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Eco 343 Week 2 Notes

by: Rachel Barnes

Eco 343 Week 2 Notes ECO 343

Rachel Barnes
GPA 3.9

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About this Document

These notes were from the second week of class and cover where the ACA receives its funding. We also examined, compared, and contrasted the different healthcare systems in the United Kingdom, Germa...
Health economics
Class Notes
Economics, Healthcare, health
25 ?




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This 4 page Class Notes was uploaded by Rachel Barnes on Saturday February 6, 2016. The Class Notes belongs to ECO 343 at Grand Valley State University taught by Callison in Summer 2015. Since its upload, it has received 28 views. For similar materials see Health economics in Economcs at Grand Valley State University.

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Date Created: 02/06/16
Eco 343, Health Economics Week 2 Notes Wrap up ACA  th Jan 19 , 2016  How the ACA is financed/funded o Reducing Medicare payments to hospitals/physicians  Caps the growth rates and takes the rest and applies it towards the ACA o An increase in taxes for individuals who earn more than $200k  o Individual and employer revenues   Penalties from not supplying/and or seeking insurance for their employees o Reduction in reimbursements to Medicare advantage plans o Taxes on insurers, pharmaceutical companies, and medical device manufacturers  o Taxes on “Cadillac” health insurance plans  40% excise tax on any plan that costs more than $10,200 for an individual  or $27,500 for a family  10 year gross cost estimates o Medicaid expansions: 710 billion o Exchange subsidies: 1,075 billion o Small employer tax credits: 14 billion  Total: 1,798 billion  Net cost of covering provisions= 1,363 billion  The impacts of the ACA o The only thing we know for sure: the people in the United States are now more  insured now than they were 10 years ago, the ACA has increased our insurance  rate substantially  U.S. Healthcare Reform Reading  Mortality rate definition: deaths per total number of cases o How to improve the mortality rate  Decrease the number of deaths  Cure disease  Treatment of disease  Survival rate definition: survivors per total number of cases in a certain amount of time o How to improve the survivor rate  Cure disease  Treatment of disease  Early detection*  Lead time bias o Longevity measured depends on diagnosis time o Survival vs mortality rate o Breast cancer example  Survival rate isn’t necessarily prolonged if there is early detection,  depending on how you look at the number, it can skew both your survival  and mortality rate Germany  “Bismarck System” in 1883, or a system of managed competition   Insurance o Sickness funds: operate as tax exempt, private, nonprofit corporations o Premium: 15.5%, of which half is paid for by the employer   They differ by age and gender  Mixture of community and experience rating  Income cap at $63,000  Statutory insurance, the “public” insurance. Not taxing income  over 63k is an incentive for people to not switch over to private  insurance.  After switching to private insurance, you were not allowed to  switch back to public o Geography or occupation determines which sickness fund you join, and you stay  with that sickness fund your entire life if you so choose   Advantageous selection, or cream skimming  Trying to enroll the healthiest people in your insurance policies  Adverse selection  A pool of unhealthy people, not profitable o The premium payments now go to a central distributer rather than straight to the  sickness funds, to help discourage advantageous selection  The central distributer does risk adjustment payments to avoid  advantageous selection  Pay more for sick people  Pay less for healthy people  Very difficult to do o Private insurance  10% of the population  Private room/bed  Shorter waits  Increased access  Benefits and extra incentives  Hospitals o Private/for profit, 28% o Nonprofit, 38% o Government, 34%  o Had a dual financing system  Global budgeting, as well as private and public hospitals  Government paid for capital expenditures  Sickness funds paid for operational expenditures  Revenue comes through a point system, or a global budget system  Incentive is to not go over the cap, and works similarly for physicians  Physicians o Primarily independent (not employed by the government) o Operated within the same point system as the hospital o Allotted within the point cap, over the cap has a smaller reimbursement o Cap is decided based on the negotiated budget, as well as the value of each point  Between the sickness funds and the group representing the physicians Jan 21 , 2016 The United Kingdom  Insurance system is public o There is an option for private health insurance though  Around 11% choose it  The government provides insurance o A complete single payer health care system, as well as nationalized health care o “Beveridge model”   How is it funded? o Little to no cost sharing  No copays  No deductibles   There are still payments through taxation  Hospitals o All government owned and operated  Physicians o NHS employees o Government employees o Few private employees  Nationalized Health Coverage o Completely different from so many other countries  The government has complete control over every aspect of health care  NICE: cost effectiveness analysis (not done in U.S.)  Cutoff: quality adjusted life year of 20,000k   ICER= change in cost/change in QALY  NICE summed up: the government decides what the quality of  your life is going to be with your disease and decides if it’s worth  paying for it, and if so, it cannot surpass 20,000k, otherwise you  pay out of your own pocket for any medical expenses OR  You can live the shorter yet maybe higher quality they calculated  for you United States  Differences from Germany and United Kingdom o Insurance: mainly private insurance, but have public insurance programs as well  There is no choice in the US to have private vs public insurance   Insurance companies are mainly for profit, few are non­profit  o Hospitals: both private and public  For profit and non­profit and public (80/20/20)  Split between long term care and short term  They negotiate rates based on the guidelines set by Medicare  Diagnosis related group (DRG)  NOT fee for service anymore  DRG for any illness you show up with at the hospital o The hospital is paid the average price for the illness o Prospective payment (quicker and sicker)  Incentive to discharge patients sooner to reap the  most net income out of each customer o Physicians  Independent with independent practices/group practices  Align w/ hospital groups (very common now)  Not under control of government  Reimbursement under negotiation with insurance  Fee for service, the more you do the more you’re paid 


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