Lecture 8: Chapter 11

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University of Toronto Scarborough
International Development Studies
Anne- Emanuelle Birn

Lecture 8: Chapter 11 Health Economics and Economics of Health Care Table 11.1 Spending on Health Why Health Economics? P537 - Spending is soaring. Why? - Need to max value for spending (efficiency) better outcomes at same or lower cost - Health economics is driving health care policy and health systems planning - Other factors are as important: education, housing etc. - Low cost interventions for developing countries (orthodox, neoclassical approach) versus: - Comprehensive primary-care oriented redistributive systems (heterodox social justice approach) Health Economics 101 Expenditure J Price x Quantity ProfitsLosses = Revenue J Expenditures Neo-Classical Economics Says: Prices links supply with demand If supply is fixed and demand high J Prices increase If price free J demand skyrockets (moral hazard = overuse) Why the difference? P542-3 1) 9]LZ}L[ }L}oZoZZL]L2~LoZZooZ} Z}L] Z rd 2) Physician often spending 3 party money (OHIP) 3) Some heath spending has no medical benefits (unnecessary services, profits etc) 4) Health is special (beyond $) may be better not to need health care: vulnerability 5) ,oZ ZL]L2ZZoZ7L}^]}Lo_ }LZKZ 6) Most societies deem health care to be a human right Table 11.2: How Health Care Sectors Differs from Markets Means of Financing Health Care: 1) Revenues gathered by natural or local government thru taxation 2) Tax-based or salary-deducted contributions to public insurance systems 3) Private payment to private insurance schemes or out-of-pocket expenditure at point-of-service ]LL ]L2,oZ ;]LZZ9 - General taxation is more progressive (most fair) - Mandatory health insurance less fair, especially if one premium for all - Private insurance even less fair: sickest (poorest) pay higher premium - Out-of-pocket least fair (most regressive): no risk sharing at all Inadequate health financing is an important cause of poverty and insecurity Health Insurance Model p 546-7 - Guilds and workers J mutual protectionfriendly societies o Social insurance (national or community based) - Risk Pooling (to reduce costs of expected illness, burial etc) - Risk Selection (private companies select young and healthy): community vs. experience rating Cost Sharing p547 - Co-payments J every time go to health provider you pay money out of pocket - Co-insurance J pay % out of pocket - Deductibles J pay amount out of pocket before insurance kicks in (prevent hypochondriacs) Limits to care (ceilings, lifetime maximum, pre-existing conditions, uncovered services) www.notesolution.com
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