Term
| Distribution of Healthcare spending in the US by Service Category |
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Definition
The Big 2 are hospital (31%) and Physician (20%). The actual order is:
Hospital (31%)
Physician (20%)
Prescription Drugs (10%)
Other (8%)
Nursing Home (6%)
Dental (4%) |
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Term
| Four Basic Questions of Health Economics |
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Definition
1. What mix of nonmedical and goods and services should be produced in the macroeconomy
2. What mix of G and S should be produced in the health economy?
3. What health care resources should be used to produce these goods?
4. Who should receive these medical goods and services |
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Term
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Definition
The best way to allocate resources to different consumption uses.
EX: How much of the budget should be spent on Medical goods? |
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Term
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Definition
What specific health care resources should be used?
EX: We have 40 bucks for medical use, how much should go to hospital? |
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Term
| Distribution of Sources of Healthcare Expenditures |
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Definition
AKA how do people buy their healthcare. Currently it stands that:
-Private insurance (33%)
-Medicare (govt Program) (20%)
-Medicaid (Govt Program (15%)
-Out of Pocket (12%) |
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Term
| Woodlandler and Himmelstein (2002) view on government spending on healthcare |
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Definition
| When CMS Studied the government input of the nation's health expenditure, government DIRECTLY attributed to 45% of the nations healthcare payments. But with tax subsidies, government agencies paying for private insurance themselves, etc, they concluded that its actually closer to 60 percent! They claim government has a higher health responsibility than meets the eye |
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Term
| Sources of US Healthcare Expenditure |
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Definition
How the US buys healthcare. Via
-Private insurance (33%)
-Out of Pocket (12%)
-Medicare (20%)
-Medicaid (15%)
*medicare and medicaid are govt ran |
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Term
| The higher the healthcare costs for the US |
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Definition
| The less is spent on other goods and services! Via the PPC curve |
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Term
| Healthcare Spending as a share of GDP in the US overtime |
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Definition
Over the past 45 years, from 1960 to 2010, the US has gone from 5% of its GDP on healthcare to 18%!! It has increased steadily over time!
*THIS DOES NOT MEAN OTHER GOODS ARE BEING SACRIFICED |
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Term
| Why an increase in US GDP toward healthcare does not equate to a tradeoff of less other goods and services |
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Definition
| The US percent GDP used on healthcare has gone from 5 to 18% since 1960. However, this does not mean automatically there is a tradeoff, because the amount of GDP in 1960 is vastly lower than it is today. So, with a lesser percent spent on other goods, but 82% of the current much larger GDP equates to at least the same if not more than it was at 1960, even if the "percent" is less |
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Term
| What is the RATE in which percent of US GDP is used on healthcare has increased over time? |
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Definition
Over time, the US has dedicated more and more of its GDP towards healthcare, but not at a continuous rate!
EX: in the 1990s, it remained about the same, and there was a spike several years after 2000! |
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Term
| Healthcare spending as a share of US GDP, compared to what other countries spend |
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Definition
Compared to other countries, the US has the highest percentage of their GDP devoted to healthcare expenditures
*2nd is Norway! |
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Term
| Percent Uninsured Over time |
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Definition
| The percent uninsured has made drastically changed since the 1940s! From 1940-1970, it decreased incredibly, going from 90% to about 18%! After the introductions of medicare and medicaid and then private insurance firms. Since then it has remained relatively constant, at around 15%! However, there have been efforts to decrease it, such as the affordable care act, which since its input has caused it to decrease from 18% to 13.4% |
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Term
| Affordable Care Act on the Percent Uninsured |
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Definition
The Percent Uninsured had a mini increase in the 2000s, but the affordable care act has caused it to decrease from 18% back down to 13.4%.
Overall, the percent uninsured has remained constant since 1980! |
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Term
| The 4 Characteristics of Medical Care |
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Definition
-Intangibility
-Inseparability
-Inventory
-Inconsistency |
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Term
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Definition
This is one of the 4 Characteristics of Medical Care! It stated that you cant use your senses to assess medical care
-This is the idea that unlike a a new car, a steak dinner, etc. you cannot see, smell, taste, feel, or hear medical care.
- To evaluate medical care, it must be EXPERIENCED, not evaluated objectively |
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Term
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Definition
This is one of the 4 characteristics of medical care. It states that Production and Consumption of medical service is done simultaneously!
-it is the idea that the health provider provides the service the same time you consume it
-EX: going to the dentist and getting your check up, the dentist is "producing" the medical service as you consume it and get your teeth looked at
IN ADDITION, the patient acts as the producer and the consumer, so the patients participation is required for the medical service to be produced (IE the patient takes in the good, also decides how much it wants |
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Term
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Definition
This is one of the four characteristics of medical care. It is the idea that due to inseparability, or the fact that medical service is produced as it is consumed by the patient, healthcare providers cant stockpile service.
EX: A dentist can't "stockpile" dental check ups, must do each one as a consumer demands them! |
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Term
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Definition
This is one of the four characteristics of medical care. It is the idea that due to inseparability, or the fact that medical service is produced as it is consumed by the patient, healthcare providers cant stockpile service.
EX: A dentist can't "stockpile" dental check ups, must do each one as a consumer demands them! |
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Term
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Definition
This is the last of the 4 Characteristics of medical service. It is the idea that the intensity, composition, and quality of medical service varies from patient to patient!
-Not every visit to a physician is the same. One person might go to the hospital for a stubbed toe, the other for heart surgery! Inconsistent in many factors patient to patient |
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Term
| Donabedian's Taxonomy of Medical Care Quality |
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Definition
Measuring the quality of healthcare is hard to do, due to the fact it is inseparable, intelligible, inconsistent, etc! Donadedian found 3 ways of measuring its quality:
-structural
-process
-outcome |
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Term
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Definition
| This is one of the 3 Donabedian ways to measure healthcare. It is done so by measuring the resources, both physical and human resources, that a medical care organization has. This includes facilitites, medical quipment, personnel, etc. It is literally looking at the "structure" of the healthcare provided |
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Term
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Definition
| This is one of the 3 Donabedian Taxonomy processes of analyzing healthcare quality. It reflects the specific actions healthcare providers take on patients in delivering the care they want. It includes how accessible (waiting time), data collection, communication, diagnosis, and how well the treatment works |
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Term
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Definition
| This is one of the 3 parts of the Donabedian Taxonomy of analyzing the quality medical care. It is the idea that quality of healthcare is how big of an impact it has on a patients satisfaction, whether through how well it aids a disability or effects postcare mortality rate. |
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Term
| Health Measured by Production Function |
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Definition
Health is viewed as "H" as a function of different factors
Health = H(Profile, TECH, Lifestyle, Medical Care) |
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Term
| Law of Diminishing Marginal Productivity |
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Definition
| As you increase health inputs, or q, the amount of health, or H, you get in return, diminishes. In the total product curve, the slope slowly approaches a flat zero because of this idea that as you input more the impact each one makes decreases |
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Term
| Total Product Curve production function on health benefits |
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Definition
| The total product curve implies that as healthcare products increase so does the amount of health for the individual. However, this is done as a decreasing rate! |
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Term
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Definition
These are things that effect the production function of Health!
-Profile
-Tech
-Environment
-SES
-Lifestyle
-Medical Care |
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Term
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Definition
| This is the characteristics of the person and how it effects health. It includes things like age, race, and gender |
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Term
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Definition
| This is a determinant of Healthcare in the production function. It refers to the state of medical technology in a given area/ time period |
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Term
| Environment (as a determinant of the health production function) |
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Definition
| These are the environmental factors someone deals with that could effect their health, such as air or water quality |
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Term
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Definition
| This stands for Socioeconomic status, and is a determinant of healthcare in the production function. This includes things like education, income, and poverty effects of where the people are. |
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Term
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Definition
| This is a determinant of healthcare in the production function for healthcare. It is how peoples choices such as diet exercise and smoking effect the persons health |
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Term
| Medical Care as a function of the Health Production function |
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Definition
| This is the amount and quality of healthcare someone receives, and it is a determinant of the healthcare production function |
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Term
| Pattern of US infant Mortality Rate Over Time |
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Definition
The infant mortality rate has vastly improved over time, going from 25 per 1000 to 6 per 1000 since 1960! Since 2000 it has been relatively constant
*NOTE, US is not as good at IMR as some other countries. Why? Possibly universal healthcare |
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Term
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Definition
| This is other wise known as a correlation from psych. It is the idea that variables are RELATED To one another, but one does not CAUSE the other one to occur! It is the result of a regression analysis |
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Term
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Definition
| Causation is when a multiple linear regression result allows us to determine that one of the variables CAUSES another to happen. It is the established cause and effect rule like from psych. |
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Term
| Top 10 leading causes of Death (Overall) |
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Definition
1. Heart Disease
2. Cancer (Malingnent Neoplasms)
3. Chronic Lower Respiratory Disease
4. Stroke (Cerebrovascular Disease)
5. Unintentional Injury (Accident)
6. Alzheimers
7. Diabetes
8. Kidney Disease (Nephritis syndrome)
9. the Flu (influenza/ pneumonia
10. Suicide
HCRSAADKFS
HCRS-SAAD-KFS
(Hercs-Sad-kifs) |
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Term
| Leading Causes of Death in Teenagers |
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Definition
1. Accidents
2. Homicide
3. Suicide
4. Cancer
5. Heart Disease
AHSCH
(ASH) |
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Term
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Definition
| Medicare is a federally funded program that is the largest health insurer in the world (15%). It is for the aged and the disabled people of the country. |
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Term
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Definition
| Medicaid is a type of public health insurance program that is funded by the federal government and issued via the state ones. Medicaid is used to give more money to economically disadvantaged groups (states) that others. The Federal Government will match between 50 and 83 percent of what the state puts in for healthcare, depending on the economic factors of the state |
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Term
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Definition
Medicare is uniformly run by the federal government, while Medicaid is a matching program of state government funds.
-Medicare focuses on providing healthcare for the aged and disabled, medicaid is a program more geared toward helping those in economic hardship |
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Term
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Definition
Present value is the idea of how much does a person value money "right now"? The equation for is is
PV = Ft/(1+r)^t
F is the number of money accumulated over a number of years, t is number of years, and r is the interest rate!
Present value is how much you value something now compared to how much it'll be in the future! |
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Term
| Net Benefits of Present Value |
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Definition
When Present Value is dealing with the course of time that is greater than 1 year, a summation between the accumulation of the years total must be added together, to get the "Net benefits" total. EX: if you get to accumulate money for 3 years, but would rather have the money now, you're present value equals the NET BENEFITS of holding the money for 3 years!
Equation:
NB or NBPV = SUM OF (Bt-Ct)/(1+r)^t |
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Term
| Chance of death on Net Benefit of Potential Earnings |
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Definition
| When asked whether to get a vaccination now or later, or anything in general, a tradeoff is made between the net benefits of waiting and your present value. However, as time goes on there is a greater chance of death! So, waiting for something for 70 years compared to waiting for something for two, although the present value net benefit may be larger in waiting for 70 years, when multiplied by the chance of death, the 2 year option actually seems better! |
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Term
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Definition
| The benefit an individual or firm sees from producing/ consuming something. It is only what effects they directly see |
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Term
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Definition
| The benefit seen by others around the transaction of producing or consuming something. EX: If someone plays guitar they have their own private benefit, but all those around who like it receive an external benefit |
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Term
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Definition
| Social Benefit is the total of an indiviudal/ firms private benefit for consuming/ producing something, and the benefits seen by those around them. EX: if someone is playing guitar in the park, their private benefit from playing, plus the benefit of those around who like the tune, is the social or total benefit |
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Term
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Definition
| The cost the consumer/producer sees directly! It is the part that solely effects them |
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Term
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Definition
| The cost that everyone around a consumer/producer sees when they consume/produce something. AKA externalities. Nuclear waste from a power plant is an external cost |
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Term
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Definition
| This is the sum of both private and external costs. EX: it is the cost a producer sees of manufacturing cars, plus the external cost the town gets from the manufacturers smoke! |
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Term
| Maximization of Net Social Benefits |
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Definition
| TB-TC!! Maximizing any benefit, social or private, is getting the greatest difference in total social benefit and total social cost |
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Term
| Maximization of Net Private Benefits |
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Definition
| TB-TC!! Maximizing any benefit, social or private, is getting the greatest difference in total social benefit and total social cost |
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Term
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Definition
| This is an unintended consequence from a transaction. It leads to external benefits/ costs |
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Term
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Definition
| An unintended negative effect on society around it. An example would be pollution a company produces that the whole town deals with |
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Term
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Definition
| A Positive, unintended consequence from a transaction. EX: A vaccination causes less people around you to get that disease, because you wont have it! |
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Term
| Correction of Externalities |
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Definition
| When negative externalities occur, the government is the one who corrects them! A good example is pollution, and the government telling a company to not produce something anymore or limiting how much they are allowed to pollute |
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Term
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Definition
When evaluating the benefits of medical care or choosing when to take it, you have to be able to measure human life. But this becomes tricky, so there are two approaches:
-human capital approach
-Willingness to pay approach |
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Term
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Definition
| This is the approach that is used to determine how valuable someone's life is, in terms of choosing medical care. This approach uses the idea that a person is valued on how much market value output they will produce in their lifetime (how much money they make, put into the economy) |
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Term
| Willingness to Pay Approach |
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Definition
| This is one of the ways that people measure the value of someones life when choosing to purchase medical coverage. It is based on the idea that the value of someones life is how much they are willing to pay for a small reduction in the probability of dying (smoke detectors, etc.). The more someone is willing to pay the more they value their life |
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Term
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Definition
| Someone who seeks higher payoffs, regardless of the risk that is at hand. They maximize their expected value in the Utility function when the curve is CONVEX |
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Term
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Definition
| When someone shys away from a gamble/ risk and generally takes the lower payoff. Their expected value utility function is maximized when the curve is CONCAVE |
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Term
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Definition
| These are people who do not care either away about associated risk when it comes to payoff. Their expected value of utility is maximized when the curve is LINEAR |
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Term
| Expected Value in Utility |
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Definition
| This is the return you will get when buying insurance, times the probability of using it |
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Term
| Risk Seekers Expected Utility..... |
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Definition
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Term
| Risk Averse expected Utility.... |
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Definition
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Term
| Decision to insure when someone is risk averse |
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Definition
They will insure when the Expected value of having the insurance is greater than the current value without it.
E(Uw) > E(Uwo) |
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Term
| Decision to insure when someone is risk neutral |
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Definition
They will insure when the expected value of the insurance is equal to the expected value without
E(Uw) = E(Uwo) |
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Term
| Decision to insure for a risk loving person |
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Definition
A risk loving person will NOT insure if the value they have now without insuring is greater than the value theyd have if they insured without or without the ailment
EUi < EUn! |
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Term
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Definition
| The idea of weighing the costs of doing something versus the benefits. Our net benefits (benefit - cost) must be greater than zero for us to do something! |
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Term
| Cost Effectiveness Analysis (CEA) |
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Definition
| Because measuring the exact benefits of medical treatment are hard, many people do cost effectiveness studies instead. These are studied of the ratio between the cost of the current medical plan and the new one, divided by the difference in efficiency between the old and the new. It is a weigh to study how effective the new system may be relative to how expensive it will be |
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Term
| Comparative Effectiveness Research (CER) |
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Definition
| Because the value of medical care is hard to pick out exactly, one way to compare them is Comparative effectiveness research CER. This is when you look at how effective your current plan is, to how effective the new plan would be. It does NOT take into account cost (thats CEA) |
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Term
| US Vs. Britian Healthcare System |
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Definition
US: Much more privatized, faster care, more expensive, higher quality
UK: Public, slower care, less expensive (universal but pay through tax), available to all, lesser quality |
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Term
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Definition
| Quantity Supplied Increases! "Supply" is constant! |
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Term
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Definition
| Quantity Supplied Decreases! "Supply" is constant! |
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Term
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Definition
| Quantity Demanded Decreases. "Demand" is constant |
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Term
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Definition
| Quantity Demanded Increases! "Demand" is constant |
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Term
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Definition
| Demand being greater than Supply! |
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Term
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Definition
| Supply being greater than Demand! |
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Term
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Definition
| A good that coupled with it increases demand. EX: if the price of peanut butter decreases, there will be a greater demand for jelly! |
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Term
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Definition
| A good that can replace another and decrease demand. EX: if the price of oranges decreases, the demand of apples will decrease |
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Term
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Definition
When there is a change in a persons income, it is the percent change of QUANTITY DEMANDED over the percent change of that income
*Can lead to an increase or decrease depending on if a normal or inferior good |
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Term
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Definition
| A good is normal when a persons income increases their quantity demanded for that good increases (buy it more) |
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Term
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Definition
A good is inferior when a persons income increase and their quantity demanded for that good decreases (buy it less)
EX: getting a 50 dollar bonus, you would buy more goldfish and less cheddar penguins from Aldis |
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Term
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Definition
When a consumer is injured and needs to use their insurance, it is when the consumer pays a fixed percentage of the cost of the healthcare needed, and the insurance picks up the rest
EX: a coinsurance rate of 15% means you pay 15 and the insurance pays 85% |
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Term
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Definition
| This is when a consumer gets injured and needs their insurance. When that happens the consumer pays a fixed amount, no matter what it is, and the insurance will pay for the rest |
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Term
| Copayment vs Coinsurance on demand |
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Definition
| The changes of 10% to 20% are far greater than 10 dollars to 20 dollars. Because of this, coinsurance differences make consumers much more sensitive to change than copayment differences |
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Term
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Definition
| The extent to which consumers alter their consumption of a good when the price changes. |
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Term
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Definition
| The extent to which demand for a product changes when the price of a another good is altered! |
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Term
| When Income increases, price of healthcare services are _____ elastic |
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Definition
| They are less elastic! or people become less prone to changes in healthcare price |
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Term
| Coinsurance and elasticity of healthcare |
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Definition
| As Coinsurance percentages decrease, elasticity decreases and people become less prone to change in healthcare price. That is because they feel less of the burden of how much the healthcare costs! |
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Term
| Manage Care Organization (MCO) |
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Definition
These are organizations that help people find the best healthcare based on quality and cost! It is almost the travel agency of healthcare.
There are two types
Health Maintenance Organization (HMO)
Preferred Provider Organization (PPO) |
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Term
| Health Maintenance Organization (HMO) |
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Definition
| HMO is a type of MCO (manage healthcare organization). It helps manage healthcare by providing financing (insurance) and the delivery (doctor) all into one organization! This is when a patient is assigned a primary care giver, and then that caregiver refers to her/him to specialists |
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Term
| Preferred Provider Organization (PPO) |
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Definition
| PPO is a type of MCO. This is when the organization acts as a 3rd party and pays financial incentive to acquire healthcare to specific predetermined hospitals. They pay for you to see specific doctors! |
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Term
| Mendocino (Stay Well) Health Insurance Plan |
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Definition
| This is a plan for health insurance where consumers pay is directly related to annual claims, or how many times they claim their insurance a year! This will cause people to participate in wellness incentives (eating better, not smoking, etc) to avoid going and having to pay for each visit! |
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Term
| Utility Maximization Model |
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Definition
This is utility as a function of health and consumption, budget constraint, and health production fucntion (4 Quadrant diagram)
-It is the idea that the production function, and the budget constraint, dictate how much healthcare is consumed and therefore how much utility is reached based on Health and Consumption! (Quadrant 2, production function, and quadrant 3, budget constraint, dictate how much healthcare good and therefore how much utility is reached |
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Term
| Pattern overtime in hourly output and hourly compensation/ real earnings |
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Definition
| The gap between productivity and the wages seen by employees is increasing! We are getting more productivity, or more hourly output, for paying them relatively the same compensation since 1980! |
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Term
| Expected Utility Model for Preventative Care |
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Definition
| Utility is at its greatest (asymptote) when there is a mix between preventive care and other times of healthcare! |
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