Chapter 11 - State healtcare provision

Question 1

Objectives of state health provision

Answer 1

The state needs to balance the following objectives:

QCS

• Quality of healthcare- Healthcare systems need to be effective, efficient and allow medical decisions to be made by medical professional and the patient
• Cost and funding - Cost of healthcare should not be a barrier to access; adequate funding needs to be set aside for healthcare, financing of healthcare systems should be equitable across all segments of population
• Social acceptability - Healthcare should be responsive to the needs and/or wants of the population. There should be universal access to healthcare

Question 2

What do the objectives of the provision of State healthcare depend on

Answer 2

PECS Q

• Political stance
• Economy
• Characteristics of the population, eg its wealth and size
• State of the country’s infrastructure
• Quantity and quality of medical services and expertise available

etc

Question 3

What are the overall objectives of a governments provision of healthcare

Answer 3

Protect Some Bra Family

• Protecting the nation’s health
• Subsidising the poor
• Balancing the budget
• Following social culture and/or political promises

Question 4

What all does protecting the nation’s health entail

Answer 4

ABC

• AVAILABILITY of food, drinking water, nutrition and hygiene, basic medical services and education
• BASIC medical services and education about health living
• a COMPREHENSIVE medical services system encompassing modern and efficient medical facilities

Question 5

What are the possible models of the co-existence of state and private healthcare provision

Answer 5

• Insurance can be an optional alternative - Here the state promises a comprehensive system of medical services, but insurance can provide a higher quality of services with more individual choice of who treats the patient, where it takes place, and possible significant reduction in waiting time
• Insurance can be an optional complement - Here the state provides a limited range of medical services and leaves it to the individual to fund the balance
• Insurance can be a compulsory alternative - Here the state provides everything for the population up to a certain salary / wealth level. Healthcare insurance is obligatory for all those above this threshold
• Insurance can be a compulsory complement. Here the state provides certain healthcare procedures “free” at the point of delivery. Insurance is mandatory for all other procedures

Question 6

What are the challenges faced by the state in designing, managing and financing a healthcare system

Answer 6

CCT BAD

• CHALLENGE of Sisyphus - The life expectancy gains in older age groups, and focus on innovation, leads to constant budget pressure
• COMPETITION or regulation in healthcare - Healthcare market failure leads to the need for regulation in the healthcare market. A balance needs to be struck between the level of competition and the level of regulation
• Technological challenge - Innovation in medical treatment and delivery of healthcare is increasing demand for healthcare. Determining how new technology is accessed, and therefore who gains access, is a key feature of the healthcare system
• BURDEN of disease - The general health status of the population may increase the costs of providing healthcare
• ACCESS to skilled medical professionals and infrastructure - The cost and duration of medical training is extensive, and medical professionals may leave for other countries after completing their training
• DEMOGRAPHIC challenge - The ageing population, which has increased healthcare requirements, is resulting in increased costs of healthcare systems internationally

Question 7

What does cost analysis entail within the healthcare system

Answer 7

Cost analysis assesses the costs of various healthcare systems providing different services, types and levels of benefits to various segments of the population.

Cost analysis are useful in estimating the required budget as well as assessing whether a particular healthcare system is affordable or sustainable over time. It can provide a breakdown of the current and future costs, changes in costs as the result of changes in the number of lives insured

Question 8

Means testing

Answer 8

Means-tested benefits are provided either to people who earn less than a certain amount, or those who have accumulated less than a certain level of wealth.

Question 9

Methods of State healthcare support

Answer 9

LAMP R

• Lump sum cash payment
• Amount of benefit
• Means testing
• Provision of treatments/services
• Regular income

Question 10

How is the amount of benefit provided by the state designed

Answer 10

• A salary-related benefit to ‘reward’ those who have contributed more through taxation and to reflect their likely higher financial responsibilities
• A flat benefit, to provide an incentive to return to work to minimise the cost on the State and to encourage self-provision through insurance

Question 11

Pay-as-you-go funding for healthcare

Answer 11

The current working population effectively pays the total costs for those currently needing benefits. If there is a shortfall in any year, then the state will fund the difference from general tax revenues.

Question 12

How can the state determine whether they need to fund PAYG systems

Answer 12

• Establish the degree of State subsidy
  – It must work out how much the state is going to pay towards benefits, and how much individual recipients should be expected to pay. This will determine the contribution rates paid by individuals in the working population
• Estimate coming year’s outgo
  – It will do this by projecting likely benefits and expense costs based on past experience
• Estimate coming year’s tax revenue
  – It will help the state work out how much it needs in order to pay projected benefits
• Adjust this so as to incorporate healthcare outgo
  – The structure of the general taxation is adjusted so that the benefit budget balances, ie the general taxation revenue equals the difference between the contributions from the individuals and the expected benefit outgo

Question 13

Forward funding for healthcare

Answer 13

Anticipate future benefit costs and build up a provision for these costs before they arise

Question 14

What are the 2 types of funding healthcare systems from the perspective of the state

Answer 14

• PAYG
• Forward funding

Question 15

Incentives for self-provision

Answer 15

GET C

• The state can offer a reduction in GENERAL taxation where appropriate insurance is in place
• The state can EXCLUDE some or all of the population from certain aspects of the state benefit system
• The state can offer TAX relief on premiums for appropriate insurance
• The state can reduce the COST of private purchase of healthcare services by direct subsidy to the providers

Question 16

Other than providing healthcare facilities like doctors and hospitals, how else can the state protect the nations health

Answer 16

• Educating the public about general health and having a healthy lifestyle

Question 17

What is one of the disadvantages of a cost analysis

Answer 17

• It does not take the value of the healthcare systems in terms of improved health of those insured into account
• This could result in a focus on cost minimisation without considering the quality and effectiveness of the healthcare system

Question 18

What are the types of costs that should be considered in performing a cost analysis to allocate healthcare system resources

Answer 18

The cost analysis should consider all the resources needed for the healthcare system in terms of the benefits provided, including:
* Initial and recurrent costs
* Fixed and variable costs
* Direct and indirect costs
* Estimates of future costs and how future costs are expected to change as the healthcare system and population develops

Question 19

What does the Cost-effective analysis assess, and what is the equation

Answer 19

• It assesses the cost of the healthcare system relative to the non-monetary benefits of the healthcare system

CEA = Costs of healthcare system in monetary units / Measure of effectiveness (measured in a scale)

Question 20

What are the weaknesses inherent to the Cost-effective analysis

Answer 20

AIR U

• The need for ALL healthcare systems accessed to have the same measure of effectiveness
• An INABILITY to account for multi-dimensional effects, e.g. reduced healthcare expenditure and increase in lifespan
• The fact that CEA does not REFLECT the utility of the healthcare service to the population covered
• The possibility that CEA will UNDER-estimate the value of various healthcare interventions

Question 21

What does the Cost-utility analysis assess and what is its equation

Answer 21

• It assesses the cost of a healthcare system relative to changes in quality of life, as well as changes in mortality

CUA = Costs in monetary units / Benefits in QALYs

Question 22

What does Cost-benefit analysis put a monetary value on and what is the equation

Answer 22

It puts a monetary value on the cost of the healthcare system and its outcomes and therefore allows for a direct comparison of the cost and outcome

CBA = Cost in monetary units / Benefits in monetary units

for a project to be recommended CBA <1

Question 23

What does willingness to pay measure and how can it be measured

Answer 23

• Can be used to measure the value an individual places on a health system, medical scheme or collection of health benefits provided by a medical scheme
• Direct method (contingent valuation CV) – conducted through questionnaires or interviews and determining individuals’ WTP to obtain that service or willingness to accept its unavailability
• Interviews are hypothetical in nature and may be influenced by emotional responses
• Responses may not reflect actual behaviour when individuals actually have to pay for it
• Indirect method – determine WTP by observing behaviour and identifying how much the person is willing to pay for medical treatment
• However, there are many confounding factors associated with the behaviour of an individual, which is a weakness of this approach

Question 24

What are the advantages of means-tested state health benefits

Answer 24

• May be a cost-effective way for the State to target benefits to those most in need – resources directed to the less well-off to ensure that everyone achieves a certain minimum standard of living when in ill-health
• May be redistributive if taxes are raised from those with more wealth/ income and means-tested benefits are then paid to those with little wealth/ income
• Those who fail the means-test may be encouraged to return to work

Question 25

What are the disadvantages of means-tested state health benefits

Answer 25

PERSUADE

• May create a POVERTY trap whereby increases in a person’s income (or assets) merely reduces the value of the State benefits
• May ENCOURAGE people to squander existing wealth so they have more chance of satisfying the means-test
• Those who RECEIVE benefits may be discouraged from returning to work
• Receipt of benefit has a “STIGMA” that identifies an individual as “poor”, and hence may discourage individuals from claiming the benefit
• May be perceived as UNFAIR to those who provide for themselves
• Means-tested benefits are not taken up by ALL who are entitled to or need them
• It is perceived by some as “DEGRADING”, i.e. State benefits should be a universal right rather than a payment to the poor
• People may be ENCOURAGED to not provide for themselves

Question 26

Other ways in which the state can enhance the nation’s health

Answer 26

MECCA PPG

• Making overseas operations a viable option
• Ensuring that health insurance is available, affordable and appropriate
• Clinics and regular check-ups
• Campaigns warning of the dangers of smoking, alcohol
• Accident prevention
• Provision of screening facilities
• Providing advice, e.g. on diet
• Greater investment in sports and exercise initiatives

Question 27

Advantages and disadvantages of the state taking a market-focused environment in the provision of healthcare

Answer 27

ADVANTAGES

CENT PPL

• CHEAPER for the State due to saved care costs and simpler administration
• ENCOURAGES competition hence innovation
• There are NO cross-subsidies between rich and poor, healthy and unhealthy.
• There can be lower TAXES – or saved costs can be spent elsewhere
• It encourages the POPULATION to take better care of itself (as people know they will have to pay if they become ill)

DISADVANTAGES
- Not POPULAR with unhealthy and/ or poor people and generally against public spirit
- LOWER security of benefits and greater uncertainty for the public

Question 28

Cost of healthcare is likely to rise faster than the cost of consumer goods due to

Answer 28

GIM

• a GROWING expectation of delivery from the public
• IMPROVEMENTS in technology
• MORTALITY improvements, leading to increased morbidity and increased health and care costs for the elderly