10.) Technology and Progress Flashcards
Why has healthcare expenditure risen?
Rising prices: increased resource costs, less competitive markets, monopolistic prices, expensive new technology.
Rising quantity: ageing population, richer population, more insurance coverage, increased quality of healthcare, new types of healthcare coming into existence.
What is medical inflation and its effect?
A rise in the price level for medical goods and services. Rising prices reduce consumer welfare because consumers cannot achieve as much utility with the same income as they could before.
Why is medical inflation difficult to measure?
The bundle of goods is constantly changing, the quality of the service is likely to be different year on year. Also it cannot account for new technology which will give consumers increased utility.
What are the findings of the Dartmouth Atlas?
They are a project that tracks Medicare enrolees across different regions. They found the care patients receive varies greatly depending on where the patient lives. More expensive treatment does not correlate with better outcomes.
Why does healthcare costs differ in different regions?
Differing input costs, different costs of living, differing hospital amenities, differing medical malpractice environments, some practice more defensive medicine, differing health habits, differing levels of illness severity.
What is supply-sensitive care?
Health care services whose use depends greatly on the supply or availability of that service. This would lead to the assumption that hospitals with many resources would have large expenditures.
What situations are not susceptible to supply-sensitive care?
Situations where treatment is unambiguous, doctors all agree on the same course of action and there is no physician discretion required.
How does supply-sensitive demand relate to moral hazard?
Physicians cause moral hazard by recommending care that is only marginally useful. Can come from more hospital resources and new expensive technologies. Average returns to new technologies are high, the marginal value of new technology is low.
