Health care system Flashcards
Economically, how is health seen?
It is seen as a uncertain good that has economic consequences for individuals
What are the economic consequences that health bring to individuals?
Lose the ability to work + health care expenditure
What is the unitary premium?
The amount I have to pay for each euro of reimbursement 0 < p < 1
What is the main cause of the market failure in insurance markets?
Asymmetric information
What does asymmetric information cause?
- Adverse selection –> the company isn’t able to distinguish between H and L individuals ex-ante
- Moral hazard –> company isn’t able to observe individuals’ behavior after the contract signing. They might engage in reckless behavior or increase their consume of health care goods (third payer)
What happens when the insurance company offers different contracts?
Individuals will want to purchase the cheapest plan to L people and the company will incur in a loss.
What happens when the company offers only one contract?
Only H individuals will buy it because the P is too expensive for L people
What happens when the company offers two contracts with an average P for all?
Only H individuals will buy it because the P is too expensive for L people, the company will raise P, only H will buy…. until only one type of individuals will be on the market facing very high prices, which not everyone can afford = market failure
What is the best solution for insurance companies?
To offer two contracts that induce customers to choose the best one, that is, full coverage for H people and partial coverage for L people.
What are the limits for co-participation in health expenditure?
- When health care demand is rigid (dialysis), recurrent
- A high coverage level must be guaranteed.
What are the main issues that arise as a consequence of the private health system?
- Over-expansion of the health-care (MH)
- No equity and partial coverage (AS)
- Typically, the health insurance market is only partially competitive (oligopoly)
How is Asymmetric information different in public and private health systems?
- Public –> it is on the demand side, individuals may not know how to correctly evaluate the quality of the service
- Private –> it is on the supply side, companies cannot differentiate among H and L individuals
What are the pros of public health care system?
- Equity on health care access
- No cream skimming –> private companies may not provide insurance for very H individuals. In the public system everyone is covered
- Compulsory coverage –> no adverse selection problem, everyone is covered and everyone contributes
- Easier to keep health expenditure under control –> there is a fixed budget
What are the limitations of the public health system?
- Inefficiency in production –> no competition, waste of resources and corruption
- Long waiting list
- Centralized decisional system –> less flexibility
- Inefficient incentives to efficient choices
What is a solution to the limitations of the public health system and why?
Introduction of a quasi-market system:
- Since institutions will receive a reimbursement per patient, they have an incentive to attract patients
- Competition among hospitals because authorities will purchase services from hospitals that guarantee the highest efficiency
What is the difference between medicare and medicaid?
Medicare –> no income requirement 65 + yrs
Medicaid –> low income and disabled people
In the US, who are the uninsured people?
Medium-low income individuals, young, self-employed or working at small-medium companies that don’t offer coverage
How is the insurance market in the US?
Not competitive at all, most states have a 65% market share for the biggest company
What are the 5 phases of uninsured individuals graph in the US?
1-17 –> low uninsurance rate, parents’ coverage also covers them
18-28 –> young adults either studying or working a job that doesn’t allow economically to purchase an insurance
29-37 –> individuals working for smaller companies that don’t offer coverage and cannot afford on their own
28-65 –> working people at jobs that pay them coverage
65 + –> medicare adopters
What was the obligations opposed by the Obama Reform on individuals?
- Compulsory insurance
- Subsidies to who cannot afford paying insurance premium
- Fiscal incentives –> tax deductions if you pay for the contract
- Less instrigent requirements for medicaid
What was the obligations opposed by the Obama Reform on employers?
- Obligation to provide insurance if N >= 50
- Subsidies for companies with N< 50
What was the obligations opposed by the Obama Reform on insurance companies?
- Not possible to refuse H individuals –> avoid cream-skimming
- Insurance premia cannot overcome threshold of 9.5% of the subscriber’s income
- Affordable insurance exchanges (inform citizens) –> decrease AS
What happened in 1992 with the italian health system?
Reform, introducing quasi-market features
What are the 4 levels on the Italian health system?
- Central government
- Regions
- ASL
- Health care providers
What are the duties of the central italian government on the health provision?
- Controls the distribution of revenue
- Define the national statutory benefits package
- General guidelines for prevention, diagnosis and therapies
- Coordinates and monitors regions
What are the duties of the italian regions on health provision?
- Autonomy with macro structure of their health systems
- Organizes and delivers services
- Ensure benefit package
What are the duties of the ASL on health provision?
- Are managed by a general manager appointed by the governor
- Responsible for territorial planning
- Purchase and deliver primary care
- Funded through a fixed per-patient reimbursement
What are the duties of the italian health providers on health provision?
- Public hospitals are either managed by ASL or operate as semi-independent public enterprises
- Hospitals funded through perspective payments
- General practitioners are paid a fixed amount/patient (max 1500)
- Salary is determined by the State, it varies with age and specialization
What is perspective payments?
Patient goes to the family doctor who provides them with a diagnosis and are directed to a diagnosis related group (DRG) that have an allocated resource. This way it is possible to have an estimate of the expenditures ex-ante.
If there is a wrong diagnosis, then there will be an expenditure problem
