Lecture 10 - Health Care and Education

Flashcards based on Health Care and Education Lecture Notes

What are fundamental problems facing health care and education systems?

To determine reasons for government intervention.

What is a principal agent nature of healthcare?

Many believe that in health care: supply creates its own demand.

Why is it difficult to determine the output of health care?

It is not clear whether to measure output as ‘healthy people,’ ‘productive people,’ or something else. Also, it is not clear if health is due to healthcare, genetics, or personal care.

What is an efficient health service?

An efficient health service is not one that gives all patients the highest possible care because money spent treating one patient cannot be spent treating another.

What is QALY?

Quality Adjusted Life Years. One way to try and measure the benefits of treatment.

What are the different measures of equity in health care?

Minimum standard, equality of expenditure, equal treatment for equal need, equal access or equality of cost, and equality of output.

What are the possible causes of market failure in health care?

Imperfect information, imperfect competition, externalities, and incomplete markets.

Why is insurance fundamental to a market based health care system?

A patient cannot predict if and when they will be ill.

What problems does a private insurance system encounter?

Moral hazard and adverse selection.

How can the government solve the problem of incomplete markets and improve equity in healthcare?

Through government production and possibly government finance.

Why is it hard to measure the output of education?

It is difficult to determine if exam results are due to education or innate intelligence. Consumption and investment benefits also need to be recognized.

What is the Human Capital Theory?

Women with a university degree earn on average 28% more than non-graduate women.

What are the costs of providing education?

Buildings, books, teacher salaries etc.

What are the different definitions of equity in education?

Equality of consumption, equality of opportunity or access, and minimum standard.

What are the possible causes of market failure in education?

Imperfect information, imperfect competition, incomplete markets, and externalities.

Why does a market based system of education fail?

Because of imperfect competition, incomplete markets, and the opportunity to borrow money to finance an education may not exist.

What is a principal-agent relationship in education?

One person (parent, teacher, government) acts on behalf of the child.