Lecture 8.docx

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University of Toronto Scarborough
International Development Studies
Anne- Emanuelle Birn

Lecture 8 – IDSB04 - Healthcare and the Economy Why Health economics? P. 537 - Spending is soaring? Why? - Need to maximize value for spending (efficiency): better outcomes at same or lower cost - Health economics is drving health care policy and health system planning - Factors that lie outside of healthcare system/services, are all as important than medical care - Low cost interventions for developing countries (orthodox neoclassical approach) vs. - Comprehensive primary care-oriented redistributive systems (heterodox, social justice approach) - Ideally health economics assesses fairness and equity in context fo local culture, history and politics Key Questions pg. 540 Health Econ 101 - Expenditures = price x quantity - Profits losses (surplus/deficits) - Supply goes up and demand goes down; demand goes down, supply goes up Neoclassical Economics says - Price oinks supply with demand - If supply fixed and demand high= price goes up - If price free=demand could go down (arguable; moral hazard as people will overuse services) Healthcare Curve - Y axis goes up, X goes up - Supply, Time/Demand - People have to spend for healthcare, healthcare creates its own demand = by everybody (multiple sources of demand) Why the Difference? (542-3) - Patients don’t contril health spending - Physician often spends 3 party $ - Some health spending has no medical benefit (unnecessary services, profits, corruption, malpractice premiums etc) - Health is special (beyond $): may be better not to need health care: vulnerability - Health care spending shaped by values, not by rational consumers - Most societies deem health care to be a human right Table 11-2 Means of Financing Health Care (5454) - Through taxes - Private payment Financing Health Care - Ultimately households pay but fairness differs: o General taxation is most progressive o Mandatory health insurance less fair, esp if one premium for all o Private insurance even less fair: poorest pay higher premiums  Older and poorer people pay more o Out-of-pocket least fair (most regressive) – no risk sharing at all o Inadequate health financing is an important cause of poverty and insecurity Health Insurance Model (546) - Guilds and workers – mutual protection/friendly socieities (social insurance in the private sector organized around what people where doing) - Risk pooling (to reduce costs of expected illness burial etc) - Versus - Risk selection (private companies select young and healthy): community vs. experience rating Cost Sharing (547) - Co-sharing o Canada doesn’t have that - Co-insurance o Set percentage instead of set payment - Deductibles - Limits to care (ceiling, lifetime maximum, pre-existing conditions, uncovered services) Health Care Financing in Canada - 70% funded publicly; remainder private insurance, employer benefits, out-of pocket - Provincial and federal taxes, personal and corporate - AL, ON, BECAUSE use premium (one rate no bar to access) - Some others use sin taxes (lotteries, sales) - As of ’04 federal portion comes in black grantL cda Health Transfer - $2/3 funded by province - Hospitals negotiate annual budgets with province - Doctors’ fees negotiated b/w province and provincial medical association (with ceilings) - Nurses’ salaries negotiated via collective bargaining - NO EXTRA BILLING and no user fees allowed Health Care Un-System in the U.S. - 1200 insurance companies: power concentrated in a handful of corporations - 6000 hospitals - “managed” care = profits over patients - Medicare - Medicaid peograms (states plus DC) - Obama – profits still rule - Prediction: in 5-10 years there will be another health care crisis in the U.S because it is too costly Why is the Profit Making System more Expensive - For-profit hospitals have higher administration cost - CABG Table 11-3 Health Care Expenditures are Rising - Aging pop, pop growth - Increase in health personnel/infrastructure - Longer periods of illness, complex diseases - Explosion in health care technology - Malpractice, defensive medicine – unnecessary care - Increased pati
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