Chapter 21: Health Care

Health CareMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.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 industryLO121-*Costs and AccessCosts increased rapidlyHigher pricesIncreased quantity of servicesProjected to grow at 6.1% annually over next 10 yearsAccess46 million uninsuredLO121-*Health Care SpendingLO121-*Health Care SpendingLO1Costs as a percentage of U.S. GDP21-*Health 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 epidemicLO121-*Economic Implications of Rising CostsReduced access to careLabor market effectsSlower wage growthPart-time and temporary workersOutsourcing and offshoringPersonal bankruptcies Impact on government budgetsLO221-*Limited AccessThe poor are likely to be uninsuredMake “too much” to qualify for MedicaidWaiting for treatment increases costsLO321-*Why the Rapid Rise in Costs?Peculiarities of the health care marketEthical and equity considerationsAsymmetric informationPositive externalitiesThird-party payments: insuranceLO421-*Increasing demand for health careRising incomeRole of elasticityAging populationUnhealthy lifestylesRole of doctorsSupplier induced demandDefensive medicineMedical ethicsLO4Why the Rapid Rise in Costs?21-*Role of health insuranceThe moral hazard problemLess preventionOverconsumptionGovernment tax subsidyRationing to control costsLO4Why the Rapid Rise in Costs?21-*Supply Factors in Rising Health CostsSupply of physiciansSlow productivity growthChanges in medical technologyRelative importance of supply and demand factors LO421-*Cost Containment: Altering IncentivesDeductibles and copaymentsHealth Savings Accounts (HSA)Managed carePreferred Provider Organizations (PPO)Health Maintenance Organizations (HMO)Medicare and DRGLimits on malpractice awardsLO421-*Patient Protection & Affordable CarePreexisting conditions, caps, and dropsEmployer mandatePersonal mandateCovering the poorInsurance exchangesOther provisionsTaxesLO521-*Patient 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 costsLO521-*