Book - Cost Containment Flashcards
Society’s view of health care expenditure value?
Society thinks that the value of health care expenditures lies in purchasing better health for the population. We gotta figure out if investing more resources buys better outcomes
Explain rate curve model of costs and health outcomes for the US.
As input increases, output improves…UNTIL reach certain levels where it plateaus (minimum benefits). US now on flatter portion of the curve
What does this mean for the U.S.?
Need to shift curve left, where there’s more efficient relationship between cost and health outcomes
Limitations of rate curve model? (3)
1) Focuses on population and NOT individual 2) Assumes that it is possible to quantify health at population level 3) Difficult to distinguish health care from SES factors
COST = Price x Quantity…what happens to the curve if we increase price while keeping quantity the same?
Means that there will NOT be improved health outcomes; curve will be flat
PAINLESS cost control strategies? (5)
Control price inflation, eliminate ineffective/inappropriate care that has no benefit, reduce administrative waste, innovation and cost savings, and increase preventative services that cost less than the illness they prevent
Things that affect Q?
Controlling price inflation, eliminate ineffective/inappropriate care, reduce administrative waste
Things that affect P?
Innovation and cost savings (substitute less costly technologies that are equally effective), and increase preventative services that cost less than the illness they prevent
3 mechanisms for controlling costs?
FINANCING, REIMBURSEMENT, and UTILIZATION (QUANTITY) controls
What’s financing controls?
Limit premiums/flow of funds into HI plans…two methods, REGULATORY and COMPETITIVE
Explain REGULATORY method for financing control.
Government can regulate taxes to control public expenditures, or it can regulate premiums
Explain COMPETITIVE method for financing control.
Control financing flow through competitive market….for example, encourage HI plans to compete on basis of price, which should restrain premiums/overall costs
Problems with cost control using HI plans?
1) Treating HI as nontaxable means employees don?t see how expensive premiums can be; makes them less cost-conscious 2) Few insurances companies in a given metropolitan area to actually COMPETE 3) Individuals at lower income levels would get inferior quality of care and health outcomes bc can?t afford high premium
What’s one of the issues with price controls (think C = P X Q)? How to fix?
Problem: Cost-shifting. Providers respond to price controls imposed by one payer by increasing charges to other payer with less restrictive policies on fees. SOLUTION: introduce UNIFORM FEE schedule for physician and hospital payments
5 ways for UTILIZATION controls?
Redefine unit of payment , patient cost-sharing, utilization management, supply limits, supply type
