Week 15

Question 1

Describe the health policy trilemma

Answer 1

Healthy, Wealthy, Equity. (Any attempt to move closer to one of these three goals necessarily also involves a tradeoff that moves the nation further away from another goal).

Question 2

Characterize the Rothschild-Stiglitz model. What are some inherent components of the model?

Answer 2

The RS model is based on only private insurance companies.

It predicts that only frail companies are insured fully and much of the population is underinsured.

Minimizes government intervention but maximizes adverse selection.

Question 3

Characterize Universal public insurance. What would be the main consequences of this model?

Answer 3

The government provides insurance to all citizens, and finances this process through taxes - good, but moral hazard is left unchecked. Higher taxes lead to distortion

Question 4

Characterize compulsory insurance

Answer 4

A mandate! But this won’t be free for governments and does not absolve them of market regulation - must be carefully defined or could be highly ineffective

Question 5

Characterize Employer-sponsored insurance

Answer 5

Employers are either offered or encouraged to offer private insurance contracts - job specific human capital encourages people to maintain their insurance and the process combats adverse selection. Major drawbacks include potential labor market inefficiencies, and the policy is not appropriate for people who are retired or disabled.

Question 6

Characterize means-tested insurance

Answer 6

Subsidizes health care for the poor, cost of expanding public health insurance in other ways: higher tax burdens and higher moral hazard.

Question 7

What are the 4 ways that moral hazard can be controlled?

Answer 7

Cost Effective Analysis, Queuing/Gatekeeping, Cost Sharing, Prospective Payments

Question 8

What does CEA entail as a method of reducing moral hazard? What are the benefits and drawbacks?

Answer 8

• Entails gathering information about treatment options for cost effectiveness, which guides the inclusion and removal of certain treatments
• less expensive, but less coverage
  “this strategy obviates gut-wrenching decisions about treating sick patients, but it also allows moral hazard to flourish”

Question 9

What does cost-sharing entail as a method of reducing moral hazard? What are the benefits and drawbacks?

Answer 9

Cost sharing includes deductibles, co-insurance, and copayments. Less politically controversial, but also tends to be less equitable

Question 10

What does gatekeeping entail as a mechanism to control moral hazard? What are the benefits and drawbacks?

Answer 10

Gate-keeping involves a tiered system of doctors that patients visit in a particular order - frivolous appointments are avoided, limited resources go to people who really need the care. Queues represent a new way people are able to “pay” for care. Considered more equitable, but also a source of considerable political backlash.

Question 11

What does prospective payments entail as a mechanism to control moral hazard? What are the benefits and drawbacks?

Answer 11

Prospective payments shift the system such that payments are made before, not after, services are rendered. This reduces cost, but has turned numerous doctor-patient relationships adversarial, and has been linked to an increase in mortality.

Question 12

Before getting into model types, what are the available options for how healthcare may be regulated?

Answer 12

As a public provision, through private hospital markets, and through government-set prices

Question 13

Characterize the public provision of healthcare model. What are the benefits and drawbacks?

Answer 13

Under the public provision of healthcare, hospitals are government run, and financed by the government. (+) Can reduce costs and oligopoly marketing, etc. (-) can be less efficient and are often associated with a lower quality of care.

Question 14

Characterize the private provision of healthcare model. What are the benefits and drawbacks?

Answer 14

Under the private provision, hospitals can compete and be efficient (+) higher quality (-) can be overruled by monopoly power, can lead to a medical arms race, and increase health care costs, some individuals will not have access to care.

Question 15

Characterize government-set prices as a healthcare model. What are the benefits and drawbacks?

Answer 15

Governments aim to prevent private providers from exercising market power - (+) keeping healthcare affordable, (-) could lead to perverse incentives, treatments below marginal cost

Question 16

What countries have the Beveridge Model of healthcare

Answer 16

UK, Canada, Scandinavia, Australia, NZ

Question 17

What does the Beveridge Model entail?

Answer 17

The Beveridge model is nationalized healthcare. It involves single-payer insurance, such that all citizens receive coverage under the government, doctors are employees of the government, and there is an emphasis on equity

Question 18

Compare the proportion of GDP spent on healthcare in Canada vs. the United States

Answer 18

Canada employs price controls, with hospitals operating under a fixed budget. The U.S. spends about 18% of GDP on healthcare while in Canada they only spend about 10%.

Question 19

Describe the global budget system under medicare as it’s used in Canada and Maryland

Answer 19

Canada had a system similar to the Medicare DRG system, Maryland introduced a global budget system similar to the Canadian system. Distinction is that in Canada, their medicare system is the only payer

Question 20

What countries have the Bismarck model of healthcare?

Answer 20

Germany, Japan, Switzerland, Netherlands, France, Israel

Question 21

What does the Bismarck model entail?

Answer 21

The Bismarck model is essentially a system of social health insurance. It involves compulsory private insurance, community rating is financed through taxes and health care is private but prices are set. the model balances equity and liberty.

Question 22

Compare and contrast the Beveridge and Bismark systems of healthcare

Answer 22

The beveridge system emphasizes equity while the bismarck system emphasizes consumer choice. Generally, the latter spends more on healthcare. But these models appear to be converging!

Question 23

Describe the American model pre -PPACA

Answer 23

• private markets played a central role in ensuring care
• no mandate for universal insurance
• no price controls
• public insurance for particular groups

Question 24

Describe the 3 major parts of the PPACA and then the 3 major tools that were used to expand care

Answer 24

1) expanding medicaid
2) reducing medicare spending
3) An individual insurance mandate

Question 25

Under the PPACA, the American insurance system remains ____ from the Bismarck and Beveridge systems

Answer 25

dissimilar

Question 26

How did the PPACA define classes of insurance policies?

Answer 26

Bronze Plan, 60% Coverage
Silver Plan, 70% Coverage
Gold Plan, 80% Coverage
Platinum plan, 90% Coverage
Catostrophic plans

Question 27

All insurance plans under the PPACA were required to have some essential benefits. These included:

Answer 27

Maternity, mental illness, substance abuse treatments, raise the cost of private plans to bring them into compliance

Question 28

describe the employer mandate under the PPACA

Answer 28

All employers required to give at least bronze level of coverage

Question 29

describe the medicaid expansion under the PPACA

Answer 29

required that states expand eligibility of medcaid programs

Question 30

The individual mandate indicated that people have at least the _____ plan

Answer 30

Bronze

Question 31

Describe the tax penalty for families on the individual mandate for the PPACA

Answer 31

The tax mandate was for the maximum of either $695 per adult, or half of that per child with an overall cap at $2,095 or 2.5% of income, capped at a bronze plan. But this tax mandate is too low.

Question 32

What was a key flaw in the individual mandate plan?

Answer 32

The tax was too low, enrollment of healthy people was lower than expected consequently

Question 33

The US spends comparatively ______ as a ratio of per capital spending

Answer 33

more

Question 34

What are the overall conclusions from aggegate international comparisons

Answer 34

Despite the obviously major differences in health care systems, nothing emerges from this type of comparison to suggest how one approach to organizing a health care system might be better than another.

Question 35

Define/describe differing inherent levels of health

Answer 35

It is not clear whether all countries share the same health production frontier (with some countries like the U.S. inefficiently below the frontier) or whether the U.S. is on a completely different HPF than the European countries.
One possibility is that the U.S. and other countries have different populations with different inherent health states. If so, the U.S. would be on a different HPF than the other countries.

Question 36

What do advocates for a single-payer health system say

Answer 36

Advocates for a single-payer system tout the large cost savings from having a uniform insurance claim process for all providers

Question 37

So, why haven’t we just moved to a single-payer system?

Answer 37

• No analysis has yet identified administrative costs
  -Large efficiency costs related to increased taxation should also be considered

Question 38

Does preventative care reduce health costs in the long run?

Answer 38

No.

Question 39

A widespread study found that despite substantial variations in spending from region to region, these differences ____________

Answer 39

have no observable effect in the longevity of patients treated.