PUBLIC POLICY AND HEALTH

ECONOMICS
PRESENTED BY M SARMAD RASHEED
PRESENTED TO DR SAJID NAZIR
LEARNING OBJECTIVES:

• In this chapter, we will learn about:

• 1. the role of the efficiency and access to the healthcare system.
• 2. the role of a market-oriented healthcare system in providing necessary
services.
• 3. the drawbacks and benefits of the main reforms in the healthcare system.
THE MARKET-BASED SYSTEM

• US Health care is more market oriented.

• Subsidies to hospital and medical institute.
• State Children’s Health Insurance Program (SCHIP)
DEMAND VERSUS NEED

• Demand of health
• Need of health
• Demand and Supply of Healthcare
EVALUATING EFFICIENCY VERSUS EQUITY

• Insured citizens uses more resources by regular visits.

• Uninsured don’t get preventive treatment and put more load on health care system
when they have more advanced illness.
• It costs less to insure the uninsured than providing treatment to them when they can’t
afford.
• Indirect increase in social cost when communicable diseases spread from uninsured
people.
• Lower quality of life and lower labor force.
THE RISING COST OF HEALTH CARE

• Cost of health care is increasing worldwide.

• Hospitals still charge some amount even after insurance.
• Insurance companies don’t work efficiently like before.
TECHNOLOGY CHANGE AND THE COST OF
HEALTH CARE

• Health care cost rises as technology advances.

• Its more costly to produce new technology in health care sector.
• For e.g. we can do more surgeries per annum with advance technology.
THE ROLE OF MARKET IMPERFECTIONS

• Monopolistically competitive market.

• Price competition due to third party payers.
IMPERFECT INFORMATION

• Most insured people don’t have information about treatment cost. Eg

cosmetics
• Nonacute care cost.
• Large proportion of resources is used to keep some terminally patients alive
by artificial means in USA because they don’t wish to die also its considered
inhumane.
• Provide information about cost of treatment.
INEFFICIENCY OF INSURANCE MARKETS

• Insurance don’t cover all aspects of diseases.

• Marginal cost is greater than the marginal benefit of additional coverage. Eg
dental
• Price discrimination. Recent illnesses
• Different price for different individuals promotes efficiency. Salary based
• Risk sharing among members of the community is more equitable.
RECOMMENDATIONS FOR IMPROVING THE
EFFICIENCY OF THE U.S. HEALTHCARE
SYSTEM
• Reduce medical errors by monitoring overuse or misuse of medical treatments.
• The absence of competition has resulted in a lack of quality improvements in medicine.
• They don’t report failures due to the fear of trial.
• Information technology system of record keeping.
• Efficient reporting system.
• Rating of doctors according to death rate for better choosing.
•
RECOMMENDATIONS FOR IMPROVING THE
EFFICIENCY OF THE U.S. HEALTHCARE
SYSTEM
• Legal reforms for malpractice.
• Campaigns to improve health will eventually reduce health cost.
• Vaccination programs.
• Greater use of public health nurses and paramedical workers could raise the
level of health in underserved communities and provide savings, by
reducing the use of hospital emergency rooms.
SUMMARY

• The proportion of GDP devoted to health care in the United States and other high income
countries is likely to continue to rise with improving medical technology.
• The rising costs of health care does not at present appear to be primarily the result of market
failure.
• Technology, rather than market failure, appears to be the main cause of the increase in the cost
of health care.
• Countries that have succeeded in controlling healthcare costs to a greater extent than the
United States have done so largely through direct price controls and/or limiting the diffusion
of technology.