Notes 03-04 - Lecture 11: Intro to Cost Control/Pay for...

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Lecture 11: Intro to Cost Control/Pay for Performance I. Wrap Up of Value of Health a. Basic Conclusion i. Cost-benefit analysis looking at the changes in medical spending and the length/quality of life since 1950 ii. Finds that increased spending is worth it b. Challenges to this analysis i. Problems/Difficulties 1. How to value a life 2. How much to discount value due to illness 3. Economists are out of their area of expertise (might not know really what they’re talking about comparing effectiveness of depression medication to therapy) 4. Are health improvements due solely to medical care? 5. Choice of discount rate (Cutler’s numbers are influenced by the numbers he chose) 6. Note: generally the benefits so exceeded the costs that the calculation is not too sensitive to his assumptions (of discount rate) ii. Average versus marginal benefits 1. How can we represent changes since 1950 on the health production function? a.
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Notes 03-04 - Lecture 11: Intro to Cost Control/Pay for...

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