Lecture 1 - Introduction Flashcards
What are the global trends in health? There are 6.
- Ageing populations
- Growing health inequalities
- Increases in NCDs
- Therapeutic advancements
- Digitalisation
- Global threats to health (pandemics, antimicrobial resistance, climate change, conflict)
What are the WHO (2000) 4 health system functions?
- Generating resources: human and material (medicines, training doctors, buildings)
- Financing: raise, allocate and disburse
- Providing services
- Stewardship (strategy and regulation)
What is the WHO definition of a health system?
The organisation of people, institutions, and resources that deliver health care services to meet the health needs of the target population
What are the WHO health system objectives/what are the final and instrumental goals?
Final goals:
1. Improving health
2. Financial protection
3. Fair financing (contributions based on ability to pay)
4. Responsiveness to population expectations
Instrumental goals:
1. Affordability
2. Accessibility
3. Sustainability
4. Equitability
5. Efficiency
6. Safety
7. Quality
If you achieve the final goals the instrumental goals are automatically being achieved.
What are the functions and objectives of health insurance? (6)
- Uncertainty about whether we become ill, when we will become ill, what type of illness we will have, how much it will cost
- Individuals regardless of income, are ill-positioned to finance their own care
- Health and financial protection
- Enables pooling of financial risks across people and over time
- Contributions are a form of pre-payment
- Third-party payers are responsible for contracting and re-contracting rather than patient (they hold the provider accountable for the services they are providing)
Why does market failure happen in healthcare? (4)
- Information asymmetry
- Moral hazard
- Supplier-induced demand
- Adverse selection
How can information asymmetry lead to market failures?
- Adverse Selection:
- Patients with pre-existing conditions or higher health risks are more likely to seek insurance, driving up premiums for everyone.
Insurance companies try to mitigate this by:
- Risk rating: Charging higher premiums to those deemed higher risk.
- Denying coverage: Excluding pre-existing conditions or high-cost treatments.
This can lead to healthy individuals dropping insurance, further increasing premiums for those who remain. - Moral Hazard:
- Patients with insurance may overconsume healthcare because they don’t bear the full cost.
- This can lead to unnecessary tests, procedures, or prescriptions, increasing overall healthcare costs. - Limited Patient Choice:
- Patients often rely heavily on their healthcare provider’s recommendations, which can be influenced by financial incentives or personal biases.
This can lead to:
- Over-treatment: Unnecessary procedures or medications prescribed.
- Under-treatment: Delaying or avoiding necessary care. - Difficulty Comparing Quality:
- Patients often lack the knowledge or tools to effectively compare the quality of different providers, treatments, or hospitals.
This can lead to:
- Choosing less qualified or effective providers.
- Difficulty accessing the best available care.
What are ex-ante and ex-post moral hazard?
- Ex-ante: patients more likely to put their own health at risk
- Ex-post: patients more likely to over-use health services
Draw a graph to explain the impact of full insurance, co-insurance and deductibles on healthcare quantity consumed.
See page 3 of notes
What is the solution to moral hazard?
User charges
What is adverse selection?
- Higher-risk or sick individuals who have greater health care needs purchase health insurance, while healthy people delay or abstain
- Can lead to atypical distribution of health and unhealthy people signing up for health insurance
- Death spiral: premiums increase, healthy people unenroll, since higher proportion of insured are high risk premiums increase again, more healthy people drop out, premiums increase again
What is the death spiral?
Death spiral: premiums increase, healthy people unenroll, since higher proportion of insured are high risk premiums increase again, more healthy people drop out, premiums increase again
What are the 2 solutions to adverse selection?
- Compulsory coverage
- Public healthcare system/automatic coverage
What is the iceberg phenomenon?
Health systems need to respond to needs outside of supply and demand. Demand is not the same as need and need is so hard to define.
See page 4 of notes for graph.
Why can we not have a perfect insurance market (which is why we need regulation)?
- Adverse selection
- Moral hazard
- Supplier-induced demand
- The probability of ill health would need to be known (but in reality we can’t know people’s lifetime risk), less than 1 (but in reality everyone gets sick), and people’s health should not affect one another (not true in real life)
