Pubpol 2350 Prelim 1

What are the 3 components of the iron triangle of health care?

high quality, broad access, low cost

What is the overall goal of the iron triangle?

provide excellent health for a country’s population at a relatively low cost

how does the US compare to OECD countries in terms of percent of GDP spent on health?

US spent 18% of its GDP in 2024 on health compared to OECD average of 9.3%

US access (bad)- what does access to healthcare look like for the average american?

fewest number of primary care providers per 1000 people

patients more likely to skip necessary care because of costs

8.2% uninsured in 2024

US quality (bad)- what does the quality of healthcare look like for the average american?

lower female life expectancy at birth

higher infant mortality rate per 1000 births

life expectancy at birth is 2 years lower than OECD average

US access (good)

more people waited less than 1 month for non-emergency surgery

ACA and ARP have driven down uninsured rate to lowest level ever

death rate dropped to a record low in 2025

US quality (good)

advanced innovation with personalized prescription drug therapy using CRISPR

increased breat cancer five-year survival

increased breast cancer screening

increased flu immunization

decreased heart attack 30-day mortality

where does the US healthcare system rank compared to OECD nations?

somewhere in the middle

2nd (care process) and 10th (health outcomes) on two broader quality measures

inconsistent quality with US healthcare system

high spending creates incentives for medical innovation

US is best for complex and expensive medical care

US is bad with primary and preventive care and coordination of care across sites/providers

inefficient spending with the US healthcare system

30% of US spending is low or negative value medical care

shift from fee-for-service to value-based care has been slow with mid results

unequal access within the US healthcare system

insured high income consumers have access to high quality medical care

underinsured, uninsured and low income consumers do not

inequalities in access, quality and outcomes across racial/ethnic groups, income and geographic areas

how does your zip code affect your life expectancy?

depending on where you live, your access to medical care can vary widely

how did the US compare to other countries during covid?

fared much worse, especially non-white population

change in population health trend

the best country female life expectancy at birth has grown by 12.5 weeks every year over the past 180 years

what is the health production function?

a person’s health is produced by many inputs

the more medical care you get, eventually there’s a diminishing effect

social determinants of health

how your socioeconomic, educational and environmental background affects your health outcomes

what are examples of social determinants of health?

housing, income, education, transportation, neighbourhood conditions

how do underlying structural factors affect the distribution of resources across the population and a person’s position in society?

they affect downstream conditions of a person’s daily life, eventually health

how does a high income influence lifespan?

americans with high income can live 10-15 years longer than those with low income

why do americans with high income have a higher chance of living longer?

social determinants of health coupled with income levels

how many eras were there when the expected age of death in England and Wales changed?

3

what were the primary reasons for life expectancy increasing 4 years in the FIRST era?

economic growth and better nutrition

why is nutrition important in the context of life expectancy?

average adult height increased, mortality is u shaped, direct impact of nutrition lowering mortality rate e.g. mortality rate for TB dropped

what were the primary reasons for life expectancy increasing by 27 years in the SECOND era?

public hygiene/people’s behaviour and big works projects

how did public hygiene contribute to increased life expectancy? (MICRO)

washing hands, boiling water, ventilating rooms, protecting food from insects

how did big works projects contribute to increased life expectancy? (MACRO)

vaccines, sanitation systems, pasteurizing milk, draining swamps, filtering and chlorinating water supplies

what happened in mass. during the second era of increased life expectancy?

infant mortality rate dropped sharply, especially in urban environments

why were public health programs so effective in the second era?

water and food-borne diseases were eliminated e.g. typhoid, TB

did medical care have a significant impact in the second era?

no, but there were contributions: vaccines, anesthesia, antibacterial drugs

when did medical care start to contribute meaningfully?

in the 1930s an antibacterial drug targeted diseases against childbirth, scarlet fever and pneumonia

how has medical care contributed to improving life expectancy by 11 years in the THIRD era?

decreased cardiovascular mortality rate, high blood pressure, cholesterol levels

expensive 1 on 1 interventions

why have low income countries experienced larger increases in life expectancy recently than high income countries?

low income countries are making major public health changes because of political independence and growing economy

high income countries are making minor changes to moderately improve life expectancy (fine tuning)

are the leading determinants of health medical? where does medical care fall into the pie?

no, the importance of medical care seems minor compared to other factors, like income, social behaviour and genetics

how does US spending compare to other high income countries when addressing social determinants of health?

relatively little, US spends a lot on health but less on social services

gross domestic product (GDP)

the total value of all domestically produced goods and services

how much of the GDP went to national health expenditures (NHE) in 2024?

18%

in terms of people’s consumption expenditure, what percent did medical care take up in 2024?

21%

why does NHE exceed personal medical care consumption?

the latter excludes R and D, investments and net exports

where does the majority of spending go to in personal health?

hospital care and physician and clinical services

medical spending increases are bc of these two factors

overall, what is the general trend of the NHE capita over time?

consistent increase

within the last 3.5 decades what trend has been observed in health spending?

substantial slow down but still growing faster than GDP

why is increased spending on medical care a potential problem?

not spending on other important things e.g. public health, climate change

large financial burden on people without insurance e.g. extending prescription medication, spending more on healthcare than groceries

what are the specific consequences on increased medical spending?

growing medical costs and insurance cut into workers’ wages so people are compensated less because insurance costs more

people have a higher standard of living and since workers aren’t earning as much with rising medical costs it’s really hurting low income households

why is healthcare spending increasing consistently and substantially decade after decade?

healthcare costs have increased in all countries

all sectors in the US healthcare system are increasing

what are the 4 components of the perfect spending storm?

technology/innovation (protagonist), health insurance, cost sharing, fee-for-service reimbursement (all enablers)

what is medical technology/innovation?

goods and services that patients receive when seeking treatment e.g. MRI tests, prescription drugs, nursing care

how does pres. eisenhower’s heart attack treatment compare to today’s?

the evolution of care has changed significantly, it’s a lot more expensive with more high quality tests and treatments available

medical tech progress as an incentive

valve replacement via open heart surgery, medicare would pay for this treatment so worth investing in developing this medical technology

what are the major sources of medical spending, as of 2024?

medicaid, medicare, private insurance

even with public insurance programs, like medicaid and medicare, controlling most of the medical spending in the US, what are out pocket prices like?

average person still faces expensive out of pocket prices from deductibles and copay

how does fee-for-service reimbursement incentivize medical tech innovation?

physicians are paid more to learn new medical technologies

hospitals and physicians are paid more when they provide more services to patients

what are the 2 major proportional causes of growth per capita in medical spending?

more medical technology and personal income increases

how has health insurance contributed to the perfect storm?

expanding public insurance programs has increased US medical spending

patients have become more insulated and public insurance programs have become more important

how has cost sharing contributed to the perfect storm?

patients don’t face the full price of medical care at the point of care so they’re more willing to use new technology

insurer pays most of the price

what has been the trend for the average annual premiums for single and family coverage?

consistent upward increase

what is the MCR?

medical care ratio

what is one method for making high-value care accessible to all patients?

redirecting medical spending and directing innovation toward high-value care

what is a result of the US slowdown in medical spending?

saving taxpayers substantial money, about 3500

what are some possible reasons for this slowdown in US medical spending?

technology, value-based care, medicare advantage, greater autonomy for less expensive nurses, shifting patients to less expensive treatment locations, less administrative spending in health insurance

how do US demographics contribute to reduced medical spending?

US demographics and health behaviours may reduce health care costs relative to other high income countries

what are some demographic examples that contribute to reduced medical spending?

low number of hospital admissions, physician office visits and number of prescription drugs per capita

what are some demographic examples that contribute to increased medical spending?

hospital admission costs, physician and nurse fees, drug pricing, multiple health insurers

overall, why is US healthcare more expensive than other countries?

high prices, multiple insurers, higher ability to pay, limited rationing of medical technology

what was the goal of cutler’s calculation?

to determine whether medical care today at its price is worth it over 1950s medical care and its price

what were the three case studies cutler examined to prove his point?

1. low birthweight babies

2. major depression

3. cardiovascular disease

how did cutler illustrate his point with low birthweight babies?

medical care is the catalyst behind recent improvements in infant survival rates e.g. neonatal ICU

how was cutler’s calculation applied to low birthweight babies?

life expectancy increased 15 years

13 extra QALY rather than 15 because of development problems

how did cutler illustrate his point with major depression?

medical breakthroughs in treatment and drugs reduced stigma, resulting in higher treatment levels

how was cutler’s calculation applied to major depression?

SSRI treatment reduced a person's depression by 10 weeks

depression impact on QALY 0.6

negative productivity impact with depression

how did cutler illustrate his point with cardiovascular disease?

huge reduction in cardiovascular mortality rate with better treatment options

how was cutler’s calculation applied to cardiovascular disease?

life expectancy increased at 45 by 4.5 years

3 of those years because of medical advances

when cutler modernized his calculation to include more health conditions, what happened to the net value of medical care?

increased by 113000 per elderly person with large differences across conditions

how does the example of Avastin illustrate increased spending on US medical care? how does it show the intolerance of other high income countries on using expensive technologies?

other high income countries often restrict expensive medical tech, resulting in lower spending

the same prescription drug in the US costs significantly more

how does the UK ration medical care?

UK promotes high value medical care when its expected value outweights its cost

UK restricts low value medical care when its expected value is below its cost

what is an overview of medical tech in the US?

price impact

government influence

insurance

price impact - medical tech in the US

medical treatments that are safe and improve health are approved, regardless of price

government influence - medical tech in the US

gov pays for tech that physicians and patients use

gov sets prices that physicians and hospitals receive for treating Medicare and Medicaid patients

gov does not directly set prices, allows market to drive price

what are the two general methods of limiting growth in medical spending without reducing quality?

demand and supply side

demand side

private insurers restrict access to tech if customers agree

patients pay a lot for expensive medical care

patients choose which tech is valuable

favoured method in the US

supply side

gov chooses which tech is available

government sets low prices

patients follow gov decisions

favoured method in Europe

pure premium

expected medical spending for a specific person or group of people with the same risk level e.g. same age, gender

loading charge

amount of money the insurance company charges in addition to the pure premium e.g. admin costs, network providers, bills

what are the 2 major benefits of health insurance?

reducing risk to customers so they don’t pay a crazy amount in one year and nothing in the next

opening up access to medical care

what does risk spreading do?

really sick people underpay, really health people overpay for others

what are the two methods that a health insurance premium is determined?

experience rating, community rating

experience rating

premium based on a person’s previous medical costs and predicted costs based on age, gender, health conditions

community rating

premium same for all people regardless of age, gender, health conditions

health people subsidize sicker people

how are premiums set for most americans?

non elderly insurance, experience rated employers, community rate within a firm, equity and subsidization

non elderly insurance

most non elderly in the US receive health insurance through their employer

employers are typically experience rated

health insurers charge higher premiums to companies with relatively sick employees vs those with healthy ones

most health insurers community rate within a firm

each employee at a firm pays the same premium, regardless of age, gender, health conditions

equity and subsidization

young healthy workers subsidize older sicker workers within a company

what is moral hazard in healthcare?

behaving differently when insured vs uninsured

what are examples of moral hazard affecting one’s decisions?

partying with an open bar, reckless driving, increased medical service spending

why is moral hazard a problem?

exposure to cost and inefficient care

what are the spending habits of patients who have high exposure to cost?

patients who pay full price will only receive medical care when its value outweights its cost

inefficient care

patients who don’t pay full price will sometimes get medical care when its cost outweighs its value

what are the 4 ways patient cost-sharing reduces/controls moral hazard?

deductible, co-payment, co-insurance, out of pocket max

what is a deductible?

dollar amount per year a patient pays before the insurer covers medical expenses

what is a co-payment?

fixed dollar amount paid for each physician visit or prescription