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Economic Evaluation of Health Policy

Economics| Week 6

Week 6: Regulation and Health Policy

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The complex health care industry faces challenges in providing efficient and effective services. While providers aim to make a profit, the competitive market in health care does not always function properly. Poorly designed incentives and limited relevant information, for example, can lead to market failures in the availability of health insurance and services. This raises the question: Does the competitive market model fit health care, or is a mixed model of private and public financing and delivery more appropriate?

The purpose of government is to maximize public welfare, and this includes looking out for the health care interests of all of its citizens. One of the government's most powerful tools is the regulation of health care goods and services, which interferes with free competition. One means for government regulation and policy to address market failures is by promoting innovative strategies such as cost transparency and health insurance expansion.

This week, you explore regulation and health policy as it relates to cost transparency and health insurance expansion. As you examine advantages and disadvantages of cost transparency, you analyze how regulation and policy on this transparency might improve economic efficiency. You also evaluate the economic implications of the health insurance expansion.

Learning ObjectivesStudents will:

Analyze advantages of transparency for health care organizations and consumers

Analyze how cost transparency can improve economic efficiency

Recommend regulation and policy to compare hospitals based on costs

Analyze how health insurance expansion relates to the problem of adverse selection

Evaluate the economic implications of health insurance expansion

Photo Credit: [Tetra Images]/[None]/Getty ImagesLearning Resources Note: To access this week's required library resources, please click on the link to the Course Readings List, found in the Course Materials section of your Syllabus.Required ReadingsGetzen, T. (2015). Health economics for the healthcare administrator (Laureate custom edition). New York: Wiley.

Chapter 14, “The Role of Government and Public Goods” (pp. 319-343)

Chapter 17, “Economic Evaluation of Health Policy: The Patient Protection and Affordable Care Act of 2010” (pp. 408-424)

Glied, S., & Miller, E. A. (2015). Economics and health reform: Academic research and public policy. Medical Care Research and Review, 1-16.Healthcare Financial Management Association. (2014b). Price transparency in health care: Highlights from the task force report. Westchester, IL: Author. Retrieved from transparency in health care: Highlights from the task force report. Retrieved from Copyright 2014 by Healthcare Financial Management Association. Reprinted by permission of Healthcare Financial Management Association via the Copyright Clearance Center.Discussion: Regulation, Policy, and Economic Efficiency Note: This is a Post First assignment. You are required to post your original post before the discussion board opens for your review.

One of the assumptions of value-based care is that if consumers are aware of price, then they can make better decisions about the health care services they receive. In an effort to encourage this efficiency in health care, government regulation and policy has been designed to promote transparency of quality and cost information. For this Discussion, examine the following scenario and consider how regulation and policy on hospital cost transparency might improve economic efficiency.

Scenario: On behalf of consumers, employers and local purchasers in your market are committed to slowing health care costs by improving visibility on hospital prices. A recent media story revealed that prices in your local market were the highest in the state. You are a member of a private sector consulting service that has been hired to help a hospital address transparency issues. The hospital would like to be more transparent in their cost and fee relationships with providers.

To prepare for this Discussion:

Review the provided scenario. What are the advantages of transparency for both the hospital and the consumer? How might hospital cost transparency improve economic efficiency?

Consider current (last 5 years) regulation and policy to compare hospitals based on their costs. Locate and review literature to support your recommendations.

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