Chapter 1 U.S.

Healthcare System
Issues
Submitted by: Nimra Farrukh (Role no. 1)
Submitted to: Dr. Sajid Nazir
 Book: Essentials of Health
Economics by Diane M. Dewar
Understanding
the overall
focus of the
book
Total 6 parts of the book:
Evaluating
What is Issues in
Healthcare the
Healthcare Demand Supply Health
Markets Healthcare
Economics? Economics
System
 This part
includes two
Part I: What is chapters,
Healthcare chapter 1 and 2:

Economics?
1. U.S.
Healthcare 2. The Role of
System Issues Economics
  Focus areas in this chapter include:
Chapter 1- U.S
Healthcare 1. The Healthcare System.
System Issues 2. The Role Of Insurance.
3. Individual Versus Population Health.
  U.S. Healthcare System is heavily influenced by:
The Political Climate
Characteristics Economic Development
Of The U.S. Technological Innovation And Diffusion
Healthcare Social Values
System The Physical Environment
Demographic Trends (Shi & Singh, 2005).
 1. There is no central governing agency and little
coordination.
2. The delivery system is technology driven and focused on
acute care.
3. The system is high cost, but only yields average health
What Differs outcomes.

U.S Healthcare 4. Health care is delivered under imperfect market

conditions.
System from 5. The private sector is the dominant market.
Others? 6. Market goals and social justice are in conflict.
7. There are multiple organizational forms and players.
8. There is a quest for integration and accountability.
All of these characteristics lead, in concert, to a dysfunctional
healthcare system and need reforms.
  Three major issues causing concern include cost,
quality and access of healthcare services.
 Factors including decline in private health insures,
steady increase in no. of uninsured people, gaps in
coverage, upward trend in medical care spending
refers that U.S healthcare system is in CRISIS.
 According to polls, almost 80% of insured people
reported that quality of healthcare services received
was good to excellent in the last year. However,
access is the real concern. Almost 50% of insured
people think that if they become serious ill, they will
not access to the needed healthcare services
(Donelan et al., 1999).
The Needed  Uninsured people have to look for their healthcare
services towards
Reforms Public Assistance
Private Charity
  The real concern of both insured and uninsured
people is the continuance of heath coverage.
Mostly, even if indiivduals are satisfied with the
received care, they still feel dissatisfied with the
overall system.
 Probable causes of healthcare crisis include:
Unrestrained use of technology
Increased use of health insurance and tax
subsidies encouraging individuals to over insure
(Blendon et al., 1993).
• Uninsured people still have access to high quality
medical care through public clinics and hospital
The Needed emergency rooms.
Reforms • In fact, over one-half of the uninsured state that
they have no trouble getting the health care that
they need for free (Donelan et al., 1999).
 Health Care
 Health care is an output in which certain inputs or
factors of production are combined in varying
quantities—usually under a physician’s supervision.
 The inputs include provider services, medical
equipment, and pharmaceuticals.
 Much of the difficulty in measuring the healthcare
process stems from the issue of quality and intensity.
 U.S. healthcare system is noticing increased spending
on as healthcare spending counted 15% of total GDP in
1997, but almost 1/5th of total GDP in 2014 and expected
to reach 33% of total GDP by 2050s.
 Quality & Output
 Quality is a broad term and is elusive in its meaning (Donabedian,
1988). Its definition depends on the type and primary focus of the
organization. The challenge, then, is in choosing the particular aspect
of quality to measure. For this reason, "visits” should only be
cautiously used as a measure of physician care.
 Output measurements are usually conducted to make comparisons,
either against other output measures or against some standard
measure.
 Types: 1. Time series - A time series comparison measures the output
of the same commodity at different times
 2. Cross-sectional comparisons - measure many different outputs
(e.g., health care provided by different providers or in different
sociodemographic groups) during the same time period.
  Another type of healthcare sector output- to avoid “risk”
and “uncertainty”.
 Insurers are organizations that specialize in accepting risk.
When an insurer accepts a large amount of risk, the average
loss to the insurer becomes predictable.
Health  Health insurance is its own output in addition to health care.
Insurance  Costly full health insurance- Cost-sharing programs:
Catastrophic coverage
Coinsurance
 Health Status
 The World Health Organization has defined health as
“a complete state of physical, mental and social well-
being, and not merely the absence of illness or
disease” (Jacobs and Rapoport, 2002).
 This is a very broad definition and the characteristics
of health suggested by it are not easy to pinpoint
and measure. The definition provides three
components of health to consider—a person can be
physically healthy, but still lacking on the other
components.
  For many years, health was identified by the
presence of disease (i.e., morbidity) or by death
(i.e., mortality).
 Individual measures, such as the diagnosis rates
for certain conditions or rates of hospitalization,
were used as indicators for morbidity. Mortality
was usually adjusted for age and gender.
Individual  In recent years, the concept of health has been
taking a more positive focus. Measurements of
Health health have focused on the characteristics that we
would expect in a healthy person. These
characteristics include:
The physical functioning of a person
The ability to perform certain tasks
The emotional and social role functioning of the
individual.
  One of the most popular population health measures is
mortality rates. Mortality rates are standardized by:
Age and/or gender and can be expressed for the entire
Population population.
Health Or for subgroups based on racial, ethnic, or geographic
qualities.
• Premature mortality