Economic Concepts and Healthcare Programs
Answer in paragraph format, using APA guidelines (double spaces, one inch margins, Times New Roman, font 12, etc, title page) Page limit is 5 pages, excluding title or reference pages. You can use headings for each questions, but you must answer in complete sentences, not phrases or one word.
Questions
1. Define the 10 key economic concepts of Health Care Economics.
2. Describe the 4 major changes that have affected the medical care delivery system
in the United States over the last 30 years.
3. What are the reasons given (by Fuchs) for the high and rising health care
spending in the US?
4. Briefly, describe how health care is different from other commodities.
5. Briefly describe the Medicare programs/ policies.
6. Briefly describe the Medicaid programs / policies.
7. Describe the eligibility criteria an individual must meet in order to be a Medicare recipients.
8. Describe how the Medicare and Medicaid program are financed.
9. Describe how (state and federal) politics (which creates policies) can affect Medicare and Medicaid programs. (for example – how is eligibility for the Medicaid decided)
10. List the problems / flaws of the Medicare program.
11. List the problems / flaws of the Medicaid program.
12. Describe the following, include in your answer its effects on the medical care for the elderly if any.
a. Medicare Part A
b. Medicare Part B
c. Medicare Part D
The textbook used for this class is:
Henderson, J. (2018). Health economics and policy. (7th ed.). Stamford, CT: Cengage Learning.
ISBN-13:978-1-337-10675-7
You can use the textbook and other sources for references. The chapters in the book are 1,2,3,4,5,7,8,12
Healthcare Economics Study Guide
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Healthcare Economics Study Guide
Economics is an important concept of study in healthcare. According to Henderson (2018), healthcare economics describes the different factors that converge to influence the healthcare industry’s costs and spending. This paper provides answers to all the assignment questions.
Economic concepts of Health Care Economics
Healthcare economics is defined by ten key economics concepts such as scarcity and choice, opportunity cost, marginal analysis, self-interest, markets and pricing, supply and demand, competition forces, efficiency, market failure, and comparative advantage (Henderson, 2018). Scarcity and choice describe limited resources when one has to choose between available resources. Opportunity cost is the potential benefit lost when one alternative is selected over the other. Marginal analysis is the examination of benefits versus costs incurred by the same activity. Self-interest is anything done for personal gain. It is the motivator of economic decision-makers.
Markets and pricing is an efficient way of allocating scarce resources. It determines how goods and services are purchased and sold. Supply and demand is a theoretical approach that determines how decisions about market prices are made. Competition forces are variables and factors that threaten organizations and encourage them to ensure the satisfaction of society. Efficiency measures how well resources are being used to promote social welfare (Henderson, 2018). Market failure occurs when the free market fails to promote the efficient use of resources by either producing more or less than the optimal level of output. Comparative advantage explains how people benefit from the voluntary exchange when production decisions are based on opportunity cost.
Changes affecting the medical care delivery system in the United States
The American healthcare system, in the past 30 years, has witnessed major changes that have affected care delivery in the country. One of the major changes ever witnessed in the US healthcare system is the introduction of Medicare and Medicaid in the mid-1960s. It leads to an increase in the government share of spending and financial relief for poor and disabled, and older citizens (Lambrew, 2018). In 1972, the Social Security amendment was passed allowing people under age 65 with long-term disabilities and end-stage renal disease (ESRD) to quality for Medicare coverage. The third change is the establishment of the Health Insurance Portability and Accountability Act (HIPAA) in 1996. The policy) restricts the use of pre-existing conditions in health insurance coverage determinations and also sets standards for medical records privacy. The fourth change and the most important one is the introduction of the Patient Protection and Affordable Care Act (PPACA (Lambrew, 2018). It provided cheap health insurance and improved access to care even among low-income and poor families.
Reasons for the high and rising health care spending in the US
Healthcare spending in the US is rising and it is probably the highest in the world. According to Fuchs, healthcare spending in the US is growing faster than any other sector in the US economy. Fuchs suggests that the increasing healthcare costs in the US are due to advances in medicine that ensure improved quality and patient outcomes (Henderson, 2018). They include improved diagnostic tools, advances in surgical interventions, more efficient pharmaceuticals, and improved therapies. Increasing spending also depends on changes in the prevalence of health problems. Costs associated with lifestyle conditions such as obesity are high.
How health care is different from other commodities
Healthcare is normally treated as one of the commodities in the market space, however, it has unique characteristics that separate it from other commodities. These unique characteristics of health care entail barriers to entry, asymmetric information, unpredictability, trust, and payment practices (Henderson, 2018). The demand for healthcare, unlike other commodities, is irregular, except for preventive care. Healthcare demand is based on an accidental injury or the onset of an illness. It is not possible to predict the onset of injury or illness, hence not possible to predict individuals’ demand for healthcare. Healthcare customers often lack sufficient information about their health and rely totally on physicians to diagnose and treat them (Henderson, 2018). Therefore, the medical transaction carries with it ethical overtones, unlike any other transaction. Unlike other commodities that are paid for directly, healthcare is paid through third-party insurance.
Briefly describe the Medicare programs/ policies
Medicare is provided under an amendment to the Social Security Act and provides benefits through four major programs: Part A, Part B, Part D, and Medicare Advantage (Shaw, 2021). It was established in 1965 to guarantee elderly Americans, defined as those over the age of 65, access to quality health care regardless of their financial circumstances.
Briefly describe the Medicaid programs/policies
Medicaid was established in 1965 as part of the Social Security Act. Medicaid is health insurance for the poor and low-income people financed jointly by the federal government and the states. Medicaid provides low-cost health care to millions of Americans (Shaw, 2021). The federal government provides guidelines for the program. State also provides certain guidelines, which makes the program varies from one state to another.
The eligibility criteria for a Medicare recipient
For one to be eligible for the Medicare program, they must be either 65 years and older, younger people with disability, or people with end-stage renal disease. One must also be a United States resident for them to be eligible for Medicare (Shaw, 2021). People are eligible for free-premium Part A if they are aged 65 or older and if they or their spouses worked and paid Medicaid taxes for at least 10 years. While most people do not have to pay a premium for Part A, everyone must pay for Part B if they want it.
How the Medicare and Medicaid programs are financed
Medicaid is funded by both the federal government and the state governments. The federal government supports states through the Federal Medical Assistance Percentage (FMAP). Every state receives the FMAP based on per capita income and other criteria (Shaw, 2021). There is a formula for calculating FMAP, which ensures that the federal share for Medicaid spending ranges from 50-75 percent and the state takes care of the rest. On the other hand, Medicare is a federal program, funded through a mix of general revenue and the Medicare levy (Shaw, 2021). The funds come from payroll taxes, income taxes, trust fund interest, and enrollee premiums.
How state and federal politics affect Medicare and Medicaid programs
State and federal politics affect the two healthcare programs because they design eligibility criteria. The federal government defines eligibility for Medicare. States define eligibility for Medicare (Shaw, 2021). They also determine the funding as well as the type of services offered under these programs.
The problems/flaws of the Medicare program
Medicare has a few flaws that people need to understand. For instance, Medicare costs a huge amount to operate. In 2020, for example, Medicare spending was approximated at $858.5 billion (Shaw, 2021). People enrolled in the Medicare program experience unnecessary hospitalizations, which increased the financial burden of care. additionally, Medicare costs taxpayers, because it majorly relies on tax.
The problems/flaws of the Medicaid program
Medicaid also has some flaws, for instance, it has coverage limitations. There are many excursions based on the treatment in the Medicaid plan. Even if the medical provider is adamant about providing the procedure or service, Medicaid will not consider it, and the patient will be forced to either forgo the treatment or pay out-of-pocket (Shaw, 2021).
Description of the following, including their effects on the medical care for the elderly if any
- Medicare Part A
Medicare Part A provides inpatient or hospital coverage. Patients are covered up to 90 days each benefit period in a general hospital. There are also additional 60 lifetime reserve days. Medicare also covers up to 190 lifetime days in a Medicare-certified psychiatric hospital (Shaw, 2021). Part A also covers skilled nursing facility (SNF) care. Other services covered include home healthcare and hospice care.
- Medicare Part B
Medicare Part B provides outpatient/medical coverage. Part B covers medically necessary services that one receives from a licensed health professional. It covered durable medical equipment such as wheelchairs, walkers, and others (Shaw, 2021). It also covers ambulance services, home health services, preventive services, among others. The 2021 Part-B premium is $148.50 per month.
- Medicare Part D
Part D provides prescriptive coverage. It is provided only through private insurance companies that have contracts with the federal government. Part D is never provided directly by the government (Shaw, 2021). To enroll in part D, one has to choose and enroll in a private Medicare prescription drug plan (PDP) or a Medicare Advantage Plan with drug coverage (MAPD).
Conclusion
The ten key economics concepts of healthcare economics include scarcity and choice, opportunity cost, marginal analysis, self-interest, markets and pricing, supply and demand, competition forces, efficiency, market failure, and comparative advantage. This paper has answered all the questions provided to complete this assignment.
Reference
Henderson, J. (2018). Health economics and policy. (7th ed.). Stamford, CT: Cengage Learning.
Lambrew, J. M. (2018). Getting ready for health reform 2020: What past presidential campaigns can teach us. New York (NY): Commonwealth Fund.
Shaw, G. M. (2021). Medicare and Medicaid: A reference handbook. ABC-CLIO.