question

adverse selection

answer

high-risk individuals are attracted to the pool selection reduces the efficiency of health insurance markets while redistributing income demand

question

Supplier-induced demand

answer

the person that is paid for the service determines how often the service is provided - creates conflict of interest

question

Moral hazard

answer

People with insurance have less incentive to avoid risky behaviour less attention paid to prevention more healthcare consumption demand side

question

cherry picking

answer

intense competition to only enrol healthy populations in managed care plans supply side

question

externality

answer

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

question

Pareto-optimum

answer

allocative efficiency

question

economic features of healthcare markets

answer

• Heterogeneous products • Exit barriers • Entry barriers • Information a-symmetry • Limited amount/number of supplier

question

Health economic approach

answer

-Imperfect markets •Imperfect information •External effects •Collective/public good

question

main types of health insurance

answer

Tax finance (NHS) Private insurance(e.g. USA) Social insurance(e.g. Germany)

question

conditions of a perfect competitive market

answer

- many consumers and many producers - no single price setter, the price is given - perfect information - all good produced are homogenous goods - free entry - free exit

question

income effect

answer

the change in consumption resulting from a change in real income

question

normal good

answer

a good that consumers demand more of when their incomes increases Income elasticity bigger/or 0

question

inferior good

answer

a good that consumers demand less of when their incomes increase Income elasticity below 0

question

luxury good

answer

A good with an income elasticity of demand greater than one; a subset of normal goods. Income elasticity above 1

question

market failure

answer

a situation in which the market does not distribute resources efficiently

question

market failures healthcare

answer

Uncertainty Moral hazard Asymmetric information (Principal-Agent problem) externalities

question

government failure

answer

government intervention that fails to improve economic outcomes

question

price elasticities

answer

% change in demand / 1% change in price

question

income elasticities

answer

change in demand due to change in income

question

utility

answer

ability or capacity of a good or service to be useful and give satisfaction to someone

question

price elasticity

answer

A measure of the sensitivity of demand to changes in price

question

mean price elasticity healthcare

answer

-0.2 (RAND experiment)

question

inelastic demand

answer

demand in which changes in price have little or no effect on the amount demanded

question

coinsurance

answer

part of charges that an insured person must pay for health care services after payment of the deductible amount

question

co-payment

answer

a small fixed fee paid by the patient per treatment

question

Evidence for effectiveness of cost-sharing

answer

Rand Experiment: reduces usage of services by 30%

question

Issues with deductibles

answer

patient heterogeneity (health status) benefit heterogeneity (medical benefits) no incentive for containment for chronically ill higher out-of-pocket expenses for chronically ill

question

shifted deductibles

answer

interval payments

question

iron triangle

answer

Access Cost Quality

question

principal agent problem

answer

a problem caused by an agent pursuing his own interests rather than the interests of the patients

question

parties involved in healthcare

answer

Patients Providers Payers

question

agency problems in HC

answer

information deficit difficult to monitor quality by patients cream skimming by insurers adverse selection supplier induced demand

question

Supplier induced demand

answer

when practitioners have financial interest in additional treatments diminishing marginal increase of SID if supply increases more SID if physicians earn less that reference income

question

fee-for-service

answer

method of payment under which a provider's payment is based on each service performed evidence of overprovision

question

utility maximization

answer

an assumption that people try to achieve the highest level of utility given their budget constraint

question

Reinhardt's fee test

answer

If an increasing supply of doctors results in higher fees (P1>P0) = evidence of SID No conclusive evidence

question

Small area variation(SAV)

answer

tool to describe how rates of health care use and events vary over well-defined geographic areas

question

SAV

answer

Physicians uncertainty Physicians lack of knowledge

question

Reduce principal-agent-problems

answer

contract design selection of agents reputation mechanism peer pressure code of conduct malpractice suits

question

agency theory

answer

The analysis of how asymmetric information problems affect economic behaviour

question

social welfare

answer

consumer surplus producer surplus summed over all individuals

question

resource allocation in HC

answer

marginal benefits equal marginal costs-->reducing mortality up to convergence points implies socially optimal mortality rate geeater than zero

question

quality in HC

answer

quality goes up if consumers more sensitive to quality quality goes down if consumers more sensitive in price positive effect of competition

question

Regulated price system (competition)

answer

competition can be beneficial improved quality welfare effects are unclear

question

free price system (competition)

answer

no clear evidence in favour of competition mixed evidence if competition increases prices

question

insurance

answer

Risk pooling transfer of risk destruction of risk

question

Demand for insurance

answer

risk aversion loss-probability loss loading fee income/wealth moral hazard

question

Insurance Premium

answer

risk premium+loading fee+profits

question

Perfect competition

answer

expected profits will tend to zero

question

taxonomy

answer

identification, naming, and classification

question

social insurance programmes

answer

provided through regulation and taxes (Folland) Mandatory (Mossialos) Element of cross subsidy necessary (Enthoven)

question

solidarity principle

answer

high risk individuals receive subsidy from low risk individuals to increase access to health care

question

Why is health insurance different?

answer

ex-ante appraisal of losses difficult moral hazard mandatory reimbursement even when engaging in risk activities cross subsidies

question

Reasons for Mandatory cross-subsidies

answer

Externalities financial risk of becoming a high risk in the future moral hazard

question

Motives for mandatory insurance

answer

prevention of free riding lack of foresight high transaction cost of alternative ways to organize cross-subsidies

question

free riding

answer

enjoying the benefits of some good or action while letting others bear the costs

question

merit good

answer

a socially desirable good which is under-provided by the market mechanism

question

Functions for 3rd party in HC

answer

insurance function agency function access function

question

payment models in HC

answer

reimbursement model contract model integrated model

question

Three waves of HC reform

answer

universal coverage and access controls, rationing and expenditure caps incentives and competition

question

Problems of first wave of HC reform

answer

uncontrollable health care cost inflation as a result of absence of constraints on demand and supply

question

Cost Containment in HC

answer

co-payments co-insurance deductibles rate regulation quality monitoring global budgeting

question

Problems of cost containment polices

answer

conflicts between rationing and access to care supply and price regulation result in inefficient allocation of resources cannot contain cost in the long run

question

regulated competition

answer

competition can be beneficial improved quality welfare effects are unclear

question

equity in HC

answer

Collective Action is appropriate complete equality is rejected complete autonomy is rejected

question

efficiency in HC

answer

perfect efficiency s not attainable most people believed more treatment better than less

question

Managed competition

answer

Triangle Consumer Health Plan Sponsor

question

sponsors in HC

answer

collective agents on the demand side contract with competing health plans guarantor of coverage

question

counteract market failure

answer

pricing risk adjustment quality assurance standard benefit packages

question

types of subsidies

answer

risk adjustment subsidies premium adjusted subsidies excess loss compensation to insurers

question

premium adjusted subsidies

answer

reduce incentives for high risk consumers for lowest premium induce over insurance misallocation of subsidies

question

requirements for implementation of shifted deductibles

answer

data about the patients' health status annual costs of the services for each patient or group of patients well informed patients knowledge about the 'really necessary' services

question

requirements for implementation of value-based insurance design

answer

Information absolute cost-effectiveness available services/treatments information disease distribution among patients cooperation across organizations to identify specific patient groups data privacy

question

Is cost sharing the best solution for achieving efficiency in health care systems?

answer

Incentives for efficiency should be at both sides combined with more emphasis in preventive actions bonus systems for providers continued education programs for health care providers

question

Deductible

answer

certain amount of money consumers pay their health care expenses out-of-pocket

question

Why cost sharing?

answer

major part of costs is shifted from provider to consumer effective way of reducing costs from public to private sector involve patients in health decision making process

question

capitation

answer

Rewards cost-efficient and effective care provided Less risk of supplier induced demand More financial risk for the physician Risk of withholding of expensive care

question

Health Production Function

answer

what can be produced with given inputs substitution between inputs diminishing marginal product

question

Economies of Scale for Hospitals

answer

up to 250 beds bigger is not better quality not always considered

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