Economics of Health Care (1)

Economics of Health Care (1) - Economics of Health Care...

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Unformatted text preview: Economics of Health Care U.S. Health care spending (U.S.) • 1960 (5.1%)-2005 (16%) of total spending • Mixed Economy: Heavy government influence Medicare , Medicaid 49% Private health insurance 36% Out-of-pocket 15% Tax system discriminates against direct purchase of health insurance! • Employer pays with pre-tax dollars, individual has to pay with after-tax income. – Business can deduct the amount they pay before taxes • What a family would have to earn in order to pay for an $8,400 health insurance policy: 15% income tax bracket + 15.3% payroll tax (lower/middle income family) $12,000 28% income tax bracket + 15.3% payroll tax (state and local taxes excluded) $14,000 Health care inflation Health care prices 2X relative to other prices. Why? • Third-party payments increase demand! – Consumers foot little of the bill (<15%) – Low incentive for consumers or providers to economize. – Increased incentive to use the most expensive technology....
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This note was uploaded on 04/01/2012 for the course ECON 101 taught by Professor Balaban during the Fall '07 term at UNC.

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Economics of Health Care (1) - Economics of Health Care...

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