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 6
• September 25

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

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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

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Hospital Competition Wasteful?

• General findings
• More competition after 1990 lowered costs and
  improved outcomes. (See table IV)
• Combine Managed care and competition High HMO
  and competition resulted in lower expenditures
  and better outcomes.

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Federal Health Information Policy

• US health care system is behind in computer
  applications
• Inability to standardize systems so that multiple
  payers, providers etc. can communicate.
• Government regulation needed to achieve
  standardization.

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Limit Malpractice Awards?

• Some states limit economic and noneconomic
  malpractice awards
• Impact on premiums, health care costs, manpower
  supply, access to care.
• Supply improves relatively in states with caps

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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