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Health%20Economics%20

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Health Economics & Policy 3rd Edition James W. Henderson Chapter 1 U.S. Medical Care: Crisis or Conundrum Growth in Spending U.S. Spending: Summary Measures Why do ... – PowerPoint PPT presentation

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Title: Health%20Economics%20


1
Health Economics Policy3rd EditionJames W.
Henderson
  • Chapter 1
  • U.S. Medical Care Crisis or Conundrum

2
Growth in Spending
3
U.S. Spending Summary Measures
4
Why do Americans spend so much on medical care?
  • Aaron (1991)
  • Expansion of 3rd party payment system
  • Aging of the population
  • Expanded medical malpractice
  • Increased use of medical technology
  • Other factors
  • Physician-induced demand
  • Entry restrictions
  • Predominance of not-for-profit providers

5
Changes in Medical Care Delivery
  • Shift from private to public financing
  • Shift to 3rd party financing
  • Changes in hospital usage and pricing
  • Deregulation and growth in managed care

6
Shifts in Financing
7
Third Party Insurance
  • Spread the risk
  • Spend other peoples money
  • Prescription for overspending

8
Payment Structure
  • Traditional fee structure
  • Fee for service
  • Retrospective payment
  • Incentive to overspend
  • Managed care
  • Capitation and risk sharing
  • Prospective payment
  • Incentive to limit care

9
Changes in Hospital Usage and Pricing
10
Growth in Managed Care
11
Nature of Health Care As a Commodity
  • Demand is irregular
  • Transactions characterized by information
    problems
  • Widespread uncertainty prevalent
  • Reliance on not-for-profit providers
  • Insurance has emerged as the primary means of
    payment

12
Health System Goals
  • Access to care
  • Whos covered?
  • Whats covered?
  • Quality of care
  • Medical efficacy
  • Medical outcomes
  • Cost of care
  • Who pays?
  • How much?

13
The Structure of Health Economics
14
Key Economic Concepts
  • Scarcity and choice
  • Opportunity cost
  • Marginal analysis
  • Self-interest
  • Markets and pricing

15
Key Economic Concepts
  • Supply and demand
  • Competition
  • Efficiency
  • Market failure
  • Comparative advantage

16
Where the Money Comes From
17
Where the Moneys Spent
18
The Medical Care Cost Problem
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