LECTURE NOTES Chapter 35

LECTURE NOTES Chapter 35 - CHAPTER THIRTY-FIVE THE...

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CHAPTER THIRTY-FIVE THE ECONOMICS OF HEALTH CARE INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1. Describe what is meant by the health care industry and approximate its size with relevant data. 2. Identify the problem connected with rising health care costs. 3. Give the negative effects associated with rising health care costs. 4. Explain what is meant by the overallocation of resources to the health care industry. 5. Describe the extent of the problem regarding a lack of health insurance coverage. 6. Identify four special characteristics of the health care market. 7. Give four factors that have contributed to the rise in the demand for health care. 8. Explain the role of physicians in increasing the demand for health care. 9. Explain the “moral hazard” problem arising from health insurance coverage. 10. Explain how the Federal income tax structure subsidizes health care demand. 11. Identify three basic reform proposals designed to increase access to health care. 12. Explain how insurance company deductibles, copayments, and preferred provider organizations might help contain health care costs. 13. Differentiate between health maintenance organizations and the traditional fee-for-service payment system. 14. Define and identify terms and concepts listed at the end of the chapter. LECTURE NOTES I. Introduction A. The high costs of health care in the United States are frequently the subject of news reports. 1. People without health insurance. 2. Federal and state budgets strained by health care costs. 3. Labor dispute over health insurance. 4. Companies dictating the medical care doctors can provide. 5. Ethical questions concerning the acutely or terminally ill. B. This chapter focuses on several issues. 1. The United States system of health care. 2. The identification of key health care issues. 3. Actual and proposed reforms. II. The Health Care Industry 443
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The Economics of Health Care A. Government’s definition of this far-reaching industry includes many aspects . 1. Services provided in hospitals, nursing homes, labs, physicians’ and dentists’ offices, 2. Prescription and nonprescription drugs, artificial limbs, and eyeglasses, 3. Services of many nontraditional practitioners , but not fitness club services, or health foods . B. The size of the industry is immense. 1. 9 million are employed in the industry including 600,000 physicians (compared to auto manufacturing industry employment of around 800,000). 2. There are over 6,500 hospitals with over 1 million beds. Half of the hospitals are private, non-profit institutions, 30 percent are operated by federal, state, or local governments, and the remainder are for-profit corporations. 3.
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LECTURE NOTES Chapter 35 - CHAPTER THIRTY-FIVE THE...

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