Term
| Describe the major features of the distribution of spending between eligible groups for Medicaid. |
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Definition
The elderly and disabled account for 25% of Medicaid enrollees and 70% of the spending. The dually eligible account for 40% of Medicaid spending. The 3.6% of the enrollees with expense above $25,000 in 2001 accounted for nearly half of all spending.
Children represent nearly half of all enrollees but less than one fifth of spending.
Medicaid accounts for 17% of all spending on health care in the US, and it accounts for 44% of the spending on nursing homes. |
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Term
| What is SCHIP, who does it cover? How does it differ from Medicaid? |
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Definition
SCHIP stands for State Children’s Health Insurance Program which was enacted as part of the Balanced Budget Amendment (BBA) in 1997. SCHIP is a health insurance program designed to cover low income children who are not covered by Medicaid.
In 2005 it covered 6 million children with a high of 4 million at one time.
Each state chooses between expanding Medicaid to cover additional children, establishing a new program, or some combination of the two.
States must provide benchmark services which can be equal to either the federal, state, or the largest commercial HMO plan's benefits.
One way these plans would differ from Medicaid is that they may not cover all the services under EPSDT. |
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Term
| What is an entitlement program? Name one government financed program that is an entitlement program and one that is not. Explain why they are or are not entitlement programs. |
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Definition
| Entitlement programs are essentially mandatory benefits provided to all those who qualify for them. Medicaid is an entitlement program, VA hospitals are not. If someone qualifies for Medicaid they are guarenteed benefits but the VA has a budget so they have to operate within that budget. |
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Term
| Describe the major historical trends in health care spending in the United States. |
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Definition
| Apart from short breaks in the 1930s and 1990s, health care spending has consistently grown faster than the GNP for the past 80 years. Government expenditures increased from 25% of total expenditures in 1960 to about half in 2008, primarily due to the introduction of Medicare (22.8% in 2008) and Medicaid (16.2%). Private expenditures decreased from about 75% of spending in 1960 to a little less than half now. The composition of private spending changed significantly. Out of pocket spending decreased from over half of all expenditures in 1965 to 14.2% in 2008. Insurance benefits increase from 25% of all expenditures in 1965 to 35.4% in 2008, but has declined slightly in recent years. The composition of public spending also changed. Federal spending increased from 10% of all expenditures in 1960 to 36.8% in 2008. State and Local spending has had a roughly constant share of the expenditures, roughly 12-14%, depending on what all is included. |
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Term
| Contrast rates of spending during different periods in recent years and projected spending 1970 –1993, 1993-2000, 2001-2002, and since 2002.What were the major reasons for the changes? |
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Definition
| After the advent of Medicare and Medicaid for several decades there was double digit growth in annual spending on health care in the US. That changed about 1993, with the annual growth rate about halved first because of the effect of managed care on private spending and then because of the effect of the BBA on government spending. With the partial undoing of the BBA and (later) managed care the rate trended back toward (but not to) double digits in 2001-2002. Since then the rate has tended to gradually slow and was down to 4.4% in 2008. |
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Term
| (Leavitt) As of 2007, what were the size, in terms of GNP, of the major sectors of health care spending in the US. What was the change in these sectors since 1993? |
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Definition
Expenditure...% of GNP...
Hospital Expenditures were 5.04%
Physician and Clinical Services were 3.46%
Retail Prescription Drugs were 1.65%
Nursing Home Care was 1.38%.
Since 1993 Hospital Care declined from 36% of total health care spending and prescription drugs increased from 6 % to 10%. |
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Term
| What is the difference between positive and normative economics? |
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Definition
Positive economics tries to determine the consequences of a policy.
Normative economics tries to determine which policies should be followed. |
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Term
| What is COTH? What is the “triad” of teaching hospitals’ mission. What % of US hospitals are COTH hospitals? |
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Definition
| COTH is the Council of Teaching Hospitals and Health Systems. Slightly less than 10% of US hospitals are COTH. The Triad includes teaching, research and patient care. |
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Term
| What is the relative share of not-for-profit, public and investor owned acute care hospitals in 2002? How has that distribution changed since 1982? |
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Definition
These are rough estimates for 2002: 5,000 hospitals, 60% not-for-profit, 25% were state and local acute care hospitals and 15% were investor owned.
Between 1982 and 2002 the number of not-for-profit acute care hospitals declined by roughly 10%, the number of public acute care hospitals declined about 33% and the number of investor owned hospitals increased slightly. |
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Term
| How did the number of acute care hospitals change between 1982 and 2002? How did the average daily census change between 1982 and 2002? How did the FTEs between 1982 and 2002? |
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Definition
From approx. 5,750 in 1983 to approx. 5,000 in 2002.
The average daily census declined from about .75 million to just over .5 million.
FTEs increased from about 3 million to about 4 million. |
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Term
| What are the four types of risk management? Provide a health care example of each type. |
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Definition
Transfer Risk – Buy insurance.
Reduce Risk – Purchase sprinkler or security system.
Bear Risk – Take no action.
Pool Risk – Group of independents get together and help each other cover risk. |
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Term
| Explain the concept of repackaging risk. |
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Definition
| The objective of repackaging risk is to partition one risk into two. This should create one option that is less risky than the original, and one that contains higher risk. |
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Term
| What are the major problems with using the standard deviation as a measure of risk? Make sure to explain prospect theory. |
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Definition
The standard deviation does not always adequately reflect risk. For example, a firm's owners may place a very high priority on limiting any losses to a certain level. The standard deviation doesn't necessarily let managers know the probability of a loss exceeding the limit.
Prospect Theory: This theory suggests that individuals begin at some reference point, and the additional utility from a gain is less than the utility lost from a loss of the same amount. The theory also suggests individuals tend to over weight small probabilities. For example, a typically risk neutral person might buy insurance against an airplane crash and also purchase a lottery ticket. Manning and Marquis use data from the Rand study and found some evidence consistent with prospect theory. For example, people appear to be more sensitive to losses than to similar size gains. |
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Term
| What are the factors that the Andersen models indicate influence access to health care? Give an example of each type of factor? |
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Definition
| At the top is Health Policy of which Financing Organization is below. Then the four categories with their subgroups. Potential Access - Structural Indicators (Characteristics of Health Delivery System): Availability...Volume and Distribution; Organization...Entry and Structure. Potential Access - Process Indicators (Characteristics of Populations-at-risk): Predisposing...Mutable and Immutable, Enabling...Mutable and Immutable, Need...Perceived and Evaluated. Realized Access - Objective Indicators: Utilization of Health Services...Type, Site, Purpose, and Time Interval. REalized Access - Objective Indicators: Customer Satisfaction...Convenience. Availabitliy...Financing and Provider Characteristics. Quality. |
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Term
| What does Andersen mean by a ‘mutable’ factor? List some. |
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Definition
| In policy research one must consider three types of variables; outcome or dependent variables and two types of independent variables, which are called policy variables. Of these two policies one can be changed or manipulated, called mutable, the other is a control variable, which affects outcome variables but is immutable or cannot be manipulated in that it cannot be changed by public policy. |
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Term
| What does Andersen suggest as different measures of access? |
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Definition
| Access is defined as "those dimensions which describe the potential and actual entry of a given population group to the health care delivery system." Equity is said to exist when demographic and need variables account for most of the variation in utilization. Inequitable access occurs when social structure, health beliefs, and enabling variables determine who gets medical care. Anderson differentiates between potential access (which includes variables such as the number of providers in the community and the distribution of the providers in the community), with realized access, (which includes variables such as consumer satisfaction with their care and the per capita number of office visits in a year). |
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Term
| Describe Grossman’s model. What are the reasons that the model suggests people demand health care? What is the process that is used to meet this demand? |
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Definition
Model looks like and X with arrows pointing right. Health Care and Time both point to Health, which splits out to Consumption and Investment.
Grossman’s model is an economic model that developed from human capital theory. The model shows:
1. The demand for medical care is a derived demand. Consumers want health, and medical care is an input that helps produce health.
2. The consumer both purchases the inputs and produces health. They combine time and inputs so they are part of the production process.
3. Health is a capital good that depreciates. The cost of holding health for one period is depreciation and interest forgone. The depreciation is faster for elderly because their cost of holding health is higher.
4. Health has the following aspects:
A) Consumption - people want health because it makes them feel better
B) Pure investment - health allows someone to work more, so health is worth more to high wage workers. |
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Term
| Briefly describe Parson’s concept of the sick role. |
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Definition
Parsons argued being sick was a role, and not just a condition, if there was a set of institutionalized expectations and corresponding sentiments and sanctions. The "sick role" includes four institutionalized expectations:
a. The sick are exempted from some activities, and may be required to give up some activities. The exemption is relative to the "nature and severity of the illness".
b. The sick must have a condition that they can't solve on their own. Parsons considers this closely related to the first point, since it absolves the sick of the responsibility of caring for themselves.
c. The sick must want to get well.
d. The sick are obligated to seek technically competent help and must cooperate in the process of trying to get well. Parsons states that this obligation is in proportion to the severity of the condition and in "the most usual case" involves care from a physician. Parsons considers this element closely related to the requirement of wanting to get well. |
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Term
| What is a production function? |
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Definition
| A production function is the technical relationship between combinations of input and the resulting outputs. |
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Term
| What types of risk does reinsurance control? What types of risk does it not control? |
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Definition
Reinsurance mainly serves to protect an insurer against unpredictable variation in claims experience. In any particular year a health plan may experience either more than the plan's average number of high cost patients or less than the plan's average number of high cost patients. Reinsurance provides protection against a single bad year that could cause severe financial results for the plan. A side benefit of reinsurance is it may allow the primary insurer to underwrite more coverage than they otherwise could with the same level of reserves.
Reinsurance generally offers little protection against the risk that the characteristics of a particular plan will cause it to consistently have high claim costs. Although particular reinsurance policies vary, frequently policies adjust premiums to reflect claims experience. Reinsurers may also respond to a high cost plan by limiting or dropping the plan's coverage. As a result, over time plans will tend to bear the full cost of the claims against them. For this reason traditional reinsurance will not protect against adverse selection. |
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Term
| List 2 sources of risk that are present for providers when they agree to capitated payments instead of fee for service. List 2 sources of risk for providers when they agree to fee for service payments instead of capitated payment. |
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Definition
1-Hospital Cost, Utilization: Usually at least a shared risk. Catastrophic High Claims: Usually protected by reinsurance, unless large plan; may be excluded from shared risk.
2-Collection: No pay, low pay, slow pay. Access of Patient: Medical group may refuse patient. |
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Term
| Briefly describe the design of the Rand study. |
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Definition
The study used a four equation model.
1. A probit equation for the probability an individual will receive any medical service during the year.
2. A probit equation for the conditional probability an individual will have at least one inpatient stay, given they have medical use.
3. A linear regression for the logarithm of total annual medical expenses for the outpatient-only users of service.
4. A linear regression for the logarithm of total annual medical expenses for the users of any inpatient services. |
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Term
| What were the principal findings of the Rand study? |
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Definition
The data show the use of medical services responds to changes in the amount paid out-of-pocket. The per capita expenses on the free plan are 45% higher than those on the plan with a 95% coinsurance rate subject to out-of-pocket expenses.
Cost sharing affects primarily the number of medical contacts, as opposed to the intensity of those contacts.
There is no significant difference among the plans with respect to inpatient services.
Outpatient-only cost sharing reduces total expenditures relative to free care, largely by reducing the likelihood of any use. It also reduces inpatient use but by an insignificant amount.
There was no differential response to health insurance coverage between the healthy and the sickly.
Poor adults with high blood pressure had a clinically significant reduction in blood pressure in the free fee for service plan compared to the plans with cost sharing. |
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Term
| What are the policy conclusions of the Rand study? |
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Definition
They decisively reject the hypothesis that increased coverage of outpatient services, holding constant the coverage of inpatient coverage will reduce expenditures.
Emergency room visits are as responsive to the cost sharing aspects of a plan as are physician office visits.
More complete coverage of psychotherapy services was not shown to reduce total medical costs.
Use of well care services is about as responsive to changes in price as other services. |
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Term
| In several sentences briefly describe Weisbrod’s model of the nonprofit sector. To what extent is the model consistent with the development of not for profit hospitals in the United States? |
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Definition
Burton Weisbrod suggests a model where a significant minority of the population feels that the amount of publicly provided services is too low. Some of these people get together and finance nonprofit organizations to provide additional public services. In this manner, not-for-profit firms are a mechanism for converting charitable gifts into the services donators demand. Under this model the not-for-profit sector is a third sector of the economy that supplements the private sector and government. Weisbrod’s theory provides an explanation for the original financing of not-for-profit hospitals. Many of these hospitals were built with public donations. At the time there was insufficient political support to pass a law that paid for care of the poor with government funds.
Jeffrey Weiss points out that Weisbrod’s model doesn’t necessarily predict that the net effect of charitable contributions will be to increase the amount of public services. It could be that the presence of nonprofit organizations reduces the general public’s desire to fund public services with government spending. Alternatively, the growth of government provided health care could be seen as discouraging donations to charities that provide health care. |
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Term
| Contrast the major theories of why there are not-for-profit organizations. |
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Definition
1) Nonprofits are a response to government failure.
2) Nonprofits are a response to information asymmetries and transaction costs in private markets.
3) Nonprofits further goals of entrepreneurs and managers.
4) Nonprofits are driven by competitive interaction with other nonprofits. |
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Term
| Contrast theories of hospital behavior. Provide a one sentence description of each of the following models, and a reason why one might be preferable to the others: profit maximization model, the utility maximizing model, physician control models, the Harris model, and constituency models. |
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Definition
Profit Maximization Model predicts Profit maximizers produce at the point where marginal revenue equals marginal cost...hospitals will reinvest profits by chosing those investments that yield the highest return.
The Utility Maximizing Model managers have objectives other than maximization of profits. In utility maximizing models, hospitals may maximize:
1. Quantity of services
2. Quality of services
3. Prestige
4. Environment for executives "Slack"
Physician Control Model: physicians act as contractors who retain the residual revenue after other inputs are paid. In these models physicians have an incentive to favor over investment in hospital equipment, since this investment increases their productivity.
The Harris Model: Harris conceptualizes the hospital as two separate firms, a medical staff, which is the demand division, and the administration, which is the supply division. Physicians adapt to uncertainty and insure that their patients will have needed inputs. For example they schedule operating rooms just in case. This suggests excess capacity isn't totally inefficient, since it would avoid the unnecessary costs associated with canceled procedures.
Constituencey Model: views hospitals as trying to serve multiple constituencies. This is shown in the figure labeled Figure 2. Instead of trying to maximize profit, the managers must balance the interests of patients, physicians, government agencies, employers, professional trade organizations and others. |
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Term
| What advantages and disadvantages do for profit hospitals have when compared to not for profit hospitals? Does the evidence suggest that either type is more efficient? |
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Definition
| Disadvantage would be taxes, advantage is that they are not constrained in many ways as tax-exempt are. They are at least no more expensive than for profit. |
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Term
| Briefly define governance. What is the distinction between governance and management? What are the roles of a not for profit board? |
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Definition
| Governance is the direction, control and exercise of authority. Governance describes who has the power, authority explains the basis of the power. Governance determines who manages, the organization’s mission, capital investment. Management hires, schedule, co-ordinates departments. A not for profit board is responsible for policy and oversight, as opposed to management and administration |
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Term
| What are the factors that the Andersen models indicate influence access to health care? Give an example of each type of factor? |
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Definition
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