HEALTH POLICY AND POLITICS IN THE U'S'

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HEALTH POLICY AND POLITICS IN THE U.S.

• Economic Role of Government
• Week 5
• September 18

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Outline

• Current Events
• Review Policy and Strategic Planning
• Role of Government
• Market Failure
• Government Actions
• Regulation, Deregulation and Privatization
• External Readings

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Current Events
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Summary

• Overview
• Model (s) for strategic management
• Health Care Organizations
• integrate external health policy
• influence external health policy
• initiate external health policy

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Implications

• Analyze Accurate assessment of effects
• Respond/position Changes in policy
• Influence
• Identify Policy Objectives Consistent with
  goals and objectives

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Applications

• Wicks Purchasing Cooperatives
• Woolhandler Administrative Costs
• Peterson Naturopaths and Prescriptions
• Birkmeyer Surgical Volume and Mortality

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Surgical Volume and Mortality

• Comprehensive examination of hospital volume and
  operative mortality (lt30 post discharge)
• Negative relation found in all 14 procedures
  comparing high to low volume (adjust for age,
  sex, race, income, adm.status, secondary
  conditions).
• Operational implications increase volume
  (recruit MDs, market, merge programs) or exit
  product line.

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Administrative Costs

• Compare Administrative Costs US and Canada
• Goal Support Single Payer System
• Build upon prior work Role of IS, Managed Care
  and business model in lowering Adm. Costs
• Administrative Costs 31 US vs 16.7 Canada
• Operational implications Single Payer System.

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Administrative Costs

• Components of Administrative Costs
• Insurance overhead
• Employer cost of managing HC benefits
• Hospital Administration
• Administration cost of practitioners
• Nursing Home and Home Care Administration

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Purchasing Cooperatives

• Problem of small employers
• Size and lack of specialized expertise imply
  they will pay more. Use agents to advise.
• Benefits of joint purchasing arrangements
• Joint efforts give size to realize lower costs
  and improved bargaining power. May offer more
  choice.

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Purchasing Cooperatives

• Requirements
• Large number of employers
• Not the small small.
• Diseconomies from many employers
• Adverse selection
• No social value from employers not offering
  insurance
• Cost reductions.

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Naturopaths

• Gaining power to legally perform procedures and
  prescribe
• Arose from high costs and low efficacy of select
  therapies
• Arguments around training and quality standards
• Trained naturopaths note that licensing could
  help.

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Taking Stock

• Introduction The economic paradigm and health
  policy 
• Economic Models Production of health - systems
  problem
• Interest Group Theory
• Strategic Integration
• Role of Government 
• Health Associations
• Redistribution and Social Justice
• Medicare and Medicaid 
• Health Care Reform

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Question
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Role of Government

• What do we want government to do for us?
• Enforce property rights
• Correct market failure
• Redistribute income
• Other??

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Market Failure

• Externalities
• Public Utility Regulation
• Market Power
• Enforcement of Antitrust
• Behavior of Regulatory Agencies

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Externalities

• What is an externality?
• Why does externality justify government
  intervention?
• Who benefits from externalities?
• How do you resolve externalities?

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Public Utility Regulation

• What are output/pricing incentives for natural
  monopolies?
• What strategies are employed to manage natural
  monopolies?
• How does time effect public utility regulation?

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Market Power

• How does a firm gain market power?
• How does Sherman/Clayton Acts assist to control
  firms with market power?
• What other acts influence control of market
  power?

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Enforcement of Antitrust

• How are antitrust laws enforced?
• Who is responsible for initiating antitrust laws?
• What are the recent trends in antitrust
  enforcement?

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Behavior of Regulatory Agencies

• Alternative Theories
• Capture Theory
• Share Theory
• Implications of behavior on agencies.

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Government Actions

• Direct and indirect subsidies
• Grant operating rights
• Grants of patents
• Control of operations

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Regulation, Deregulation and Privatization

• Why do we have regulation?
• What are the factors leading to the movement to
  deregulate?
• What are the potential impacts of deregulation in
  health care?

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Readings

• Hospital Competition Wasteful?
• McCarran-Ferguson Act and Competition
• Federal Health Information Policy
• Limitation on Malpractice Laws

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Hospital Competition Wasteful?

• Classic Dichotomy, social impact of competition
• Economic theory cost, quality, efficiency
• Social model market failure, increased cost,
  medical arms race, monopolistic competition
• General findings
• More competition after 1990 lowered costs and
  improved outcomes.

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McCarran-Ferguson and Competition

• MF provides insurance exemption from antitrust if
  regulated by state
• Pooling of action may reduce costs of insurance
• General argument that regulation enables
  maintenance of monopoly power
• Competitive nature of insurance industry

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Limit Malpractice Awards?
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Federal Health Information Policy