Access to health care is a broad concept that encompasses the availability and utilization of various healthcare services, the existence of such opportunities, and the ease with which the populace can obtain them (Hummer and Hayward 22). Enabling access allows the public to command the necessary health resources in order to enhance their health outcomes. Because organizational, economical, and socio-cultural factors limit health-care consumption, life expectancy must be linked to access to care. Furthermore, the accessibility, cost, and acceptability of health products and services are affected by socio-cultural, organizational, and financial factors in addition to supply. Although other health professionals argue that access to healthcare is the primary determinant of health longevity, the complex relationship between the various determinants and barriers to access makes it difficult to pinpoint a particular factor as the key contributor. Depending on the perspective of analysis, cultural settings, health needs, and health resources influence the longevity with different magnitudes. Consideration both the vertical and horizontal dimensions of the equity of access, utilization, and outcomes offers different perspectives of health longevity thereby making it difficult to prove that access to healthcare is the primary determinant.
Hummer and Hayward (26) argue that both males and females across ages and socioeconomic statuses can make substantial differences in their health longevity by having positive inputs to their lives. However, access is not the main determinant of individual consumption patterns, social behaviors, and habits, and exposure to stressors may significantly contribute to individuals’ health longevity.
Question Two
The healthcare system of the United States is considered unique among other developed economies. It relies on the private sector for health purchasing, financing, and delivery of the various care services. The public expenditure by the State and federal governments directed to the provision of healthcare services ensures that the specific populations such as the elderly and disabled receive the health products. The shifts from traditional care to managed care have been instrumental in improving service quality and access among the target population. The managed care focuses on the adoption of policies and regulations necessary to contain the rising healthcare cost while improving access and quality of such services.
According to Essock (1109), the traditional care systems limited the demand for the healthcare services since most indemnity plans created financial barriers to consumers through co-insurances and deductibles. Moreover, other policies such direct payments and reimbursements from insurers resulted in patients incurring losses since reimbursements were less than the actual charges. Managed care principle, however, focuses on the responding to the purchaser demands, containing costs, improving quality of the care provided to the population.
Organizations implementing the managed care principles have been able to monitor and coordinate provision of care services ranging from primary to tertiary care. There has been increased emphasis on the health education and prevention mechanism thereby enabling consumers to make informed choices while providers are improving the quality of their services to meet demand. Managed care has encouraged the provision of healthcare to the population in need, in the most appropriate setting, and by the most qualified providers (Essock 1109). Moreover, emphasis on cost-effective services has allowed providers and consumers to share costs while focusing on quality improvement.
Question Three
Adverse selection is the scenario where sellers or providers of certain goods and services have information that consumers do not have. Such information pertains to product quantity, quality, and pricing. In the health sector, adverse selection refers to the situation where healthcare financers and providers have asymmetric information about the healthcare consumers (Bajari et al. 751). For instance, health insurance companies may exclude people who live high-risk lifestyles, dangerous jobs, and poor health conditions from acquiring health insurance coverage. Such companies tend to reduce their exposure to large claims from such individuals by either increasing the number of premiums or denying them the chance to be covered by their various insurances covers.
Adverse selection leads to the occurrence of undesired results since a given party has more information than the other does. The lack of knowledge among the health insurance consumers makes them more disadvantaged thereby causing inefficiency in quantity, quality, and prices of the healthcare services. The players in the health insurance use the information available to them in choosing the set of contracts and the probability of benefiting from the health services. Consumers tend to prefer plans that are more generous while providers limit the degree of coverage to prevent them from incurring high losses due to larger claims.
According to Bajari et al. (763), insurance companies use the market information to forecast the behaviors of consumers thereby devising contract offers used to screen the potential clients. Such screening strategies adopted by the health insurance providers limit the success of the health care market, and financing. Regulations put in places such as the premium rate restrictions and open enrollment requirement cannot be successful in providing efficient risk pooling across all the consumers if providers can access potential customers’ information on health conditions.
Question Four
The move to contain the cost of providing healthcare services and improving the quality of the services has led to the need to understand efficiency from a broad perspective. Economists and physicians have a divergent view on the achieving healthcare system efficiency. While health providers are trying to identify the key qualities of Physicians that can help in driving health facilities to achieve their desired values, the performance of physicians have been viewed as an essential factor that affects achieving effectiveness in healthcare organizations. While economists are keen on payment for the services offered by physicians based on their workload and performance, physicians advocate for a work environment where their efforts are recognized and their contribution to service delivery rewarded.
Economists argue that like any other market, the health sector is influenced by the changes in forces of demand and supply thereby dictating the efficient allocation of the health resources. In addition, government interventions through policies and regulations on the pricing and allocation of health expenditure only distort allocation of resources. However, critics assert that ideal economic theory of market forces may not apply to the healthcare sector since other critical issues are coming into consideration other than market forces affecting the provision of health services. The economic view of efficiency is important when determining the pricing models that can be used to delivery while maintaining costs. Besides, remuneration models for physicians such as pay-per-performance can also utilize economic view of efficiency in healthcare delivery.
Physicians view efficiency of healthcare regarding how they deliver the services, the various behaviors that may limit the achievement of desired health outcomes, and time taken by the patients to receive the services. Unlike economists who criticize the whole healthcare system in the move to achieve efficiency, Physicians focus on specific behaviors to attain improvements in the sector. Physicians’ view of efficiency is applicable when addressing the issues of performance and workload.
Question Five
Price Negotiation with Suppliers
In Australia, the escalating cost of healthcare services is due to benefit scheme expenditures. To contain the rising spending, the federal government directly influences the charges of such schemes by prioritizing on the areas to direct their funding. Additionally, the government negotiates with the suppliers of such services to reduce their charges on the products and services. The Pharmaceutical Subsidized Scheme is used to fund the supply of drugs to pharmacies at subsidized prices. The move is to reduce the cost incurred in the purchase of pharmaceuticals thereby reducing the cost of healthcare products and services. Hospital funding is also managed through policies set by the federal government.
Single-Payer Purchasing
Canada uses the single-payer purchasing to control the cost of healthcare expenditure. Budgetary overruns and government decisions on investment in the healthcare sector reflects the real healthcare spending. Measures like the mandatory global budgets, resource restrictions, negotiated fee, and drug formularies helps in containing healthcare cost. Moreover, technology assessment helps in verifying the new technologies used in health facilities thereby verifying their costs versus service delivery and efficiency.
Regulated Competition
Although Switzerland's cost of healthcare provision is among the highest across the globe with more than 11% of the country’s GDP directed to healthcare spending, ‘regulated competition’ policy has been used to contain the rising expenditure. Regulating the operations of health insurers and the introduction of mandatory health insurance was aimed at containing cost. Risk equalization among the players helps in reducing the tendency of increasing charges and adversely selecting the policyholders by insurers.
The above policies may not be applicable in the United States due to the difference in the population structure and healthcare market characteristics between the U.S and other countries. For instance, the United States uses Medicare and Medicaid to provide essential health services to the elderly, disabled, and infants. Depending on a country’s priorities, the cost containment objective may not be solved by universally applying cost containment from different barriers to cost containment.
Question Six
Retrospective payments can be defined as the fee-for-service payment methods where the insurers and third parties pay for the services after the providers have delivered them. Such payments are made based on the charges set by the providers. Under retrospective method, fees are based on each service rendered to provide patients and providers’ freedom of choice. Example of such payment is laboratory test charges.
Health care providers can provide service in volumes then forward the charges to the payer for the release of medical expenditures. Since such avenues bring more revenue to the organization, retrospective payment system encourages healthcare providers to employ other means to increase the cost of services they provide. With the introduction of managed care, retrospective payments are slowly becoming unpopular as most payers and providers are embracing the adoption of prospective payment methods.
Question Seven
Cost reduction and containment are among the challenges that affect healthcare financing in the United States. The long history of poor financial planning and adoption of inappropriate policies have led to the unsustainability of the healthcare reforms in the United States. One of the negative impacts of poor financial planning is the issue of cost shifting. According to Kantarevi and Kralj (251), cost shifting can be defined as a scenario in which healthcare providers or hospitals charge insured and uninsured patients differently for similar services offered. Due to this, insured patients tend to cover the loss that providers incur when they offer services to the uninsured population.
Cost shifting is closely linked to charity care. Health providers believe that the cost incurred for charity care or provision of healthcare services to the uninsured can be compensated by overcharging the insured patients. The need to reduce expenditure on health financing by the government ends up creating a hidden tax to the population. Health providers react to cost containment by differentiating the two types of clients. However, the inability of the providers to shift can adversely affect the manner in which uninsured members of the population access and consume given health services.
Kantarevi and Kralj (253) define cream skimming as the situation where healthcare providers choose patients for some given characteristics other than their need for healthcare provision. Regarding payment scheme or capitation, creams skimming always imply the option of less ill patients. Cream skimming is adopted to enhance profitability and maintenance of the provider’s reputation. Moreover, such approaches help the hospitals/ providers achieve the desired level of productive efficiency. Consumers of the services may be limited from accessing some given health service since they lack the desired characteristics of the company.
Question Eight
Over the past decades, there have been significant variations in the number of funds that countries set aside for healthcare expenditure. The differences have been associated with the varying GDP and per capita incomes. The developing economies have less healthcare expenditure compared to industrialized economies. Due to such disparities, advanced economies spend up to 12% of their GDP on health while developing countries only spend around 3%. Although other factors like age structure and epidemiological needs, technological advancement, and health system characteristics also play a vital role in determining the number of funds set aside for healthcare expenditure, the significant difference between the rich, middle income and developing countries can be evident.
Due to the difference in population structure, health needs, technological advancements, countries have varying priorities thereby leading to the difference in resource allocation in their health sectors. In developed economies the majority of the population are dissatisfied with healthcare financing due to the absence of universal coverage. Developing countries, however, have issues like access to services, charges, and fees for obtaining the services that must be addressed hence making their allocation for spending differently with middle income and developed economies. Moreover, the disparity in health resource availability in these countries dictates their priorities in health financing.
Question Nine
The shift from the traditional to managed care models in the healthcare sector have forced healthcare providers to look for alternative ways to reduce cost, increase referrals, and improve service delivery. According to Huppertz et al. (1609), the extent to which the current healthcare system strives to appropriately allocate the health resources to ensure timely and efficient service delivery dictates their level of competitiveness and the number of referrals they get from Physicians and returning customers. Moreover, hospitals are slowly eliminating the areas that are slowed down by the system complexities.
Currently, every provider utilizes all the available avenues to market their products by showcasing the quality of their services and their charges. Consumers, on the other hand, are keen on getting packages combining quality with affordable rates thereby increasing the quantity demanded. Most hospitals also depend on the physician referrals as a marketing strategy that helps in obtaining clients. However, critics have argued against physician referrals and linked it to moral hazards in consumption of health services (Huppertz et al. 1598). Although few hospitals and medical professionals want to be viewed as salespersons, advertising is necessary when competing with other hospitals providing similar healthcare services.
In order to compete for the few clients and curb the scenario of empty beds and underutilized resources, hospitals have abandoned the traditional means of acquiring clients and adopted the modern advertising and marketing strategies to scramble for the few patients ((Huppertz et al. 1603). Low cost of healthcare products is used as the main selling point to acquire customers who are always keen for affordable care. Moreover, patients without insurance coverage prefer hospitals charging less since they make direct payments.
Question Ten
The nature of health expenditure consisting of both private and public health expenditures have increased both in the U.S and across the world. There have been improvements in health outcomes, especially infant mortality, life expectancy, and other health outcomes indicators. The adoption of appropriate health policies and management strategies can further help in achieving the desired health outcomes for the target population. From the perspective of health policy, it is evident that cost health expenditure relocations are needed for better outcome indicators.
Health policy will help in understanding the link between healthcare resource allocations, priority in allocation, and health outcomes. Therefore, relocating health expenditure and investment between public and private healthcare providers will help in improving the outcome indicators. Healthcare management, on the other hand, will inform the investment decisions especially when choosing to pay more attention to the private and public institutions and how such decisions are essential for health outcomes improvement. Weinberg and Chen (33) argue that there is need to strike a balance between social spending and health expenditure in order to achieve the desired health outcomes. Moreover, the unusual combinations of spending that often results to undesired outcomes must be abandoned.
Health policymakers have agreed on the need to balance social spending and health spending if health outcomes improvement is the main concern of increasing public and private health spending and investments. The federal, state and local governments must focus on reducing problems like adult obesity, mental health problems, high blood pressure and heart attack, and mortality rates by relocating expenditure from social issues to more pressing health concerns. Since the providers, payers, and patients are directly affected by the relocation of healthcare spending, such moves may help in improving health outcomes.
Works Cited
Bajari, Patrick, et al. “Moral hazard, adverse selection, and health expenditures: A semiparametric analysis.” The RAND Journal of Economics 45.4 (2014): 747-763.
Essock, Susan M. “What to Do When the Managed Care Firm Says No.” JAMA psychiatry 73.11 (2016): 1109-1110.
Hummer, Robert A., and Mark D. Hayward. “Hispanic older adult health & longevity in the United States: Current patterns & concerns for the future.” Daedalus 144.2 (2015): 20-30.
Huppertz, John W., et al. “Hospital advertising, competition, and HCAHPS: Does it pay to advertise?” Health services research 52.4 (2017): 1590-1611.
Kantarevic, Jasmin, and Boris Kralj. “Risk selection and cost shifting in a prospective physician payment system: Evidence from Ontario.” Health Policy 115.2 (2014): 249-257.
Kantarevic, Jasmin, and Boris Kralj. “Risk selection and cost shifting in a prospective physician payment system: Evidence from Ontario.” Health Policy 115.2 (2014): 249-257.
Weinberg, Micah, and Lanhee J. Chen. “International Healthcare Systems and the US Health Reform Debate.” (2017): 12-45.
