Health Care Financing and Regulation Outline

 
Health Care Finance And Regulation
Leonard –Fall 2012
 
 
 
I.                   Health care Cost and Access
a.       About 17% of Americans or 50 million people are uninsured
b.      Full time workers are 61% of the uninsured
c.       Below 100% of the FPL is 40%
                                                              i.      Everyone eligible for public programs do not always apply
                                                            ii.      Medicaid
1.      Only for the deserving poor based on situations outside of their control
d.      Those covered are mostly from employer based chunk
                                                              i.      Employee benefits are tax free
                                                            ii.      Employers however are dropping off because of costs
                                                          iii.      In the long run increases in health insurance premiums are reflected in lower wages, not higher prices
e.       Government pays for nearly 60% of national healthcare expenditures
                                                              i.      Includes direct government programs
                                                            ii.      Public employee’s health benefit plans
                                                          iii.      Public tax subisidies that encourage the purchase of private insurance
f.       Only 5% of the population is buy their own insurance because of the costs
g.      Most consumers do not have expertise they need to evaluate the quilaifications of their health care providers
                                                              i.      They also do not have perfect informations about the altneratives
                                                            ii.      The presence of third party payers dulls the incentives for consumers to pay attention to costs at the point of service
                                                          iii.      The tax subsidy also discourages the consumer from researching the lowest priced otion
                                                          iv.      Rent-term used by economist that describe situations in which the returns to labor or capital are above the returns needed to attract the appropriate supply of resources to an activity
1.      Physicians earn rent for two reasons
a.       Number of qualified applicants for medical school is far greater than the number of student slots available so entry limits matter
b.      Studies of financial returns from education and training suggest that the private returns on investments in general and exceed the returns in most occupations
2.      Physicians earn 5 times the average worker
a.       Bulk is paid by third party payers
                                                                                                                                      i.      Private insurance
                                                                                                                                    ii.      Federal government
                                                                                                                                  iii.      State government
                                                                                                                                  iv.      Local government
                                                            v.      Costs are so high that 17.6 % of GDP is spent on healthcare
1.      A lot of the spending is on technology and overuse of certain things
2.      Factors contributing to high costs
a.       National wealth
                                                                                                                                      i.      Healthcare is a luxury good in the sense that wealthier countries spend a higher proportion of GDP on health care than poorer countries
b.      Aging population
                                                                                                                                      i.      People over 80 require a great deal of health care and the US population is steadily aging
                                                                                                                                    ii.      Public programs have age requirement and if they retire they are no longer contributing
c.       Waste, fraud, and abuse
                                                                                                                                      i.      Fraud and abuse account for more than a trivial share of cost and aggressive enforcement appears to have played a role in decreasing Medicare Cost in the 90s
                                                                                                                                    ii.      Waste is difficult to define and police
1.      Medicine is not an exact science and tests and procedures that some regard as wasteful are also considered necessary
d.      Market structure
                                                                                                                                      i.      Competition limited because of entry requirements such as licensure and certificate of need requirements
                                                                                                                                    ii.      The market for certain health care services including health insurance, hospital care, and specialty physician services
                                                                                                                                  iii.      Market concentration can facilitate collusive attempts to raise prices and dampen competition
e.       Administrative costs
                                                                                                                                      i.      US pays more proportionately for administrative costs than any other nation
                                                                                                                                    ii.      $1059 per person compared to $307 in Canada
f.       Malpractice
                                                                                                                                      i.      Not a major contributor and account to 1%
                                                                                                                                    ii.      Malpractice insurance brings it down
g.      Changing nature of disease
                                                                                                                                      i.      Obese people and other people with disease need high cost medical care on an ongoing basis but also now live as long or longer than normal people
h.      Treating of hopeless cases
                                                                                                                                      i.      We spend a lot of prolonging the lives of patients who are near death with heroic interventions
i.        Higher prices
                                                                                                                                      i.      We consume no more health care than other nations
                                                                                                                                    ii.      The average American sees the doctor 5.8 times a year and that it typical
                                                                                                                                  iii.      Two ramifications
1.      The true cost of medical care that could be allocated other places is relatively low
2.      Managed care companies pay high salaries to their executives and employ a host of workers who monitor and administer health care rather than providing health care services
j.        Technology
                                                                                                                                      i.      Most health economists believe that the primary reason why health care costs so much in the US is because of the widespread adotption of health care technology
h.      The Cost Problem:
                                                              i.      Are Americans just unhealthy?
                                                            ii.      Limiting or controlling provider charges
1.      Insurance companies bill strategically and play games to increase profits
2.      Should there then be a global fee schedule and eliminate price completion?
                                                          iii.      Rationing and limiting older and hopeless cases and people may decrease cost
1.      Ensure that treatments offered are effective and cost effective
2.      Rationing technically exists
a.       Private insurance determines who gets what, when, and how
i.        Expanding Access
                                                              i.      Single payer
1.      Supported by taxes
2.      Universal ideal
a.       One way is direct service and the government directly does the health care service
                                                                                                                                      i.      Therefore the government would employ the doctors, nurses, etc.