Exam 1

Question 1

law of demand

Answer 1

The quantity demanded of a good falls when the price of the good rises, other things equal`

Question 2

law of supply

Answer 2

The quantity supplied of a good rises when the price of the good rises, other things equa

Question 3

factors that increase demand

Answer 3

• increase in income
• increase in population
• increase in taste or preference
• increase in price of substitute good
• decrease in price of a complimentary good
• expectations about the future (i.e. expecting price to get higher in the future)

Question 4

factors that increase supply

Answer 4

• decrease in production costs
• decrease in natural disasters
• decrease in government policies (taxes)
• expectations about future (expect prices to go down, expect production costs to go up)

Question 5

When the cost of a product or service falls, what normally happens to the quantity demanded?

Answer 5

the quantity of demand increases

Question 6

When the cost of a product of service falls, demand increases; Does this apply to health care? Why or why not?

Answer 6

No, it doesn’t apply to healthcare because healthcare costs are inelastic, meaning demand doesn’t depend on price rising and falling

Question 7

Briefly describe the purpose and methodology of the RAND Health Insurance Experiment.

Answer 7

Participants were randomly assigned to one of five types of health insurance plans created specifically for the experiment. There were four basic types of fee-for-service plans: One type offered free care; the other three types involved varying levels of cost sharing—25 percent, 50 percent, or 95 percent coinsurance (the percentage of medical charges that the consumer must pay). Th e fi fth type of health insurance plan was a nonprofi t, HMO-style group cooperative. Those assigned to the HMO received their care free of charge. ; this experiment was conducted to determine whether cost-sharing would effect the amount of use of health care services and the quality of this care

Question 8

Explain the results of the RAND HIE. How could the results be used to argue for cost sharing in the health care system? How could they be used to argue against it?

Answer 8

• The results showed that cost sharing reduced the use of nearly all health services
• the overall level of quality for process measures was surprisingly low for all participants: criteria for quality were met only 62 percent of the time.
• In general, the reduction in services induced by cost sharing had no adverse effect on participants’ health

Question 9

Explain the purpose and methodology of the Oregon Medicaid study.

Answer 9

Use of a lottery to study the impact of medicaid expansion
Control Group: continue w/o medicaid
treatment group: Eligible to apply for Oregon Health Plan Standard (Medicaid), which provides comprehensive medical benefits at a low monthly premium, including prescription drugs, physician services, and major hospital benefits, with no patient cost-sharing.

Question 10

Explain the results of the Oregon Medicaid study. How could the results be used to argue for expanding access to Medicaid? How could they be used to argue against it?

Answer 10

• Medicaid increased the use of health-care services.
• Medicaid increased the use of recommended preventive-care services
• had no statistically significant effect on physical health measures

Question 11

Do people overuse health care when it’s provided for free? Explain

Answer 11

they don’t overuse it, but tend to actually use preventative care to maintain a healthy lifestyle

Question 12

When and why did health insurance begin in the U.S.?

Answer 12

Alternative to out of pocket payments. Blue Cross Blue Shield officially made in 1929 by Baylor. Noticed Americans spent more on cosmetics than health care. Small expenditures that add up, lack of financial stability.

Question 13

How did insurance evolve from the late 1800s/early 1900s to the present day?

Answer 13

1890s- large manufacturers had on site doctors/infirmaries to treat injury. Unions began sickness protection programs to help injured and ill employees.
1910- first multi employee health insurance policy by montgomery ward. Paid benefits up to 28.85 to ill/insured employees, not bills directly.
1920- Blue cross blue shield- 50 cents per month from patient for Baylor to cover visits
1930s- great depression saw many beds empty and financial instability
WW2- stabilization act (benefits), IRS code (employer health care tax free), internal revenue act (additional tax incentives for offering health benefits to exployees)
1940s- 9% were insured 1954- 63% insured
Today- tax exclusion is $323 billion in 2016

Question 14

How did employer-sponsored health insurance become entrenched?

Answer 14

Healthcare costs increased dramatically, costs increasing 3-4x faster than inflation

Question 15

What does it mean to say that employer-sponsored health insurance has tax-preferred status? Very briefly, what are the pros and cons of this approach?

Answer 15

Tax exclusion to health care under employers
Cadillac Approach- Would tax employers that exceed threshold for insurance coverage. Limiting would limit or remove tax exclusion on employee health benefits.
Pro to cadillac- increase employee wages, less unequal benefits compared to other labors, lack of tax liability incentives to companies that overspend- increases prices for services
Cons to cadillac- cost of reducing tax preference would hurt working class, may increase wages but also increase out of pocket costs, cost employee $520 yearly.

Question 16

What is the history of Medicare & Medicaid? How and why was it created?

Answer 16

1912: Teddy Roosevelt spreads idea of national health insurance, fails to implement, Truman fails to implement national in 1945, 1962 Kennedy also fails, 1965 Johnson was able to make a breakthrough.
1960s signing of HR by Johnson, birth to medicaid and medicare. 1970s, Nixon expanded for people under 65 with disabilities and end stage renal (medicare). 1980s Omnibus Reconciliation included home health services and medigap, medicare included hospice.
1990s- medicaid now required to pay for premiums. Early 2000s those younger than 65 with ALS eligible for immediate enrollment for medicare. 2010 Obama signed ACA and patient protection. 2015 medicare and CHIP reauthorization, allowed for proper care instead of paying physicians based on quantity.

Question 17

Who is served by Medicare?

Answer 17

65+, young people with disabilities, individuals with end-stage renal disease

Question 18

What are Parts A, B, C, and D of Medicare? What does each do?

Answer 18

A: Hospital insurance- covers inpatients, hospital stays, skilled nursing, home health, hospice. No premiums.
B: Medical insurance- covers outpatient hospital care, preventative services, mental health, medical services and supplies. Monthly premium of $135.50 and deductible of $185
C: Medicare advantage- includes a,b,and d. Covers vision, hearing, dental, and health and wellness programs. Premium of $30 plus bb premium
D. prescription insurance- certain prescription drugs depending on plan. Premium of $13-$77.

Question 19

Describe the fee-for-service payment model.

Answer 19

Current system, providers paid for each service they provide, paid regardless of clinical outcome, ineffective for chronic conditions, coordinate care, ec. Effective for one time treatments w/o follow up- original health care

Question 20

Describe the capitation payment model

Answer 20

Capitation- value based payment- incentivize low cost, high quality. Providers paid set amount per enrollee per given time period. Risk adjusted- paid more for higher risk patients. Population based, effective for cost reduction, long term care coordination, preventive care.

Question 21

How are physicians and clinics incentivized to treat (or not treat) patients under each model?

Answer 21

Fee for service- focus on service value, more tests/procedures get more money. No focus on money, no long term coordination, no focus on preventative care, need sick patients to treat
Capitation- profit by enrolling as many patients as possible, incentivizes doctors to have as many patients as possible. Set amount paid per month, fewer treatments less bookkeeping. No excess treatment, health care rationed to decrease costs/increase profits.

Question 22

What are the pros and cons of each model?

Answer 22

Fee for service pro- patients receive access to care they need, decide what treatment, choice in doctors/hospitals, not responsible for every healthcare cost problem people face, two separate policies to choose from. Encourages max number of patient visits, fewer barriers in place, less limitations.
Con- denial of care not insured, more expensive, more paperwork, pay costs upfront, no preventative coverage, don’t know what things cost, less face-to-face, no accountability to provider, doesn’t incentivize providers to pay attention to costly patients
Capitation pro- HMOs and IPAs benefit, less bookkeeping, discourages PCP from providing more care than necessary, lower out of pocket expenses
Con- incentivizes doctors to enroll as many patients, less time to see patients, excessive cost for patients in need of enhanced care, increase profit may have medical practice alter how it would otherwise treat a patient

Question 23

Who are the uninsured, demographically speaking?

Answer 23

10.2% nonelderly, mostly working class, 17.7% TX residents, white and hipsanic, 12% adults 5% children

Question 24

What social and economic factors contribute to being uninsured?

Answer 24

Overwhelming cause is cost. employment, income, and dependency are other main causes. 72% live below 400% of poverty level. Young-middle aged adults. Less uninsured with kids in the house, Native has more 22%.

Question 25

What are some problems faced by the uninsured population?

Answer 25

Less likely to have typical source or outpatient services. Did not get prescription, twice as likely to have issues paying. Risk of medical debt. Uninsured children have less access to care, higher risk for preventable hospitalizations and missed diagnoses.

Question 26

What is the state of uninsurance in Texas compared to the rest of the country?

Answer 26

Most uninsured in US. 17.5% in 2018. 8.9% national average of uninsured. 1 of 14 states that hasn’t expanded on medicaid. Medicaid in TX expansion was invalidated, would’ve given coverage to 1.1 million low income texans. Medicaid use by Texans dropped from 17.9% to 10.7% from 2017-2018.

Question 27

How did things change for the uninsured population after the Affordable Care Act was passed? What changed? What remained the same?

Answer 27

Led to significant drop in uninsured below 200% FPL, improved enrollment across whole population, strong impact on minority group, helped adults and children, 5.9% base drop with or without expansion
Only about half of uninsured qualify for federal assistance. Covered half adults in poverty/children and adults below 400% poverty-tax credits. Uncovered half-ineligibilty. Income/ESI, immigration, lack of medicaid expansion.

Question 28

Explain the concept of moral hazard as it relates to health insurance and/or health care.

Answer 28

Moral hazard is an issue in which insured individuals may become less cautious about their unhealthy or risky behaviors, leading to more health issues and requiring more healthcare.
Although health insurance is intended to keep us safer, it can often backfire and have the paradoxical effect of producing risky and wasteful behavior.
People who have health insurance use more healthcare services simply because it is readily available to them.

Question 29

Why do some argue that moral hazard is a major problem? Why do some argue that it is a myth?

Answer 29

Major problem because:
Increased healthcare due to moral hazard is only intended to compensate for the increased risky and unhealthy behaviors that people engage in.
Moral hazard causes health insurance companies to lose money.
A myth because:
Some argue that moral hazard is overblown- Do well-insured, rich people go check into the hospital just because they can?”
Health insurance is not consumed the same way that other consumer goods/services are consumed.
Many of the things we do that are beneficial to our health are because we have insurance. Ex.) getting moles checked, preventative care, regular screenings, etc.)

Question 30

Explain adverse selection as it relates to health insurance.

Answer 30

People with more health problems likely to obtain insurance, people with fewer problems more likely to abstain from insurance, Insurance companies economically inefficient and lose money when more claims to be funded than originally anticipated. Issue when health insurance companies possess a risk pool with more customers with unhealthy lifestyles

Question 31

How was ACA legislation intended to address the problem of adverse selection?

Answer 31

Designed to resolve adverse selection, families/individuals would pay a penalty if they opted out of insurance more than 3 months, health insurance companies would received more low-risk customers to add to their risk pools. Cost was too low, weakly enforced, not popular with public

Question 32

How is physician time with patients linked to patient satisfaction?

Answer 32

No direct findings, studies show that patients are left wishing they had more time. Physiciann participation in decisions for patients give them incentive to stay with their physicians. Physicians are 30% les likely to have their patients leave, physicians with less than 70 visits per week have a decision making style

Question 33

How is physician time with patients linked to physician job satisfaction?

Answer 33

Primary satisfaction for physicians is the time they spend with their patients. Time pressure also hurts physicians. Risk of malpractice claims

Question 34

How are medical scribes being used to solve the problem of physicians spending too much time on paperwork?

Answer 34

Scribes follow physician around and enter data, transcribe data into computers. They do it instead of doctors, less time.

Question 35

What are the pros and cons of using medical scribes?

Answer 35

Pros= doctors have to spend more time with computers than patients with new mandates. More time with patients
Cons- background of scribes not standardized. Accuracy not studied. Could be violation of patient privacy. Could feel uncomfy

Question 36

Has prescription drug use increased or decreased over the past few decades? Why?

Answer 36

Risen, new illnesses and mental health acceptance, taking drugs prematurely, drugs that aren’t needed for life saving or improvement reasons (weigh less pills), lowering bar for what’s considered normal

Question 37

What is a Pharmacy Benefit Manager (PBM)?

Answer 37

Companies that manage prescription drug benefits on behalf of insurer=nce, middlemen between manufactures and insurers that negotiate and discounts for health plans,have important behind scenes impact on determining drug costs and how much pharmacies get paid

Question 38

Approximately what percent of health care spending goes toward prescription drugs?

Answer 38

17% of healthcare, close to $370 billion per year

Question 39

How much does it cost to give birth in the U.S.? How much does it cost in other countries?

Answer 39

$30,000 for vaginal, $50,000 for c section, in lindo wing its $8,900, same delivery in us is $10,808. Free or cheap in other cares, $4,000 tops for swiss, french, spain its $1,950. Stilll worse care. More infant mortality

Question 40

What explains the difference in cost to give birth?

Answer 40

Billed per item (per service), charges change per hospital. Prenatal testing. Insurance paying more. Charges marked up 3 times actual cost, prices to alarm you and insurance negotiates. Don’t know how much it costs

Question 41

How does a midwife-assisted birth differ from a physician-assisted birth?

Answer 41

At birth centers women treated as low risk, no epidurals, low tech management. Hospitals treated as high risk, epidurals administered if needed or requested. Saves $30 million

Question 42

What is the benefit of primary care to individuals and public health?

Answer 42

preventive clinical practices, screening and early preventive intervention, early diagnosis and intervention, quality driven and evidence-based care

Question 43

What factors are contributing to the shortage of primary care?

Answer 43

ifestyle concerns, such as schedule and income, as well as the lack of prestige associated with this field seem to be among the most prevalent reasons cited for the diminishing interest. Less money for pcp

Question 44

What are some potential solutions for addressing the shortage?

Answer 44

Greater emphasis on primary care in med school, residency positions expanded,

Question 45

How much do we spend on end of life health care costs as a fraction of total health care costs?

Answer 45

5% of all medicare spending occurs during patient’s last year of life. 5% of population occurs for 50% of medical costs in a given year.

Question 46

Why do some argue that this amount of spending is a problem?

Answer 46

Expensive care is poor quality, most prefer to die at home but ⅕ die in hospitals. Not excellent care. Excessive efforts make things worse.

Question 47

Why do some argue that this amount of spending is not a problem?

Answer 47

Death unpredictable, don’t know who will die soon. Less than 5% of medicare applied to high risk percentile. Little money spent on those who will die soon, stats are not as they see,

Question 48

What is Medicare’s role in end of life care and cost?

Answer 48

Services medicare covers also apply to end of life care like home health, doctor visits, hospice (only if will die in next 6 months and not seeking curative care). 80% of people who died in US in 2014 were on medicare.