PUBHLTH 122 Lecture Notes - Lecture 3: Sick Individuals, Population Pyramid

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20 Jan 2017

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The trend is towards ever increasing expenditures. 85% is made up of personal healthcare and the rest of it, about 15% comes from government administration, net cost of private insurance and more. Figure #7: personal health care by type of service. Not because people get it so often but because it is the most expensive type of medical care. The next is professional services and physician and clinical services. Figure #8: health consumption by source of funding. How do we pay for it: out of pocket (11%), health insurance (78%), and other third party payers (11%), the (cid:858)out of po(cid:272)ket(cid:859) i(cid:374)(cid:272)ludes (cid:272)o-pays and people who do not have insurance. Health care"s 1%: the extre(cid:373)e co(cid:374)ce(cid:374)tratio(cid:374) of us health spending (nihcm foundation, nov,2014) Usually 20% of the population are responsible for 80% of the phenomenon. A very small group of patients who consume most of the health care resources.

Related Questions

Question 1 to 9. Choose TRUE or FALSE. WILL RATE 5 stars for a correct answer

1. Flow of Funds

Direct spending by the government on health care in 2012 was almost $ 4,500.

Flow of Funds

Payments to hospitals and physicians account for about half of all health care spending in 2012.

Flow of Funds

Over the past 100 years, out-of-pocket expenditures for health care services by individuals have decreased from over 75% to less than 5%.

Flow of Funds

Third-party payers account for 60% of all health care expenditures in 2012

Flow of Funds

The dollar amount of health care expenditures paid by charitable organizations and individuals has remained roughly constant over the past 100 years if one adjusts for inflation

6. Flow of Funds

Ranking everyone by the amount spent on medical care, 30 percent of the total (all expenditures for all people) is accounted for by the top 1 percent of patients. The top half of the population accounts for 90 percent of total spending. This is mostly due to cost-shifting.

7. Flow of Funds

Not only is the share of GDP to health care higher in 2012 than in 1929, but the wages of health care workers have also risen concerning wages of other types of workers. The Flow of Funds idea emphasizes that total dollars spent by individuals, the government, and other third-party payers for health care must equal total income earned by health care providers, administrators, and other health care workers.

8. Equity and Distribution

Socioeconomic differences in mortality found in the U.S. are most likely attributable to a lack of universal health insurance coverage.

9. Shifting Overhead

When a drug company advertises it will provide a prescription drug at no charge to certain individuals who cannot afford a doctor prescribed drug, costs are most likely being shifted away from individuals who are paying high prices to those who are paying nothing.

10. What is Economics?

Which of the following is not an example of the fundamental theorem of exchange?

A. You pay a fertility specialist $10,000 to perform an in-vitro fertilization procedure that does not result in pregnancy.

B. You donate your old, used eyeglasses to the Lions Club, a charitable organization that recycles and distributes the glasses to needy people.

C. You pay a fertility specialist $10,000 to perform in vitro fertilization procedure which results in pregnancy.

D. Unknown to you, your neighbor is tapping into your cable tv service and sharing your service.

E. You pay your optometrist $500 for a new pair of eyeglasses.

11. What is Economics?

To reduce the ache in your knees when you work out, you buy an elastic knee brace from the pharmacy section at the grocery store. This transaction differs from paying a surgeon to replace your knee joint because

A. you require a physician

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Question 11 One potential remedy to the tragedy of the commons is to: never allow a single individual to consume more than one percent of the common resource. criminalize the usage of common resources. allow individuals to use a common resource as long as they receive some benefit from doing so. place a common resource under private ownership. 4 points Question 12 As a result of a positional externality: contestants have a tendency to invest in a series of mutually offsetting investments in performance enhancement. there is generally an underinvestment in performance enhancement. the market price of performance enhancement materials is too high. the quality of performance in competitive situations is lower than the socially optimal level. 4 points Question 13 Which of the following statements is true regarding health insurance? Economics shows that all health related procedures should be free to individuals because the health of an individual is priceless. Total economic surplus would be larger if individuals faced an incentive to only use services when the benefit exceeds their costs. Health maintenance organizations provide an incentive for doctors to prescribe expensive nonessential services. First dollar insurance coverage has likely had very little to do with rising healthcare expenditures since World War II. 4 points Question 14 A strategy that yields a higher payoff no matter what the other players in the game choose is known as a: prisoner's strategy. dominated strategy. dominant strategy. Nash strategy. 4 points Question 15 Based on the diagram below, if the costs of hospital care are constant at $200 per day, and the individual does not incur any cost for each day for hospital care, then: the individual will stay 7 days and there will be no loss in economic surplus. the individual will stay 3 days and there will be no loss in economic surplus. the individual will stay 7 days and there will be lost economic surplus. the individual will stay 3 days and there will be lost economic surplus. 4 points Question 16 Economic research by Manning and colleagues suggests that people with deductible health insurance policies: spend substantially less on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially more on health care and have substantially better health outcomes compared to people with first-dollar insurance coverage. spend basically the same amount on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially less on health care and have no measurable difference in health outcomes compared to people with first-dollar insurance coverage. 4 points Question 17 An efficient program for reducing pollution is one for which: all polluters incur the same total costs of abatement. all polluters pay the same amount in taxes to the government. all polluters have the same marginal costs of abatement. all polluters reduce their emissions by the same amount. 4 points Question 18 Given the information on pollution abatement costs of the two firms shown below, which of the following is an efficient combination of pollution reduction? Quantity of pollution abatement Firm A's MC of abatement Firm B's MC of abatement 1 $30 $25 2 $35 $30 3 $40 $35 4 $45 $40 Firm A reduces by 1 ton and Firm B reduces by 1 ton. Firm A reduces by 2 tons and Firm B reduces by 3 tons. Firm A reduces by 4 tons and Firm B reduces by 1 ton. Firm A reduces by 3 tons and Firm B reduces by 2 tons. 4 points Question 19 All of the following are characteristics of perfectly competitive markets except: there are a large number of firms. productive resources are mobile. all firms produce a differentiated product. buyers and sellers are well informed. 4 points Question 20 An advantage of the auction method to pollution abatement is that: it is very expensive to firms. regulators can achieve a desired abatement target without having detailed knowledge of the abatement technologies available to polluters. it requires all firms to reduce by exactly the same amount. it assures that eventually society will reach a level of zero pollution emissions. 4 points Question 21 There are 2 firms each emitting 200 tons of a pollutant. Firm A's abatement costs are constant at $20/ton, and Firm B's abatement costs are constant at $40/ton. The government's goal is to reduce pollution by half. If the government auctions 200 one ton permits to the highest bidder: Firm A will purchase all 200 permits. Firm B will purchase all 200 permits. each firm will buy 100 tons. there is no way to know who the highest bidder for any permit would equal. 4 points Question 22 As a result of economies of scale, as output expands: fixed costs are decreasing. average total costs are decreasing. marginal costs are increasing. total costs are decreasing. 4 points Question 23 Generally, when countries open their borders to free trade: both domestic producers and consumers of imported goods gain. both domestic producers and consumers of exported goods gain. domestic producers of imported goods and domestic consumers of exported goods gain. domestic producers of exported goods and domestic consumers of imported goods gain. 4 points Question 24 Which of the following is the best example of a tariff? South Korea bans imports of U.S. beef because of safety concerns. The U.S. requires toys imported from China to undergo testing for lead content. The U.S. imposes a tax on sugar imported from Brazil. The U.S. restricts the quantity of cars imported from Japan. 4 points Question 25 A means-tested program is a benefit program: in which benefits decline as a recipient's earned income increases. in which all individuals must undergo health screening to be eligible for benefits. in which all recipients exclusively receive benefits through in-kind transfers. that only affects the average income of a specific segment of the population. 4 points Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers.


(Please Summerize the work down below, thank you)

Political	Economic
Growing political influences on healthcare advances	Cost of living increases
Global government influence on healthcare cost	Cost of insurance prices
Government control of Medicaid, Medicare funding	Rise of forecasted interest rates
Social/Cultural	Technical or Technology
Increase average age of population	Demand on new medical treatments
Patient expectations increase	Customize treatments
Demographics are in constant change	More advance service facilities
Environmental	Legal
Growing need for green business	Constant change of government drug Regulations
Environmental agenda and community awareness	Consumer laws
	Health and safety regulations



Porters 5 forces of business model

Competitive Rivalry
Growth opportunity for healthcare companies are expected to growing the next few years
Increase in new revolutionary drugs both in and outside of the US

Threat if New Entrants
Strict government regulations
Difficult to keep up due to constant change
Huge startup cost

Substitute Products
Threat of other substituting product and service at lower cost



Bargaining Power of Customers
Generic drugs offered at large discount to consumer
Larger less customized healthcare facility with lower housing costs
Several facilities offering similar services.

Bargaining power of supplier
Medical suppliers have a large pricing power
Bargaining power of physicians and nurses is huge because of large hospital benefits

Swot Analysis

Strengths

Highly trained and capable employees

Market experience

Strong leadership

High level of organizational efficiency

Excellent facilities

Strong commitment to bettering the community

Weaknesses

Increased cost of healthcare could lower our clientele

Limited staff resources

Limited cash flow to hire and train new employees

Lack of resources

Opportunities

Fast growing technology opens new doors for using state of the art equipment to better serve the patients.

Nursing and residential care is one of the fastest growing industries

Aging population

Threats

Uncertainty in political and economic climate causes hesitation for receiving new patients.

Funding constraints

Highly competitive market

Product or Service Analysis

Our services will be used by patients who cannot afford experimental treatments and patients who have been abandoned by the system because hospitals can no longer provide medical assistance. At our facility, we will be able to work with the families and provide them with different payments options, such as low monthly payment plans. Our main goal is to be able to treat the patient at a very affordable cost; however, if any patient does not possess the means to pay for treatment, he or she would not be turned away; our facility will tap into government and private funding to cover treatment cost.

The beauty of this service is that there isnât a charge of any kind to take part in our program because it is completely funded by government grants. Individuals that would take part would more than likely not have the means to pay a monthly deductible. Due to the nature of the business listed as a non-profit agency, there is no way to make a profit of any kind, as it would jeopardize the business in its entirety.

Some of the market factors that create a demand for our services include the need of medical care after having maximized all resources, the number of low income families, and the number of patients facing health issues needed extended medical care.

Opportunities that may derive from this business is the opportunity to expand and open multiple facilities, while extending a helping hand to many more in need. The risk, however, is the unstable funds deriving from grants. This can pose a huge treat to the business, as grants often times come and go and cannot be counted on as a constant income.

After studying the healthcare system and current policies in place, data shows many individuals facing severe health issues usually go untreated and uncared for due to the outrageous cost of medical care. It is devastating to see how often people, especially the elderly, are sent home and forgotten for the mere reason that hospitals and doctors are not willing to care for patients without financial means. In fact, in 2009 Harvard news reported 45,000 annual deaths due to lack of health coverage in the U.S. alone, which is significantly higher than the 18,000 reported by USA Today in 2002.

Financial Analysis

Clermont will be a nonprofit organization, dedicated to help the most needed. To open the facility fully operational we must take in consideration some fixed expenses like the land acquisition, permits, interest, brokers, administration fees, professionals (facility setup), staff, reports (environmental, occupational, fire, FDA), electricity, water, phone, water & sewer , connections, taxes, insurance, management, security, advertising, accountants, food, lawn mowers, bank fees, etc.

The facility will need have a total value of approximately three million dollars, but if we break the price of the land acquisition in to a thirty (30) year mortgage we can star up the business with an investment of approximately $ 233,944.61 USD to cover the first month of operation including all the startup permits and connections. After the first month the fixed expenses will be $184,444.00 USD with the exception of the months were taxes are due; taxes are around $ 43,000.00 USD paid quarterly will increase the tax month (depending on the facility fiscal year) for $ 10,750.00 USD approximately. We will fund all the costs with private and public funding, fundraiser, events, raffles, and most important with the help of the community.

As we mentioned before, Clermont is a nonprofit organization and we will do everything in our power to give the relief to the families in need. No one will be rejected because they do not have the money or the insurance cannot help. No money will be required from patient and every single dollar received will be spent in the patients, and in improving our facility and our service every day.

We believe our financial even breaking point will be a year after we begin operations, and be profitable soon after. There are many patients in need, and with the government and public grants each person will receive the treatment they need, and we will become the hope of many.

PUBHLTH 122 Lecture Notes - Lecture 3: Sick Individuals, Population Pyramid

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