Recommended
More Related Content
What's hot
What's hot (20)
Similar to SAC410 chapters 9 and 10
Similar to SAC410 chapters 9 and 10 (20)
More from BealCollegeOnline
More from BealCollegeOnline (20)
Recently uploaded
Recently uploaded (20)
SAC410 chapters 9 and 10
- 1. CHAPTER 9 HEALTH ECONOMICS IN A HEALTH POLICY CONTEXT
- 2. Chapter Overview Provides a basic overview of economics and why it is important for health policymakers to be familiar with basic economic concepts Focuses on: How economists make decisions Supply Demand Markets
- 3. Economic Decision Making Economists believe that people are rational actors who will never purposely choose to make themselves worse off. People seek to maximize utility. Given the scarcity of resources, decisions need to be made about the production, distribution, and consumption of healthcare resources. Consider individual preference and efficiency.
- 4. Demand (1 of 2) Demand—the quantity of goods and services that a consumer is willing and able to purchase over a specified time Common demand shifters Price of the original good, price of a substitute good, and price of a complementary good Income Quality (actual or perceived)
- 5. Demand (2 of 2) Price elasticity of demand—the percentage change in the quantity demanded resulting from a 1% change in price If a product is elastic, a change in price will result in an equivalent or greater change in demand. If a product is inelastic, demand for the good is not sensitive to a change in price.
- 6. Health Insurance and Demand Health insurance acts as a buffer between the consumer and cost of healthcare goods and services. Goods and services cost the consumer less than the charged price because of the presence of health insurance. Moral hazard Because a consumer does not pay the full cost of a good, the consumer may purchase more goods than he or she would otherwise purchase without insurance.
- 7. Supply (1 of 3) Supply—the amount of goods and services that producers are able and willing to sell at a given price over a given period of time. Common supply shifters Input costs Sale price Number of sellers Change in technology
- 8. Supply (2 of 3) Supply elasticity—the percentage change in quantity supplied resulting from a 1% increase in the price (or other variables, such as inputs) of buying the good. If a product is elastic, a change in price (or other variables) will result in an equivalent or greater change in supply. If a product is inelastic, supply of the good is not sensitive to a change in price (or other variables).
- 9. Supply (3 of 3) Suppliers are driven to maximize profit. In a competitive market, profit is maximized at the level of output where marginal cost equals price. Equilibrium exists in the market when there is a balance between the quantity supplied and the quantity demanded.
- 10. Health Insurance and Supply The presence of health insurance may impact a provider’s willingness to supply goods and services. Competing concerns Providers act as patient’s agent and act in patient’s best interest. Providers may have a financial incentive to act or refrain from acting in a certain way due to insurance arrangements or the lack of insurance. Supplier-induced demand is the provider version of moral hazard. Providers create a demand beyond the amount the well- informed consumer would have chosen. It is debated whether supplier-induced demand actually occurs.
- 11. Markets Market structures Perfectly competitive market should efficiently allocate resources Monopolies—single seller controls market Oligopolies—few dominant firms, substantial barriers to entry Monopsonies—few consumers who control price paid to sellers Healthcare is a monopolistically competitive market. Few dominant firms with significant market power and many smaller firms without market power
- 12. Health Insurance and Markets A typical market transaction involves two parties. Consumer and supplier Healthcare transaction with an insured patient involves three parties. Consumer (patient) Supplier (provider) Insurers Presence of third party (insurers) changes consumer and supplier analysis of costs and benefits of each transaction.
- 13. Market Failure (1 of 2) Market failure—resources are not produced or allocated efficiently Traditionally, inequitable distribution of resources does not equal a market failure Common reasons for market failures Imperfect information Concentration of market power Consumption of public goods Presence of externalities
- 14. Market Failure (2 of 2) Ways to address market failure Do nothing Government finances or directly provides public goods Government increases taxes, tax deductions, subsidies Government issues regulatory mandates. Government prohibitions Redistribution of income
- 15. CHAPTER 10 HEALTH REFORM IN THE UNITED STATES
- 16. Chapter Overview Discusses the history of health reform in the United States and details the key provisions of the Affordable Care Act (ACA) Focuses on: Previous attempts at national health reform Why health reform is difficult to achieve The passage and provisions of the ACA
- 17. Health Reform There have been numerous health reform attempts in the United States. Prior to 2010, all attempts at national health reform to create universal or near-universal coverage have failed Some successes at the state level
- 18. Health Reform—Difficulty of Reform in the United States Individualistic culture Dislike of big government Lack of consensus Federal system rules and structure make it difficult to achieve major reform States generally home to social welfare issues Powerful interest groups against national health reform Path dependency
- 19. Health Reform—Key Failed Attempts at National Health Reform 1912 Progressive Party candidate Teddy Roosevelt supported social insurance platform that included health insurance 1915 American Association for Labor Legislation proposal for working-class health insurance President Truman supported national health reform upon taking office, won re-election on national health insurance platform in 1948 President Nixon: initial health reform proposal in 1969 and revised proposal in 1972 President Clinton Health Security Act in 1993
- 20. The Affordable Care Act (1 of 3) Why did the ACA pass when so many prior attempts had failed? Commitment and leadership Learned lessons from past failures Political pragmatism
- 21. The Affordable Care Act (2 of 3) Individual mandate—most people have to purchase health insurance or pay a penalty starting in 2014 Exemptions for certain populations and based on affordability Penalty for individual mandate repealed in 2017 Tax Cut and Jobs Act Controversy Too much government interference in private lives? Constitutional?
- 22. The Affordable Care Act (3 of 3) State Health Insurance Exchanges American Health Benefit Exchanges for individuals Small Business Health Options program for small businesses Effectively ended in 2018; may be revised Must offer essential health benefits (abortion compromise) Four cost levels for plans based on actuarial value
- 23. ACA: Premium and Cost Sharing Subsidies Premium tax credits available for individuals who purchase insurance in an exchange and have income between 133% and 400% of poverty Cost-sharing subsidies available for individuals who purchase insurance in an exchange and have income up to 250% of poverty To qualify, must be a U.S. citizen or legal resident, not eligible for any type of public insurance, and not have access to employer-sponsored insurance
- 24. ACA: Employer Mandate In 2014, employers with 50 or more employees must provide affordable health insurance or pay a penalty. Insurance is affordable if it has an actuarial value of at least 60% or is not more than 9.5% of an employee’s income. Penalty is per employee after first 30 employees.
- 25. The Affordable Care Act (ACA) (1 of 2) Private insurance market changes No preexisting condition exclusion Dependent coverage to age 26 Preventive services without cost sharing Prohibitions against lifetime and annual coverage limits No rescission without fraud New appeals process Premium rate reviews
- 26. The Affordable Care Act (ACA) (2 of 2) Private insurance market changes (cont.) Guaranteed issue and renewability Rate variation limits Essential health benefits Wellness plans Some plans may be grandfathered in and not subject to all of these changes
- 27. ACA: Financing Health Reform (1 of 2) Changes to Medicare provider reimbursement Changes to Medicare Advantage reimbursement Medicare Part A increases for high earners Changes in Medicare Part D subsidies Changes in Medicare employer subsidy
- 28. ACA: Financing Health Reform (2 of 2) Changes in disproportionate share payments Increase Medicaid prescription drug rebate paid by manufacturers Income tax code changes Health industry fees Tax on high-cost health insurance plans