Foundations of Health Services Exam 1

What percentage of GDP is healthcare in the US?

17.8%

What is the average family premium in U.S.? What do employers cover?

1584.67

77% covered by employers

Copays in U.S. and prescriptions in U.S.?

Copays vary and prescriptions are on a tiered system

Insurance coverage for adults in the U.S.

49% employer sponsored

21% Medicaid

14% Medicare

9% uninsured

8% other

What percentage of GDP is healthcare in Britain?

8.3%

What is the average family premium in Britain?

There is no average family premium

Can you buy private insurance in Britain?

Yes, you can get better care and services not covered by NHS

NHS determines what is covered and what is not (Zyrtec example...not covered in Britain)

What does the government pay for in Great Britain?

Almost all care (hospital, doctor visits, etc).

All doctors are government employees

MORAL HAZARD IS HIGH in the UK (in a cash based system however, there would be 0 moral hazard)

True or False, doctors are incentivized in Great Britain.

True

True or False, hospital facilities are not struggling in Great Britain because they are getting reimbursed enough.

False

What percentage of GDP is healthcare in Germany?

10.7%

What is the average family premium in Germany?

$750

Compared to Britain, what are the copays like in Germany?

Britain has some copays, but most things are covered by the government.

Germany has $15 copays every three months

What are the differences between Germany and U.S.?

Spend less on healthcare

Cheaper premiums

Insurance companies are not for profit

Everyone is insured in Germany

More than one insurance company (sickness funds)--if you lose your job you remain on your sickness fund

10% of population has private insurance (the rich opt out)

True or False, sickness funds are non-profit and cannot deny coverage based on pre-existing conditions.

True

What are the negatives with Germany's healthcare?

Physicians are underpaid

Physicians do not have incentive to provide the best care

What percentage of GDP is healthcare in Taiwan?

6.3%

What is the average family premium in Taiwan?

$650

What are some positives about Taiwan's healthcare?

No wait times

Smart cards

Track overuse of doctor visits--reduces moral hazard

One government run insurance company

What are the negatives with Taiwan's healthcare?

Government has to borrow from the banks to cover healthcare costs (debt)

What percentage of GDP is healthcare in Japan?

8%

Price lists in Japan

The prices are the same throughout Japan

Government negotiates prices with providers

Because Japan does not spend enough it induces

Innovation and efficiency, however most of the hospitals are in deficit

Consumer surplus

The buyor is willing to pay for a good for a certain price, but then receives the good for less than the anticipated price

Imperfect information

Pricing is not straight forward

Prices are sometimes not available until treatment is done

Healthcare is a big budget item

Patients do not know if they are getting good service

Patients and providers are often uncertain about outcomes of treatments

Difficult to get expert advice (No consumer reports)

True or False, 3/20 hospitals provided prices for echocardiograms, but only 19/20 were able to provide prices for parking

True

Asymmetric information

A situation in which one party has less information than the other party

Physician-induced demand

Physicians recommend care that patients wouldn't want or accept if you had all of the information

Similar idea when taking car to mechanic

Physicians respond to incentives, meaning when physicians are paid per service provided they will

Provide more service

McCallen vs. El Paso

Population of the cities are relatively similar and number of physicians is also similar, however McCallen has much higher medical reimbursements (El Paso is much lower.

The mindset of the doctors is different

When there is ambiguity in healthcare, like in cardio cases, it's not clear what you need to do. (Go home and tell them to come back if they need to, thousand dollar workup). In McCallen when there is ambiguity, they are doing too much care.

Mayo Clinic

Patients are put first vs. McCallen (there are incentives in the system to be inefficient).

Self-referral

Referral by doctors to facilities in which they have a financial interest (or own the facility).

Doctors that have investment in a healthcare facility are more likely to order tests from that facility.

Study conducted on physicians exploiting asymmetric info...

Physicians recommend riskier plans for family members in comparison to their patients

Why do people buy insurance?

They are risk averse and are willing to pay to avoid future loss

To avoid loss under uncertainty

Why was the author willing to pay for health insurance for her dog?

She didn't want to have to decide between her dog and patio furniture.

Dog health insurance is relatively cheap

Property loss

Car insurance, renter's insurance, flood insurance

Health loss

Life insurance, health insurance, disability insurance

People do not insure themselves against all risks because

Small negative effects and unlikely events

Also for some risks, no insurance is available (things you cannot control is something that you buy insurance for)

True or false, health insurance does not compensate for loss of health.

True

Loss in health is different from other losses (from an insurance perspective) because

It is hard to quantify and define loss

A health loss may create an ongoing need for medical care rather than a one time payment

Health losses occur more frequently

(the probability that my apartment burns down is low, so the insurance is cheaper)

Expected loss

The amount of loss multiplied by the probability of the loss

Insurance companies "pool risk" meaning they

Create certainty out of uncertainty by bringing groups of people with different risks together

If 10% of people get appendicitis and treatment for appendicitis costs $13,000, then how much should the insurance company charge 10 people?

1,300...can charge a relatively low amount to cover a high amount of people

Insurance pricing

Insurance companies charge a price (premium) for insurance that is the expected loss plus a loading fee

What is the premium if the average expected loss is $200 and the insurance company charges a loading fee of 20%?

Premium=$200 + 0.2($200)= $240

Premium

The amount of money that you and/or your employer pay each month for insurance coverage

Moral Hazard (insurance induced demand)

Changes in the amount or probability of loss as a result of insurance coverage

Changes in behavior based on the removal of risk

Increased utilization in response to decreased prices

-People in Great Britain did not have to pay the doctor to visit, so they would visit the doctor when lonely (moral hazard)

True or False, if you remove the risk, people wont' practice good risk management techniques.

True

Is moral hazard bad?

Excessive or unnecessary use of medical (more use of necessary care?)

Increased health care expenditures are passed on to patients and employers in form of higher premiums

Welfare loss

People are using goods and services that they value less than the market price of the good or service.

Adverse selection

High-risk individuals are more likely than low-risk individuals to purchase insurance (high risk select into insurance, low risk select out of the insurance)

Results from asymmetric information (individuals have better knowledge of their health risk than insurers)

Example: I know I'm going to have a baby, so I'm going to get insured (but the insurance company does not know).

Did the author know more about her dog's health than the insurance company?

She had information about how she knew about the dog's sickness, but the insurance company does not---adverse selection

What we think of as health insurance has two components:

Risk removal (there is risk of unpredictable catastrophic medical care costs, so there is valid reason for purchasing insurance)

Prepayment (most health insurance policies also cover many predictable/non catastrophic medical expenses--dental cleanings and vaccinations)

Why is health insurance so expensive? Moral hazard? Adverse selection? Pre-payment?

All of the above

How was public health defined in 1920?

Preventing disease, prolonging life, and promoting physical health/efficiency through sanitation of environment, control of community infections, and personal hygiene.

What 4 components make up redefined public health?

Mission:society's interest in healthy people

Substance:organized community efforts to prevent diseases and promote health

Organizational framework: government, NGOs, volunteers

Core functions: 3 core functions and 10 essential services

A simpler definition for public health

Disease prevention and health promotion

Primary prevention

Prevention of disease or injury itself, through reducing exposure or risk factor levels

Disease status-susceptible

Aims to reduce disease incidence (number of new cases)

Mask mandate

Secondary prevention

Attempts to identify and control disease process in their early stages

Disease status-asymptomatic

Aims to reduce prevalence (number of existing cases)

Disease screening

Tertiary prevention

Seeks to prevent disability through restoring individuals function after damage is done

Disease status-symptomatic

Aims to reduce or delay the onset of complications/ disability

Public health approach to a community's problem

Develop and test population level interventions

What 3 components make up public health services?

Assessment, policy development, assurance ("taking action")

Public health focuses on

Community, preventing disease, it is abstract, proactive, government

Leading cause of death=tobacco use

Medical care focuses on

Individuals, diagnosing, easier to recognize, reactive, physicians

Leading cause of death=heart disease

What is the greatest public health achievement?

Vaccination

What does pharmacoepi provide

A less expensive way to establish evidence about safety and effectiveness of medications in the "real world"

Efficacy vs. Effectiveness

treatments that work in controlled trials (efficacy) might not work in routine care conditions (effectiveness)

Postmarketing surveillance

Process of monitoring drug safety to identify potential problem with the use of the drug after is has received FDA approval

Individuals make choices because

They can and they must

Economics studies how people make choices in the

Allocation of scarce resources to satisfy their unlimited wants

Treatments choice is not the same thing as

Treatment chosen--you only have one treatment chose and multiple treatment choices

Negative outcomes of a choice

Cost-less of something you like or more of something you don't like

Positive outcomes of a choice

Benefits-more of something you like or less of something you don't like

True or false, making a choice is a cost of that choice

True

Tradeoff

Choices have both positive and negative outcomes. Any choice precludes other choices (you can't pick the other choices after you make your choice)

Optimal choice

The best choice...the most of what you want, the least of what you don't want

This choice has the highest utility, so consumption bundles with the highest utility is chosen

Opportunity cost

The next best choice of the optimal choice

Decision

Is made over at least two choices

Must be an available choice

They are complex and intensely personal

Domain

Decisions are characterized by domains

Domains include various components

Consumption bundle

All of the different components associated with a given choice

If there is a decision, there needs to be at least two consumption bundles

Utility

Construct of satisfaction and is associated with a particular choice (consumption bundle)

Individuals are rational

They prefer more utility as opposed to less utility, all other things equal

Factor loading

Provides a sense of relative importance of components either within a choice or across the choice

Components that increase utility

Positive values (beneftis)

Components that decrease utility

Negative values (costs)

Because we cannot buy health, what do we do?

We buy or already have goods with which we use to produce health (invest in health)

Endowments

Goods that we have (age, race, gender)

Commodities

Everything else that you like in life (other than health)