Chapter 21 - Health care. After reading this chapter, you should be able to: Convey important facts about rising health care costs in the United States, relate the economic implications of rising health care costs, discuss the problem of limited access to health care for those without insurance, list the demand and supply factors explaining rising health care costs, summarize the goals of the Patient Protection and Affordable Care Act and the major changes that it institutes.
Trang 1Health Care
Chapter 21
McGrawHill/Irwin Copyright © 2009 by The McGrawHill Companies, Inc. All rights reserved.
Trang 2Chapter Objectives
• Rising health care costs
• Economic implications
• Problem of limited access to
health care for the uninsured
• The market for health care
• Potential reforms of the U.S
health care system
• Recent legislation
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Trang 3Health Care Facts
• 16% of GDP in 2006, up from 5.2% in 1960
• 10% of U.S employment
• Overall prices 3.3% higher each of
last 4 years
• Spending to grow 7.3% per year next
10 years
• 45 million uninsured
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Trang 4Health Care Expenditures
2006 Data
Health Care Expenditures
Sources of Funds
Nursing Homes Prescription Drugs
Program Administration
Doctors
Dental,
Vision, Misc.
Hospitals
8% 10%
7%
21%
23%
31%
Medicaid
Medicare
Military, Other Public Insurance
Other Private Expenditures
Copayments, Deductibles, Etc.
Private Health Insurance
34%
15%
12% 7% 13%
19%
Trang 5Health Care Spending
Percentage of GDP, Selected Nations, 2005
United States Switzerland
France Germany Canada Australia
Italy United Kingdom
Japan Mexico
0 5 10 15
Source: Organization for Economic Cooperation and Development
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Trang 6Economic Implications
of Rising Costs
• Reduced access to care
• Labor market effects
–Slower wage growth
–Part-time and temporary workers –Outsourcing and offshoring
• Personal bankruptcies
• Impact on government budgets
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Trang 7Other Issues
• Are we healthier?
–Yes
• Too much spending?
–Maybe
• Limited access
–The uninsured
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Trang 8Why the Rapid Rise in Costs?
• Peculiarities of the health care
market
–Ethical and equity considerations –Asymmetric information
–Positive externalities
–Third-party payments: insurance
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Trang 9Increasing Demand
• Rising income
–Role of elasticity
• Aging population
• Unhealthy lifestyle
• Role of doctors
–Supplier induced demand
–Defensive medicine
–Medical ethics
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Trang 10Role of Health Insurance
• The moral hazard problem
–Less prevention
–Overconsumption
• Government tax subsidy
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Trang 11P
Q
P
Why the Rapid Rise in Costs?
D S
Q a
P a
Without Health Insurance
With Health Insurance
D S
Q a
P a
Q c
P c
Insurance and the overallocation of resources
to health care
a
b
c
Efficiency Loss From Overallocation
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Trang 12Supply Factors
• Supply of physicians
• Slow productivity growth
• Changes in medical technology
• Relative importance of supply
and demand factors
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Trang 13Health Care System Reform
• Universal access
–“Play or pay”
–Tax credits and vouchers
–National health insurance
• Cost containment: altering
incentives
–Deductibles and copayments
–Managed care (PPO and HMO)
–Medicare and DRG system
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Trang 14Recent Laws and Proposals
• Prescription drug coverage
–Medicare Part D
• Health savings accounts
• Limits on malpractice awards
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Trang 15Mandatory Health Insurance
• Massachusetts in 2007
• Proof of insurance or pay fee
• Eliminate free riders
• Expected to reduce cost for some
• Will increase demand
• State subsidy
• Neighboring state issues
• May not work for entire nation
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Trang 16Key Terms
• deductibles
• copayments
• fee for service
• defensive
medicine
• tax subsidy
• “play or pay”
• national health
insurance (NHI)
• preferred provider organization (PPO)
• health maintenance organization (HMO)
• diagnosis-related-group (DRG) system
• Medicare Part D
• health savings account (HSA)
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Trang 17Next Chapter Preview…
Immigration
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