HCMG Midterm Exam 100% Solved!!
Healthcare spending around the world - US - ANSWERSUS is the highest spender, pxq
but not a quantity issue rather much higher prices in the US
Why do higher GDP countries spend more on healthcare - ANSWERShigher income =
higher quality of life = wanting more years so enjoy invest more in their healthcare
margin of utility of function increases much faster than health
Why are US prices so high - compared to europe - ANSWERShigher prices!
less regulations, not universal providers, have market power (prices can be higher bc
need to pay for R+D, etc), suppliers also have market power (monopoly on drugs)
To compare, Europe national insurance w a lot of market power to negotiate price bc
they have a monopsiny or one buyer
Life expectancy as a poor measure of spending - ANSWERSpremature babies survive
in US bc we have a very intensive medical system and we try really hard to save people
also behaviors like obesity, drug abuse, etc thats unrealted to healthcare that healthcare
tries to fix but really hard to change habits
better to look at the opportunity cost!
US vs Avg health expenditure and why US is growing faster - ANSWERSin US vs avg
see that the gap between is group because US is growing faster than the average -->
why? innovation! not a story really about wasteful spending but its a story about the
innovation that drives the prices higher
two considerations - monopoly pricing is inefficient but theres also a dynamic efficiency
that allows the companies to make a profit to fund further innovation
Price Changes and Quality Adjustments - ANSWERShospitals are so expensive! but
they arent adjusted
if you see a 200% price increase does this equal a 200% quality increase?
What statement about your health system do you most agree with? - ANSWERSfor all
countries people who want to fundamentally change is half!
all criticize their health system
US espically - 27% believe should be totally repealed
, How do countries deal with these issues in people being unhappy with their healthcare?
- background on issues countries face - ANSWERSanswer is it depends because all
countries are different
some are more rural like rwanda and need to use drones and tertiary hospitals
some are more elderly like Japan and need to deal with end of life care
also burden of disease is very different
Price of health vs price of healthcare - ANSWERSprice of health is infinite! being
healthy cant have a price
thus as new things are discovered the price of health is constantly decreasing because
as a cure is found thats better than dying
but price of healthcare is increasing as tech and new innovation drives prices higher
What is health insurance? - ANSWERSincreases access and lowers individual risk
pay for the unhealthy people through everyone elses contribution
premium for healthy people is cheaper because less risk because less likely to get sick,
premium for sick people is higher because higher risk since more likely to get sick
health insurance recognizes different risk and thus charges differently!
ability to transfer risk from unhealthy to healthy people and price transferring from
healthy to unhealthy
Issues with Health Insurance (pre existing conditions) pre ACA --> adverse selection in
action - ANSWERSissue of pre existing conditions - used to put everyone in a pool and
make them pay the same (even sick and healthy!)
this makes price increase because unhealthy people are expensive, but then the
healthy people drop out since expensive and then have to charge sick people more and
more... eventually the pool collapses when its just unhealthy people
so what do countries do... community rating! (price discrimination)
Adverse Selection - ANSWERSmisinformation issue, insurance doesnt price their
insurance correctly causing the healthy individuals to drop out so now the pool is jsut
sick people
Idea behind Community Rating - ANSWERSidea is that it transfers the risk and benefit
by not charge one demographic more or less
Healthcare spending around the world - US - ANSWERSUS is the highest spender, pxq
but not a quantity issue rather much higher prices in the US
Why do higher GDP countries spend more on healthcare - ANSWERShigher income =
higher quality of life = wanting more years so enjoy invest more in their healthcare
margin of utility of function increases much faster than health
Why are US prices so high - compared to europe - ANSWERShigher prices!
less regulations, not universal providers, have market power (prices can be higher bc
need to pay for R+D, etc), suppliers also have market power (monopoly on drugs)
To compare, Europe national insurance w a lot of market power to negotiate price bc
they have a monopsiny or one buyer
Life expectancy as a poor measure of spending - ANSWERSpremature babies survive
in US bc we have a very intensive medical system and we try really hard to save people
also behaviors like obesity, drug abuse, etc thats unrealted to healthcare that healthcare
tries to fix but really hard to change habits
better to look at the opportunity cost!
US vs Avg health expenditure and why US is growing faster - ANSWERSin US vs avg
see that the gap between is group because US is growing faster than the average -->
why? innovation! not a story really about wasteful spending but its a story about the
innovation that drives the prices higher
two considerations - monopoly pricing is inefficient but theres also a dynamic efficiency
that allows the companies to make a profit to fund further innovation
Price Changes and Quality Adjustments - ANSWERShospitals are so expensive! but
they arent adjusted
if you see a 200% price increase does this equal a 200% quality increase?
What statement about your health system do you most agree with? - ANSWERSfor all
countries people who want to fundamentally change is half!
all criticize their health system
US espically - 27% believe should be totally repealed
, How do countries deal with these issues in people being unhappy with their healthcare?
- background on issues countries face - ANSWERSanswer is it depends because all
countries are different
some are more rural like rwanda and need to use drones and tertiary hospitals
some are more elderly like Japan and need to deal with end of life care
also burden of disease is very different
Price of health vs price of healthcare - ANSWERSprice of health is infinite! being
healthy cant have a price
thus as new things are discovered the price of health is constantly decreasing because
as a cure is found thats better than dying
but price of healthcare is increasing as tech and new innovation drives prices higher
What is health insurance? - ANSWERSincreases access and lowers individual risk
pay for the unhealthy people through everyone elses contribution
premium for healthy people is cheaper because less risk because less likely to get sick,
premium for sick people is higher because higher risk since more likely to get sick
health insurance recognizes different risk and thus charges differently!
ability to transfer risk from unhealthy to healthy people and price transferring from
healthy to unhealthy
Issues with Health Insurance (pre existing conditions) pre ACA --> adverse selection in
action - ANSWERSissue of pre existing conditions - used to put everyone in a pool and
make them pay the same (even sick and healthy!)
this makes price increase because unhealthy people are expensive, but then the
healthy people drop out since expensive and then have to charge sick people more and
more... eventually the pool collapses when its just unhealthy people
so what do countries do... community rating! (price discrimination)
Adverse Selection - ANSWERSmisinformation issue, insurance doesnt price their
insurance correctly causing the healthy individuals to drop out so now the pool is jsut
sick people
Idea behind Community Rating - ANSWERSidea is that it transfers the risk and benefit
by not charge one demographic more or less
