Instructor Manual For

Instructor Manual For Health Economics and Policy 8 th

Edition By James Henderson

(All Chapters 1-17, 100% Original Verified, A+ Grade)

All Chapters Arranged Reverse:

17-1

This is The Original Instructor Manual For 8 th Edition, All other Files in The Market are Fake/Old/Wrong Edition. 1 / 4

Instructor Manual: Henderson, Health Economics and Policy, 8e, © 2023, 978-0-357-13286-9,

Chapter 17: Lessons for Public Policy

Instructor Manual Henderson, Health Economics and Policy, 8e, © 2023, 978-0-357-13286-9,

Chapter 17: Lessons for Public Policy

Table of Contents Purpose and Perspective of the Chapter.......................................................................................................2 Cengage Supplements.................................................................................................................................2 Chapter Objectives......................................................................................................................................2 What’s New in This Chapter........................................................................................................................2 Chapter 17: Lessons for Public Policy.........................................................................................................2 Chapter Outline...........................................................................................................................................2 Teaching Suggestions..................................................................................................................................5 1 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 / 4

Instructor Manual: Henderson, Health Economics and Policy, 8e, © 2023, 978-0-357-13286-9,

Chapter 17: Lessons for Public Policy

Purpose and Perspective of the Chapter The purpose of this chapter is to summarize the 10 key economic principles that have been at the center of this text’s discussion of health economics. By reviewing these essential concepts, the chapter aims to reinforce students’ understanding of basic economic theory, which can be usefully applied in their future careers, particularly those who will engage in public policy.Cengage Supplements Supplements, including PowerPoints, an Instructor Manual, and a Cognero Test Bank, can be found at www.cengage.com.Chapter Objectives

The following objectives are addressed in this chapter:

1.Analyze the economic lessons relating to health care delivery and finance.

2.Explain how economics provides few solutions to medical care problems and can only offer alternative approaches to addressing the problems.[return to top] What’s New in This Chapter The following elements are improvements in this chapter from the previous edition: Reorganized and updated summary of the 10 key economic concepts used to guide this text in its discussion of health economics

Chapter 17: Lessons for Public Policy

This chapter is organized according to the 10 key economic concepts that have served as guiding principles for our study of health economics. Some of the lessons are obvious, some not quite so obvious.There will be disagreement, as the propositions are not all based on positive analysis. The very nature of public policy discussions means that some are laced with normative implications.Chapter Outline I.Scarcity and Choice: Economics recognizes the problem of limited resources and unlimited wants and desires. Without enough resources to satisfy all the desires of all the people, allocating those resources (have alternative uses that are also beneficial) among competing objectives becomes essential.II.Opportunity Cost: Opportunity cost is defined as the cost of any decision or action measured in terms of the value placed on the opportunity forgone (e.g., time and resources used to satisfy one set of desires cannot be used to satisfy another set). Some assumptions in implementing the cost are as follows: 1) Practitioners have knowledge of the fundamentals of economics to mitigate the issues regarding costs and benefits that affect medical care delivery and policy; 2) Long-run savings and understanding what other beneficial use of the same resources is foregone are determinants of wise resource use; 3) Resources taken from Medicare and used to fund the expansion of Medicaid cannot be used simultaneously to extend the solvency; 4) Universal coverage is expensive and state-financed programs will crowd out private programs, making coverage costlier.2 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 / 4

Instructor Manual: Henderson, Health Economics and Policy, 8e, © 2023, 978-0-357-13286-9,

Chapter 17: Lessons for Public Policy

III.Marginal Analysis: The economic way of thinking about the optimal resource allocation may be classified as marginal decision making. This is manifested in several ways: There is transfer of the benefits of productivity gains for greater use of superior goods if productivity grows in most sectors; If MC is very low, resources are of no value; Balancing incremental benefits and incremental costs can optimize resource allocation (spending more on one resource makes spending less on another one); Only marginal changes (not overall) in utilization and spending are analyzed; Wise resource use is by comparing one with the next best option; Other factors, besides medical care spending, improve health status; The relationship between health care spending and death proximity is due primarily to the relationship between age and mortality; Risk-averse people will insure against low-probability, high-cost events; A one-size-fits-all benefits package is expensive and pressures to expand coverage are enormous.IV.Self-Interest: People respond to incentives and practice economizing behavior only when they individually benefit from it. This pursuit of self-interest leads to the following courses of action: It dominates decision making; Practicing economizing behavior is influenced by cost-conscious behavior: whether people spend their own money (tend to spend wisely) or other people's money (show little concern for how it is spent); The patient/buyer must actively involve in cost containment if achieved without artificial controls (mandatory fee schedules, fixed budgets, and resource rationing); Good health is not always the primary goal in life for most people; The best way to control overall spending is to require more personal responsibility in financing medical care consumption; Economic incentives matter in determining the demand for medical care; Evidence that insurance affects medical decisions supports the notion that physicians respond to economic incentives; The differences between the for-profit and the not-for-profit organizational form may be classified as differences in property rights; Consumers perceiving that they will benefit from additional information will demand information, and it will be provided.V.Markets and Pricing: The market accomplishes its tasks through a system of prices, Smith’s “invisible hand.” The price mechanism balances a firm’s output decisions with consumer desires in the following ways: Providing all care for a fixed fee changes the nature of the physician– patient relationship; With Medicare and Medicaid paying a large amount, government reimbursement rules determine the financial stability; As efficiencies are eliminated, so too is the ability to subsidize for the uninsured, increasing the pressure on public policymakers to improve the social safety net; Transportation and Internet eliminates the boundaries of the medical marketplace; Policymakers must be ready to respond to the inevitable cost pressures that have the potential to undermine any early access; Expanding insurance coverage beyond a delivery system’s ability to provide care results in shortages and a call to ration care.VI.Supply and Demand: Supply and demand determine pricing and output decisions. Goods and services are allocated by equating the consumers’ willingness to pay and the suppliers’ willingness to provide: The quantity of care increases with decrease in cost to the individual; Price controls create shortages; The favorable tax treatment for employer-based health insurance distorts the composition of employee compensation; Information costs are a central factor in economic decision making; Managed care can control utilization when patient choice is restricted; Problems in the system emphasize cost containment over quality and access (e.g., the desire for expensive treatment is sacrificed to the demand to control spending); When the physician faces a zero price for other medical inputs, too many other inputs will be used relative to physician inputs, resulting in inefficiencies; When government attempts to provide “free” care, shortages develop in the form of long waits, and the quality of specialized care deteriorates; After the initial cost efficiencies are realized, the lower prices associated with the mandatory fee schedules lead to fixed budgets and eventually to limits on services.VII.Competition: Competition forces resource owners to use their resources to promote the highest possible satisfaction of society (those can do so are rewarded, while those are inefficient are penalized). The effects of competition on resource owners are as follows: Competition guards against undue concentration because substitutes are readily available; Competition in markets 3 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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