Week 3
Chapter 8 Economics of Health Care
Economic Approach to Health Care
Competition in the market
Healthcare market
Demand
Supply
Competition
Competition Versus Regulation
Standards of participation
Cost containment and value
Market Failure in Health Care
Free market competition
Market failure
Supplier-influenced demand
Third-party payer
Imperfect market
Rising Costs and Today’s Healthcare System
Social Security Act of 1935
1959 Federal Employees Health Benefit Act and Blue Cross
1960’s Medicaid (Title XIX) and Medicare (Title XVIII)
Increased costs
Gross domestic product (GDP)
Rising Costs and Today’s Healthcare System (cont.)
Decreased access
Rising costs/inability to pay
Increased number of people covered by Medicare and Medicaid; decreased number covered by private insurance
More employers offering insurance; fewer employees are purchasing it
Private insurance does not guarantee financial access to care
Public programs offer inadequate prenatal and mental health care programs
Negative outcomes for the uninsured/underinsured
Rising Costs and Today’s Healthcare System (cont.)
Influences on costs and access
Increased sources of funds from governments
Inflation
Drug cost increase
Advanced technology is expensive
Higher personnel wages and benefits costs
Change in population demographics
Excess
Medical excess
Administrative excess
Emphasis on cure instead of prevention
Paying for Health Care
Out-of-pocket payments and charity
Cost sharing
Health insurance
Private insurance
Employment-based insurance
Experience rating
Community rating
Health insurance purchasing cooperatives
Self-insurance
Paying for Health Care (cont.)
Publicly funded insurance and direct care programs
Medicare
Part A
Inpatient hospital care
Benefit period
Skilled nursing facility
Home health agency
Hospice
Part B and Part D
Medicare Advantage
“Medigap” insurance
Paying for Health Care (cont.)
Medicaid
Entitlement/welfare program
Based on income and assets
Categorically needy
Medically needy
Personal Responsibility and Work Opportunity Act
Temporary Assistance for Needy Families (TANF)
Paying for Health Care (cont.)
Children’s Health Insurance Program (CHIP)
Federally funded
CHAMPUS
Other public direct care programs:
Public Health Service Act of 1994
Affordable Care Act (ACA) of 2010
Cost Containment, Cost Analysis, and Quality
Cost-containment strategies
Controlling quantity of supply
Controlling price
Controlling quantity of demand
Competition
Prioritizing through cost analysis
Cost Containment, Cost Analysis, and Quality (cont.)
Cost analysis
Cost-of-illness analysis
Cost–benefit analysis
Cost-effectiveness analysis
Technology assessment
Public Health, Managed Care, and the Economics of Prevention
Opportunities for collaboration
Cost-containment efforts
Shift from acute services to preventive
Counterforces to collaboration
Safety net
Dumping of services
Coordination of state reporting
Nature of for-profit firms
Economics of alternative therapies
Significance of Economics for Community Health Nursing Practice
Disease prevention/health promotion
Consumer-driven health care
Nurses can help consumers understand price and quality issues
Gaining third-party reimbursement—an important labor market change for nurses
Coalition building, research, lobbying, negotiating with insurers, influencing policymaking
Economics and Nightingale’s Legacy
Market justice
Social justice