MHA5030 WEEK 4 DISCUSSION AND PROJECT INSTRUCTIONS

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MHA5030 WEEK 4 LECTURE NOTES

Traditional Model vs. Classical Equity

Traditional economics does not concern itself with equity or justice. Here, we’re going to look at problems with two assumptions of the traditional model. The first is that social welfare is based solely on individual utilities, which, in turn, are based solely on the goods and services consumed. The second is that the distribution of wealth is approved by society. We will contrast these assumptions in this unit by looking at classical equity and justice concepts, particularly utilitarianism, which basically states that goods should be put in the hands of those who get the most gain from those goods, that is, who gain the most utility. We will also take a look at John Rawls’s theory of justice from the viewpoint of what he calls the original position. The original position is a basic starting place where a person does not know what he or she has or where he or she is going but makes decisions from this position to create a just society. There are problems with these concepts, for example, a free rider who puts in no effort but enjoys the fruits of others’ efforts in formal welfare. There is the theory of Robert Nozick, who proposed the concept that the role of the government is mutual protection and enforcement of contracts.

One will find a lot of controversy in this unit over what equity and fairness are, and there are a number of examples to illustrate the complications of the tension between the free market and government intervention in terms of equity and fairness. While there are no standard answers to what is fair or just, a number of guidelines will be offered in this unit. Opportunity and capability are two of the factors that enter the discussion of equity and fairness. Good health is an important consideration in enabling people to fulfill their potential as persons and to determine, to some degree yet to be determined, how much society contributed in making this possible for all the citizens of the country.

Additional Materials

From your course textbook, The Economics of Health Reconsidered, read the following chapter:

· Equity and Justice

From the South University Online Library, read the following article:

· Equity in the Finance of Health Care: Some Further International Comparisons 

From the Internet, read the following article:

· Daniels, N. (2001). Justice, health, and healthcare. American Journal of Bioethics, 1(2), 2–16. Retrieved from https://www.hsph.harvard.edu/benchmark/ndaniels/pdf/justice_health.pdf

The Patient Protection and Affordable Care Act of 2010

The ACA is perhaps the most important legislation in the modern era of healthcare. Unlike Medicare and the Social Security Act, which are entitlement programs and thereby restricted by age and, in some circumstances, by health status, the ACA is available to all US citizens. The act is surrounded by controversy. As of 2013, less than 50% of the population believes it is the government’s responsibility to provide healthcare to over 20% of the population that is very poor and cannot afford healthcare services. The focus of the ACA to take care of the people in our country who cannot afford healthcare will place great challenges on the workforce when one considers adding as many as 50 million people as patients to an already burdened system; and certainly, the additional cost of these new patients who will be supported by the government will be extensive.

While some of the designers of the ACA desired to have government-run insurance carriers to provide coverage to the poor, the politicians preferred that the coverage come from private companies in the traditional marketplace. This was perhaps the greatest accommodation toward keeping the free market alive in the healthcare marketplace.

There has been a great deal of discussion about universal health coverage and how the ACA stopped short of providing it, but the universal coverage perhaps is less than half of the story of providing health to the population of the country. The social determinants of health are believed to make up at least half of the created health status of a person. For example, diet, exercise, and social behavior have a great deal to do with health status. It is well known that smoking and drinking play a large role in our society.

While the ACA has been instrumental in providing access and funding to a large segment of our population and created more equity and justice in our system, it will not solve all our problems.

Additional Materials

From the South University Online Library, read the following article:

· Reframing Federalism—The Affordable Care Act (and Broccoli) in the Supreme Court 

From the Internet, read the following article:

· Henry J. Kaiser Family Foundation. (2013). Summary of the Affordable Care Act. Retrieved from http://www.kff.org/healthreform/upload/8061.pdf

Healthcare Expenditures

The chapter “Healthcare Expenditures” of your course textbook provides a great deal of data on the expenses of healthcare and their trends. These numbers are available for the United States and selected foreign countries. It is clear that expenses have risen drastically in the past few decades in the United States than in other countries, but there are many reasons this is true.

Unit price is often one of the considerations in looking at these expenses, but it would be well to consider the lack of market power that providers have in the marketplace. Medical technology is a source that has been considered as a driver in increased cost. It has administrative cost regional variation in fee-for-service payments.

High unit prices are very important, and the lack of bargaining power, especially in the public sector, may be a great driver in that cost. A look at some foreign countries that consolidate their buying will show that they pay considerably less per unit than purchasers in the United States.

There are a number of methods for controlling cost from the demand side, for example, reducing the information asynchronicity so that consumers have an understanding of price and can compare benefits of various providers. Increasing cost sharing has helped control cost, and a debate could be made for even higher cost sharing in noncatastrophic instances.

It is perhaps on the supply side that the politics is most complicated, where we consider all-payer systems or single-payer systems, such as those found in other countries. An examination of them would appear to offer many benefits and controlling costs, but these generally fly in the face of the free-market philosophy that we find in the United States. Still, when searching for ways to reduce the cost of healthcare in this country, an understanding of these methods is essential.

Additional Materials

From your course textbook, The Economics of Health Reconsidered, read the following chapter:

· Healthcare Expenditures

From the South University Online Library, read the following articles:

· It’s the Prices, Stupid: Why the United States Is So Different from Other Countries 

· Is Technological Change in Medicine Worth It? (Cover Story) 

· Market Failure and the Failure of Discourse: Facing Up to the Power of Sellers