Podcast
Questions and Answers
What is a key distinction between personal health care spending and other health spending?
What is a key distinction between personal health care spending and other health spending?
- Other spending constitutes a larger portion of overall health expenditure.
- Personal health care refers to spending on individual health care, like hospital and physician services, while other spending includes public health activities and administration. (correct)
- Personal health care includes investments in research and structures.
- Other spending is primarily related to individual health care services.
Which of the following is considered a 'Wasted resource' contributing to the health care spending problem?
Which of the following is considered a 'Wasted resource' contributing to the health care spending problem?
- Health and economic disparities
- Substantial low-income population
- High prices and fraud (correct)
- Desire to keep taxes low
In the context of factors contributing to high medical spending in America, what does 'physician-induced demand' imply?
In the context of factors contributing to high medical spending in America, what does 'physician-induced demand' imply?
- Insurance companies dictate the demand for medical procedures.
- Patients are increasingly demanding more specialized treatments.
- The demand for medical services is solely determined by patient needs.
- Physicians may influence demand for services beyond what is strictly necessary. (correct)
According to Baumol's model of unbalanced growth, which characteristic is typical of a 'non-progressive' sector like healthcare?
According to Baumol's model of unbalanced growth, which characteristic is typical of a 'non-progressive' sector like healthcare?
How could increased coverage by third-party payers influence health care spending?
How could increased coverage by third-party payers influence health care spending?
If the growth in nominal health care spending consistently outpaces the growth in the PCE-Health Price Index, what does it imply?
If the growth in nominal health care spending consistently outpaces the growth in the PCE-Health Price Index, what does it imply?
What is a primary implication of the statement 'One person’s spending is another’s income' with respect to the medical care sector?
What is a primary implication of the statement 'One person’s spending is another’s income' with respect to the medical care sector?
What is the primary reason that productivity in the non-progressive sector lags compared to the progressive sector?
What is the primary reason that productivity in the non-progressive sector lags compared to the progressive sector?
How does the concept of opportunity cost relate to health care spending?
How does the concept of opportunity cost relate to health care spending?
How does government spending on medical care contribute to concerns about the sustainability of the current U.S. health system?
How does government spending on medical care contribute to concerns about the sustainability of the current U.S. health system?
What fundamental issue arises from the fact that the current annual health care expenditure has grown 1.4 percentage points faster than the rest of the economy for the past 30 years?
What fundamental issue arises from the fact that the current annual health care expenditure has grown 1.4 percentage points faster than the rest of the economy for the past 30 years?
If Medicare spending outpaces its revenue sources, what becomes a likely consequence?
If Medicare spending outpaces its revenue sources, what becomes a likely consequence?
In the context of universal health coverage, what challenge is posed by individuals who can't afford coverage or choose not to purchase it?
In the context of universal health coverage, what challenge is posed by individuals who can't afford coverage or choose not to purchase it?
What is the potential economic impact if the U.S. medical sector is larger than the economies of many developed countries?
What is the potential economic impact if the U.S. medical sector is larger than the economies of many developed countries?
Which characteristic contributes to the health care cost disease?
Which characteristic contributes to the health care cost disease?
Which consideration is most relevant when evaluating the extent of the health care spending problem from an economic perspective?
Which consideration is most relevant when evaluating the extent of the health care spending problem from an economic perspective?
What is meant by the term 'health care cost disease'?
What is meant by the term 'health care cost disease'?
From an economic standpoint, what would be the result of health spending surpassing the benefits?
From an economic standpoint, what would be the result of health spending surpassing the benefits?
When evaluating the factors associated with spending growth, what may increased coverage by third-party payers lead to?
When evaluating the factors associated with spending growth, what may increased coverage by third-party payers lead to?
What is the result of the health care sector being an ever-larger share of gross domestic product (GDP)?
What is the result of the health care sector being an ever-larger share of gross domestic product (GDP)?
When referring to the health care cost disease, what is the reason productivity in the non-progressive sector lags?
When referring to the health care cost disease, what is the reason productivity in the non-progressive sector lags?
Which factor is associated with spending growth?
Which factor is associated with spending growth?
Which of the following describes what perspectives on medical care spending are?
Which of the following describes what perspectives on medical care spending are?
What did the physician discover was the source of the 70-year-old man's illness?
What did the physician discover was the source of the 70-year-old man's illness?
Which of the following is not a problem with increased spending?
Which of the following is not a problem with increased spending?
What happens to nominal wages as the labor of productivity in the progressive sector rises?
What happens to nominal wages as the labor of productivity in the progressive sector rises?
How can the aging of the population affect medical care spending?
How can the aging of the population affect medical care spending?
How often should a country spend on medical care?
How often should a country spend on medical care?
What is one of the largest industries in the US economy?
What is one of the largest industries in the US economy?
Why is the concern primarily political when concerning US Healthcare spending?
Why is the concern primarily political when concerning US Healthcare spending?
According to Baumol's model, what is the expected outcome in a progressive sector of the economy?
According to Baumol's model, what is the expected outcome in a progressive sector of the economy?
What does the term universal coverage necessitate?
What does the term universal coverage necessitate?
Flashcards
Health Care Spending
Health Care Spending
Total expenses on healthcare goods and services within a country, typically measured over a year.
Personal Health Care Spending
Personal Health Care Spending
Includes expenses for hospital care, clinical services, dental, and prescription drugs.
Health Spending as % of GDP
Health Spending as % of GDP
Percentage of a nation's total economic production that is devoted to health care.
Other Health Spending
Other Health Spending
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Waste in Health Spending
Waste in Health Spending
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Reasons for high USA Spending
Reasons for high USA Spending
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Health care spending models
Health care spending models
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Non-Productive sector Lags
Non-Productive sector Lags
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Spending Somebody Else's Money
Spending Somebody Else's Money
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Study Notes
Basics of Healthcare Spending
- Healthcare spending in the US constitutes a significant portion of its GDP
- In 2020 expenditures in the US were $4,014.2 billion
- In 2020, per capita national spending was $12,118
- Personal health spending accounts for 84% of all health spending
- Other spending includes public and private program administration, government expenditure on public health, and investment in research and structures, accounts for 16% of health care spending
Extent of the Healthcare Spending Problem
- There isn't an optimal level of healthcare spending from an economic viewpoint
- Healthcare spending benefits outweigh its costs
- The US lags behind other developed nations in life expectancy and infant mortality, even with higher spending
- There are two problems with increased spending: wasted resources and distributional issues
- Waste comes from equivocal spending, high prices, excessive administrative costs, fraud, and abuse
- Distribution issues, include high prices, a large low-income population, and the desire to keep taxes low
Factors Associated with Spending Growth
- Increased use of medical technology contributes to spending growth
- The aging population has increased spending
- Disease prevalence and treatment differences increase spending
- Entry restrictions that limit competition are associated with spending growth
- Physician-induced demand is associated with spending growth
- For-profit providers may lead to increased medical spending
- Relatively high incomes make healthcare more affordable
- Expanded medical malpractice leads to defensive medicine practices
- Increased coverage by third-party payers increase spending. Medical care sector is a large and growing industry in the U.S. economy
Healthcare Cost Disease
- There is no formal theory to predict per capita healthcare spending
- Research is based on empirical work and data availability
- Baumol's model of unbalanced growth suggests the economy consists of progressive and non-progressive parts
- Regular productivity growth comes from technological innovation
- Non-progressive sectors include education and health care, which are highly labor-intensive
- Nominal wages are linked between sectors
- Demand in the non-progressive sector is price inelastic
- Over time, resources shift to the non-progressive sector
-Two reasons cause productivity lags in the non-productive sector:
- Medical services are difficult to standardize
- Quality is assessed by time spent with the patient
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