Chapter 22. Health Care

Chapter 22Health CareCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.U.S. Emphasis on Private Health InsurancePatient Protection & Affordable Care Act (2009)During WWII employers offered insuranceContinued as an employee benefitLed to overuse & higher pricesTendency to regulate industryLO1Costs and AccessCosts increased rapidlyHigher pricesIncreased quantity of servicesProjected to grow at 5.8% annually over next 10 yearsAccess49 million uninsuredLO1Health Care SpendingLO1Health Care SpendingLO1Health Care SpendingIs the U.S. healthier?Longer life expectanciesMost advanced medical equipment and technologiesHalf of medical research funding is in U.S.Increase in breast cancer mortalityTB has reappearedAIDS epidemicLO1Economic Implications of Rising CostsReduced access to careLabor market effectsSlower wage growthPart-time and temporary workersOutsourcing and offshoringPersonal bankruptcies Impact on government budgetsLO2Limited AccessThe poor are likely to be uninsuredMake “too much” to qualify for MedicaidWaiting for treatment increases costsLO3Why the Rapid Rise in Costs?Peculiarities of the health care marketEthical and equity considerationsAsymmetric informationPositive externalitiesThird-party payments: insuranceLO4Increasing demand for health careRising incomeRole of elasticityAging populationUnhealthy lifestylesRole of doctorsSupplier induced demandDefensive medicineMedical ethicsLO4Why the Rapid Rise in Costs?Role of health insuranceThe moral hazard problemLess preventionOverconsumptionGovernment tax subsidyRationing to control costsLO4Why the Rapid Rise in Costs?Supply Factors in Rising Health CostsSupply of physiciansSlow productivity growthChanges in medical technologyRelative importance of supply and demand factors LO4Cost Containment: Altering IncentivesDeductibles and copaymentsHealth Savings Accounts (HSA)Managed carePreferred Provider Organizations (PPO)Health Maintenance Organizations (HMO)Medicare and DRGLimits on malpractice awardsLO5Patient Protection & Affordable CarePreexisting conditions, caps, and dropsEmployer mandatePersonal mandateCovering the poorInsurance exchangesOther provisionsTaxesLO6Patient Protection & Affordable CareObjections and alternativesGreater inefficiencies in health careFirst step to national health insuranceLack of revenue sourcesIncreased consumptionNeed to force consumers to weigh marginal benefits and costsLO6