Foundations of Healthcare Systems Exam #2

LECTURE 5: The Market for Healthcare & “Value”

The Myth of the Perfect Market

A “perfect market” is like Blair Waldorf’s dream of perfect order at Constance Billard—structured, informed, and competitive. But real healthcare? More like a chaotic Upper East Side party gone wrong. Why?

• Perfect Market Assumptions:

  • Many buyers & sellers

  • Products are interchangeable

  • Transparency & easy entry

• Healthcare Market Reality:

  • Highly regulated (not just anyone can sell care)

  • Asymmetrical info (patients don’t know what’s best)

  • Insurance coverage distorts pricing & choices

🗣 “You can't make informed choices when Serena’s just gone rogue.” — Healthcare consumers = confused patients.

Waste: When Quality Goes MIA

Remember when Nate dated that Dutch heiress who ghosted him? That’s how waste operates—flashy but lacking real value.

Types of Healthcare Waste:

1. Failures in Care Delivery: Like Dan’s bad love advice—ineffective, sometimes harmful.

2. Failures in Care Coordination: Disconnected like Jenny’s NYC–Hudson fashion crossover.

3. Overtreatment: Treatments based on outdated info or doctor preferences.

4. Administrative Complexity: Too many middlemen = messy billing.

5. Pricing Failures: Paying Chanel prices for Zara quality. 🙄

🗣 “Spending money isn’t bad … wasting it is.” – David Cutler

We spend more than other countries…

Case Study: Semaglutides (Ozempic, Wegovy)

Everyone wants it, but no one wants to pay for it (like the Met steps fashion wars).

• Originally for diabetes, now popular for weight loss.

• Medicare won’t cover it for obesity (by law).

• Employers/insurers trying to contain costs.

• Question: Is this market behaving like a “perfect market”? Nope—info asymmetry, regulated entry, limited substitutes.

💬 Imagine if Chuck Bass had to get FDA approval to buy his own club—welcome to the healthcare economy.

LECTURE 6: The Policymaking Process

The Window of Opportunity (Kingdon Model)

Serena returns from boarding school? Big moment. That’s what a Policy Window is—everything aligns for action.

Three Streams:

1. Problem: Something dramatic (e.g. crisis in access or cost).

2. Policy: A viable solution exists.

3. Politics: The right people are in power.

When all 3 align—bam! Policy can move forward.

🗣 “Never let a serious crisis go to waste.” – Rahm Emanuel
Translation: Use the drama for reform (a la Blair during scandal cleanup).

Interest Groups: The Real Puppet Masters

If Gossip Girl were real, she’d be an interest group—influencing everything from behind the scenes.

• Provider Groups (e.g. AMA): Want high prices & low competition.

• Consumer Groups: Push for affordability and access.

• PhRMA (Big Pharma): Defends drug prices and patents.

• AHIP (Insurers): Support market-based solutions.

Think of them as Blair, Chuck, Dan, and Serena—each fighting for control of the narrative.

Goals of Reform:

1. Access: Expand coverage

2. Cost: Lower overall spending

3. Quality: Better outcomes and patient experience

Like trying to have a drama-free Upper East Side brunch. Rare, but possible.

LECTURE 7: The Affordable Care Act (ACA)

The Three-Legged Stool (Gruber Model)

Picture the Gossip Girl universe held up by trust, money, and scandal. Remove one? Chaos.

ACA’s Three Legs:

1. Mandates: Everyone must buy insurance.

2. Marketplace Subsidies: Make it affordable.

3. Insurance Reforms: No discrimination or coverage caps.

Without one leg? System collapses like Serena’s reputation mid-scandal.

Key ACA Expansions:

1. Medicaid Expansion:
   
   

   • Pre-ACA: Only specific groups covered.

   • Post-ACA: Nearly all under 138% FPL eligible.

   • Some states still refused, leaving a coverage gap—like when Jenny’s invited to the ball but can’t afford the dress.

2. Marketplaces:
   
   

   • Online shopping for insurance with subsidies.

   • Premium tax credits (based on income).

   • Cost-sharing reductions for low-income groups.

3. Insurance Reforms:
   
   

   • No more denying coverage for preexisting conditions.

   • No lifetime/annual caps.

   • Essential Health Benefits required.

💬 “Guaranteed issue”? That’s like not being able to kick someone out of your social circle just because they had a bad season.

Politics & the ACA Over Time

Trump Era:

• Attempted repeal (AHCA), but kept popular provisions like pre-existing condition protections.

• Repealed the individual mandate (Tax Cuts and Jobs Act, 2017).

• Trumpcare? More like trying to reinvent the Met Gala theme without a designer.

Biden Era:

• American Rescue Plan: More generous subsidies, expanded access.

• Inflation Reduction Act: Drug cost negotiations, capped insulin costs.

Public Option = Medicare vibes for everyone who wants out of the Upper East Side insurance drama.