for government intervention
Policy options for market power
Regulate
May set maximum prices.
Negotiate prices with drug companies and
doctors.
Mandate longer hospital stays (deliveries, started
to only insure 1 night stays, it was mandated that
woman could stay 2 nights.
Public provision.
21. Government Involvement in US
Support for hospitals
Started under the Hill Burton Act in 1946
Idea was to expand rural health facilities by providing
matching grants to non-profit institutions.
Requires states to survey its hospital needs and develop
a statewide plan for construction of public hospitals.
State, county and municipal hospitals account for
20 % of total hospital beds.
22. Government Involvement in US
The Veterans Administration & Champus
Largest public provider of health care in US.
Provide care for veterans
Retired military personal and dependants.
Food and Drug Administration
Started in 1906
Regulates drugs quality.
23. Government Involvement in US
Mandated Health Insurance Benefits.
Insurance industry is regulated at the state level.
Tradition role is to ensure solvency of insurance
companies.
Mandate insurance benefits.
In 1970, 48 mandates in 1991 1,000, in 1997, 600 new
ones.
Often are due to special interest groups.
Some research has found that they prevent
insurers from offering low-cost alternatives.
24. Government Involvement in US
Tax Policy
Employer contribution to health insurance not part
of taxable income.
Individual payments for health insurance and care
can be itemized and deducted if amount large
enough.
HAS
These subsidies do not promote equity, go to
those who can afford the most health care.
25. Government Involvement in US
Public Health
Department of Public Health
Center for Disease Control
Financing Health Insurance
Medicare and Medicaid
Finance Medical Education and Research
Institutes of Health (provides grants)
26. Government Failure
What is the extent and form of government
involvement?
Hard to agree on objectives, choose from
different policy instruments, and select the
correct value of these instruments.
These difficulties could lead to government
failure.
27. Government Failure
Economists tend to treat government as a
benevolent despot who knows what is good for the
economy and regulates accordingly
1. Theory of Local Capture:
Some argue that politicians are like everyone else, they
want to maximize how many votes they get.
So instead of doing what is good for the economy, may
do what is good for some special interest group.
May reward voters with monopoly profits, or public goods
(common to build a hospital in your name in developing
countries, beneficial regulation
28. Government Failure
Consumers could band together to be a
special interest group but tend not to because
difficult to agree on one interest, and due to
free-rider issue.
Criticisms of capture theory
Assumes all public officials are solely self-
interested which is not the case.
Leaves little room for ideology in politics. People
assumed to do what special interest groups want
even if doesn’t follow party platform
29. Government Failure
2. Bureaucracy and efficiency
Government is a monopoly so if tries to provide
goods will it do so at the minimum cost.
Government run by politicians who tend to
prefer quick fixes rather than longer-term
solutions.
Some of these criticism could also be made of
the private market.
They do quick fixes when cleaning up environmental
spills.
Not all managers are trying to maximize company
profits, they may be trying to maximize their salaries,
or length of stay in the job.
30. Government Failure
3. Don’t have capacity to administer
Due to low wages may not be able to hire
competent people.
Corruption may be large
More often the case in developing countries.
31. Role of Public and Private Sector
No one right way
Depends on level of income of the country
Poor countries cannot afford to provide health
care for all, so tends to be a larger role for the
private sector.
Don’t have ability to tax.
Public funds need to be concentrated on the most
cost-effective interventions.
32. Role of Public and Private Sector
Rich countries can afford to be more
involved in health care. How much you
governments intervene often depends on
beliefs.
There is a battle over superiority of:
1. Regulation: Increased government
involvement through expanded regulation
and government programs to provide or
finance health care.
33. Role of Public and Private Sector
Argue that information imperfections, flawed
agency relationships, and other distortions cannot
be readily corrected by private markets.
The point to the US record with the highest cost of
health care, least regulation, and poor health
outcomes compared to other developed countries
as proof.
34. Role of Public and Private Sector
2. Competition: An increased emphasis on
market mechanisms and market forces with
a decreased in use of regulatory
instruments.
Is seen in two ways:
a. Adhere more of a competitive market.
b. Rely on financial incentives instead of controls to
achieve goals.