Economic models - Health economics

EXAMPLES

1.Please read the article below. Using economic theorydiscuss the implications for the vaccine market, should the Supreme Court allow the vaccine manufacturers to be sued outside of ‘vaccine court’.

 

Supreme Court Considers Vaccine Injury Case

By Emily P. Walker, Washington Correspondent, MedPageToday

Published: October 12, 2010

 

 

WASHINGTON -- The U.S. Supreme Court heard arguments today in a case seeking to sue vaccine maker Wyeth outside the special forum established to assure continued availability of vaccines.

 

Congress created the so-called "vaccine court" in 1986 to address safety claims in an attempt to ease the threat of lawsuits in state courts against pharmaceutical companies lest they pull out of what they claim is an unprofitable vaccine marketplace completely.

 

The case under consideration was brought by the parents of Hannah Bruesewitz, now 18, and charges that she developed a seizure disorder after receiving her third dose of the diphtheria-tetanus-pertussis (DTP) vaccine when she was six months old. She has suffered developmental problems ever since, and will likely require medical attention for the rest of her life, her parents say.

 

The dose of the vaccine in question, TRI-IMMUNOL, came from a lot that generated 65 reports of adverse reactions, including 39 emergency room visits, six hospitalizations, and two deaths, according to documents from the U.S. appeals court that heard the case last year.

 

The Bruesewitz suit argues that the vaccine had a flawed design, contained toxins that caused their daughter's seizures, and that Wyeth could have manufactured a safer vaccine but chose not to. The flawed-design concept, the family alleges, takes the case out of the jurisdiction of the vaccine court, which was set up to compensate injuries from unavoidable side effects.

 

The vaccine court turned down the Bruesewitz claim and the family then sought to bring a case in state court.

 

Although the current case does not involve autism, the outcome could have important implications for the hundreds of lawsuits filed against vaccine makers by people who allege the shots caused their children to develop autism. Numerous courts have ruled in the past year that there is no link between common childhood vaccines and autism.

 

A number of groups, including the American Association for Justice and the National Vaccine Information Center, have filed briefs on behalf of the Bruesewitz family, arguing that Congress intended to allow lawsuits hinging on vaccine defects.

 

Meanwhile, the Solicitor General of the United States, the Chamber of Commerce, and several medical groups including the American Academy of Pediatrics have filed briefs stating that the 1986 law meant to block the Bruesewitz type of vaccine lawsuit.

 

Several lower courts have ruled that the law creating the vaccine court preempts design-defect claims.

 

 

2.

Please read the article below. Using economic theory discuss the implications of tax deduction provision for self-employed on the bottom line of small firms.

 

Smart Answers October 12, 2010, 9:44AM EST

Health-Care Tax Relief for the Self-Employed

 

This year a new law will let solo business owners fully deduct health insurance premiums for the first time. Here's how it works

By Karen E. Klein

I heard that I can deduct my health insurance costs because I run my own business. Is this part of the health-care reform bill? How does it work?

—P.J., Pasadena, Calif.

If you are self-employed and your business is a sole proprietorship, single-member LLC, or sole-owner S-corp, you can indeed deduct your health insurance expenses for 2010. This one-year provision is not a part of the health-care reform bill that passed in March, however. It was included in the Small Business Jobs and Credit Act that President Barack Obama signed into law just last month.

"In this economic climate, any kind of bottom line tax savings is helpful," says Kristie Arslan, executive director of the National Association for the Self-Employed, a Washington-based lobbying group. "This is one of the few small business provisions that's been passed where business owners will actually see lower taxes on Apr. 15, 2011."

Her organization has championed the deduction for more than eight years and unsuccessfully tried to get it included in the health-care reform law.

The new provision corrects what Arslan calls a fundamental unfairness: Self-employed individuals cannot deduct the full cost of health insurance premiums as a business expense on their payroll taxes, as other business entities can do.

Although the new law authorizes the deduction only for 2010,Arslan says it's "a foot in the door" for self-employed individuals, who pay both the employer and employee portions of the payroll tax—a self-employment tax totaling 15.3 percent. Employees typically pay half that amount (7.65 percent) and their employers cover the other half as part of their payroll taxes. The new deduction exempts solo business owners from paying self-employment tax on the portion of their income that they spend on health premiums. "This is a step in the right direction. We're hoping to extend it and make it permanent," Arslan says.

Make sure to ask your tax preparer about taking the deduction when you file your tax returns next year. In order to take advantage of it, you must buy your own insurance (rather than relying on a spouse's coverage or being uninsured) and you must pay self-employment tax on business income (rather than declaring a business loss). The deduction phases out above a $106,800 annual income limit. The provision is specifically geared for those who file a 1040 Schedule C business income tax form or a Schedule E earned income tax form, Arslan says.

Another important caveat: The new deduction does not apply to health insurance coverage that you may provide for any employees you have. There is a small business health-care tax credit, part of the health-care reform legislation, that you may be able to claim for that expense. More information on that tax credit is available at the IRS website.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

©2010 Bloomberg L.P. All Rights Reserved.

 

 

 

3.

Please read the article below. Using economic theory discuss the implication of excessive expenditure in medical care that denies availability of resources to investments in public health, education, public safety, safety-net, and community development programs andtherefore on life-expectancy in the U.S.

 

U.S. Still Lags in Life Expectancy

By Joyce Frieden, News Editor, MedPage Today

Published: October 07, 2010

 

Americans' 15-year survival rates in comparison to those of other countries has been declining despite increases in health spending, researchers have found.

 

"Even as relative health care spending has increased in the United States, the nation has fallen behind 12 comparison countries with respect to 15-year survival for men and women ages 45 and 65 during the past three decades," according to Peter A. Muennig, MD, MPH, and Sherry A. Glied, PhD, both of the Mailman School of Public Health at Columbia University in New York City.

 

"The findings undercut critics who might argue that the U.S. healthcare system is not in need of major changes," they wrote in the November 2010 issue of Health Affairs.

 

In 1950, the U.S. was fifth among the leading industrialized nations with respect to female life expectancy at birth, the authors noted. But the most recent numbers put the country at 46th in the world. And, for male and female life expectancy combined, the U.S. is ranked 49th.

 

Meanwhile, per-capita health spending increased at nearly twice the rate in other wealthy nations between 1970 and 2002. The U.S. now spends far more on health than any other country as a percentage of its gross domestic product.

 

To explore the issue further, the investigators examined health costs and 15-year survival from 1975 to 2005. They focused on 45- and 65-year-old men and women, and measured costs as healthcare spending per capita. They also examined relative changes in smoking and obesity over time.

 

They used international data on obesity and health system costs from the Organization for Economic Cooperation and Development. They also looked at data for U.S. non-Hispanic whites from the CDC and at International Mortality and Smoking Statistics data to examine smoking statistics.

 

In 1975, the United States was in last place with respect to 15-year survival at age 45 for people of both sexes. However, it ranked high for those at age 65. At that time, per-capita U.S. health care costs were above the mean for other nations but were comparable to those in some of the nations studied.

 

Between 1975 and 2005, survival probabilities and health costs increased for all groups in all nations.

 

However, by 2005, "not only were 15-year survival rates for 45-year-old U.S. white women lower than in all comparison countries, but they had not even surpassed 1975 15-year survival rates for Swiss, Swedish, Dutch, or Japanese women," the investigators wrote.

 

In addition, 65-year-old U.S. white women in particular also showed large relative declines in 15-year survival.

 

One possible explanation for the U.S.'s poor showing is its population diversity, the researchers noted. "According to this argument, lower health status or lower survival gains for ethnic or racial minorities would tend to depress overall health outcomes for Americans relative to the residents of other countries."

 

But that does not appear to be the case. For instance, relative gains in survival for non-Hispanic whites in the U.S. between 1995 and 2005 were the lowest among nations in each age category, while men and women in Austria and Australia experienced some of the largest gains.

 

"Contrary to the diversity hypothesis, including the experience of diverse groups in the U.S. data improves the comparative performance of the United States, since the superior survival gains of other Americans relative to non-Hispanic whites boosts the overall performance of the United States relative to that of other countries," the authors wrote.

 

In terms of smoking, the current smoking rate in the U.S. is generally lower than in the 12 comparison nations. In 2006, the U.S. smoking rate was 15% for women and 19% for men, whilethe comparison-country smoking rates ranged from a low of 14% for Japanese women to a high of 41.3% for Japanese men.

 

As for obesity, the U.S. population is much heavier, on average, than the populations of other countries; however, "there is nothing new about this pattern: In 1975, U.S. obesity rates were also much higher than those in other countries," the authors noted.

 

Other causes of death, such as homicides and traffic accidents, aren't borne out as possible causes either, they continued.

 

Rather, Glied and Muennig suggested, rising U.S. health spending may be the reason.

 

"First, as health spending rises, so, too, does the number of people with inadequate health insurance," the authors wrote. "Higher spending could be reducing survival by decreasing the number of insured people."

 

In addition, rising health spending may be decreasing public funding on more important life-saving programs, and "investments in public health, education, public safety, safety-net, and community development programs may be more efficient at increasing survival than further investments in medical care."

 

Finally, unregulated fee-for-service reimbursement and an emphasis on specialty care may contribute to high U.S. health spending because it leads to unneeded procedures and fragmented care.

 

"Unneeded procedures may be associated with secondary complications. Fragmentation of care leads to poor communication between providers, sometimes conflicting instructions for patients, and higher rates of medical errors. For example, two separate physicians are probably more likely than a single primary care provider to prescribe two incompatible drugs to a single patient."

 

However, how much this affects population health is uncertain, the authors admitted.

 

"We speculate that the nature of our health care system -- specifically, its reliance on unregulated fee-for-service and specialty care -- may explain both the increased spending and the relative deterioration in survival that we observed. If so, meaningful reform may not only save money over the long term, it may also save lives."

 

The study was funded by a grant from the Commonwealth Fund.

 

Glied is currently on leave from the Department of Health and Human Services (HHS); the study was written prior to her appointment at HHS and does not reflect the official views ofHHS. No other information on conflicts of interest was provided.