Understanding Healthcare Economics : Managing Your Career in an Evolving Healthcare System, Second Edition

"Healthcare economics is a topic of increasing importance due to the substantial changes that are expected to radically alter the way Americans obtain and finance healthcare. Understanding Healthcare Economics, 2nd Edition provides an evidence-based framework to help practitioners comprehend the changes already underway in our nation's healthcare system. It presents important economic facts and explains the economic concepts needed to understand the implications of these facts. It also summarizes the results of recent empirical studies on access, cost, and quality problems in today's healthcare system. The material is presented in two sections. Section 1 focuses on the healthcare access, cost and quality issues that create pressures for change in health policy. The first edition was completed just as the Patient Protection and Affordable Care Act (PPACA) was debated and passed. This new edition updates the information about access, cost, and quality issues. It also discusses the pressure for change that led to the passage of the PPACA, evidence that shaped the construction of the act, evidence on the impacts of the PPACA, and evidence on the pressures for future changes. Section 2 focuses on changes that are underway including: changes in the Medicare payment system; new types of healthcare delivery organizations such as ACOs and patient-centered medical homes. It also discusses the current efforts to help patients build health such as wellness programs and disease management programs. And finally, health information technology will be discussed. The new edition will maintain the current structure; however each chapter will be updated to discuss post-PPACA evidence on each type of type. In addition to the updates previously mentioned, the authors will present a series of data explorations to several chapters. Most of the new data explorations present summarized statistical information based on de-identified data from one hospital electronic data system. These data explorations serve two purposes. First, they illustrate the impacts of the pressures for change - and some of the changes - on healthcare providers. For example, the data illustrates the financial impact of pre-PPACA uncompensated care. Second, explanation of the data will require explanations of standard coding systems that are used nationwide (DRGs, CPT, ICD) codes. Other data explorations provide detail about other sources of data useful for health policy analysis, and for healthcare providers and insurers."--Provided by publisher Cover Half Title Title Page Copyright Page Dedication Table of Contents Foreword Preface Acknowledgments Authors Introduction Section I: Pressures for Change 1: Access Introduction Sources of Insurance and Characteristics of People Who Are Uninsured Insurance Sources and Trends Who Is Uninsured and Why? Who Is Uninsured? Why Are Some People Uninsured? Private Insurance Markets Insurance Principles: Insurance Is a Mechanism for Managing Risk How Will the Insurance Company Compute the Premium for a Specific Type of Insurance? When Will an Individual Decide to Purchase Insurance? Application of Insurance Principles in Markets for Health Insurance Health Insurance for Preexisting Conditions: Risk versus Subsidy Insuring Risk versus Subsidizing an Expenditure Summary of Explanation of Insurance Premiums and When to Buy Insurance Why Do Some Employers Offer Health Insurance While Others Do Not? Employers Don’t Actually Pay for Employer-Sponsored Healthcare What Forces Shift the Cost of Employer-Sponsored Health Insurance onto Workers? Basic Economic Tools: Supply and Demand Basic Economic Tools: At the Equilibrium Wage, Quantity Supplied Is Equal to Quantity Demanded What Happens When the Actual Wage Is above (or below) the Equilibrium Wage? Why Is the Equilibrium Concept Useful? How Does Employer-Sponsored Health Insurance Affect the Equilibrium Wage? Scenario 1 Scenario 2 Implications of Scenarios 1 and 2 An Inefficient Healthcare System Means Lower Wages for Workers Healthcare Coverage Mandates Lead to Higher Costs for Health Insurance and Lower Wages for Workers Why Do Some Individuals Remain Uninsured, Even Though They Are Eligible for Public Insurance or ESI? Why Do Insurance Companies Utilize Restrictive Practices That Make It Impossible for Some Individuals to Purchase Insurance Industry Reasons for Using Restrictive Practices The “Lemons Problem” Lemons Problem in Health Insurance Markets Employer-Sponsored Health Insurance Mitigates the Lemons Problem Solution Strategies Pre-PPACA Legislation to Restrict the Use of Preexisting Condition Exclusions Title I of HIPAA: Prohibit Restrictive Practices in the Markets for Small Group and Large Group Health Insurance State Reforms That Preceded PPACA Reforms Pre-PPACA Estimates of the Impacts of Alternate Strategies for Increasing Access Employer Mandate with or without Individual Mandate Expand Public Programs, Chiefly Medicaid Tax Credit ACA Solution Strategy for Increasing the Proportion of Individuals Covered by Health Insurance ACA Strategy for Increasing Health Insurance Coverage Mandates That Employers Must Offer Group Insurance, Mandates That Individuals Must Obtain Insurance Coverage, and Ban on Provisions in Health Insurance Policies That Exclude Preexisting Conditions from Coverage Creation of State-Level Health Insurance Exchanges Expansion of Medicaid Eligibility for Adults with Incomes up to 100% of the FPL Impacts Conclusion 2: Cost Introduction Background Information Definitions: Cost, Price, and Expenditures Healthcare Expenditures by Type Sources of Funding for Healthcare Expenditures Sustainability of the Public Expenditures Diagnosing the Problem: What Is Fueling the Cost Increases? Technology Is a Key Driver of Healthcare Expenditure Increases Value Produced by the New Technologies Compared with the Costs of the Treatments Do the New Treatments Improve Health? Are the New Treatments a Good Investment as Measured by Cost per Life Saved (or Cost per Life-Year Saved)? Solution Options Option 1: Continue to Spend More on Healthcare Every Year, and Accommodate This by Spending Less on Other Goods Option 2: Restrain the Quantities of Healthcare Services That Are Utilized Annually in the United States Ration by Price Ration by Wait Time Ration by Setting Priorities Option 3: Reduce the Rate of Technological Innovation by Reducing the Incentive for Firms to Invest in R&D Option 4: Reduce the Cost of Delivering Care by Regulating Prices and/or Profits of Healthcare Providers and Pharmaceutical Companies Regulate Prices and/or Profits of Healthcare Providers and Pharmaceutical Companies Option 5: Implement Strategies to Make Our Healthcare System More Efficient Conclusion 3: Quality Introduction Background Information: Three Types of Evidence Indicate That Quality Is Not Consistently High International Comparisons Indicate That Other Countries Are Doing More With Less What Can We Conclude about This Evidence? Diagnosing the Root Cause of the Quality Problem Evidence Documents the Occurrence of Preventable Medical Errors Evidence Documents Variations in Regional Treatment Patterns What Is Influencing Physician Decisions? Does Higher Healthcare Spending Produce Better Outcomes? Are the Regional Differences Large Enough to Be Important? Solution Options: How Can We Make Our Healthcare System More Systematic? Applying Total Quality Management Principals to Healthcare Brief History Implement Systematic Protocols: Clinical Pathways and Guidelines Clinical Pathways Clinical Guidelines Conclusion: Some Strategies for Strengthening Quality Are Clear, but the Concept of Healthcare Quality Is Complex and Multidimensional Conclusion to Section I Section II: Strategies to Increase Efficiency Introduction Do Healthcare Markets Operate Efficiently? Two Key “Market Failures” in Healthcare How Should Government Address These Market Failures? 4: Align Incentives via Payment System Design Introduction Background: Alternate Hospital Payment Designs Strategies to Control Cost: Rate Design Replaced Certificate of Need Programs FFS Payments for Hospital Services and Certificate of Need Programs Rate Redesign DRG Payment for Hospital Services Capitated Payment for Physicians; Accountable Care Organizations for Wider Sets of Providers Bundled Payment: Eliminate Silos Selective Contracting Pay for Performance and Consumer Information to Incentivize Increased Quality Current Efforts: Value-Based Purchasing for Hospitals Physician Payment Systems: RBRVS and MACRA Implications of Public and Private Payment Systems for Hospitals Conclusions 5: Managed Care Organizations, Accountable Care Organizations, and Patient-Centered Medical Homes Introduction Background: Managed Care Organizations Managed Care: Historical Trends Managed Care: The Backlash Current Issues: Lessons Learned Defining Consumer Protection Is Complex Shifting to Managed Care and/or ACOs Focuses on a Definition of Quality that is New for Many Patients Growth of Managed Care Organizations Raised Two Types of Market Power Issues Reducing Healthcare Cost by Reducing Provider Reimbursement Sounds Good, if You Are a Consumer, but Providers See a Different Side of the Issue Providers Responded in Two Ways Managed Care Organizations Also Raised Questions about Physician Risk Taking and Solvency Regulation Mental Health Parity Mandate May Constitute a Special Case Physician Rating Systems Raise Concerns Do ACOs and PCMHs Deliver on Improving Quality and Coordination of Care at a Reduced Cost? Conclusion: Experiences with Managed Care Organizations Provide Significant Lessons Learned, as Providers Begin Forming ACOs and PCMHs 6: Wellness, Prevention, and Disease Management Introduction Background: PPACA Focuses Increased Attention on Prevention and Wellness Current Issues After We Identify Individuals Who Are Most Likely to Benefit from Prevention Programs, Can We Design Programs to Successfully Induce Them to Participate? Effectiveness of Prevention and Wellness Programs Conclusions 7: Regulatory Challenges Posed by New Types of Competition in Healthcare Introduction Background Current Issues New Types of Providers: Retail Clinics, SSHs, Telemedicine, and Integrated Care Providers Retail Clinics Single-Specialty Hospitals Telemedicine Integrated Care Providers Conclusion 8: HIT = EMR + HIE Introduction Background If HIT Can Generate Net Benefits, Why Are Federal Subsidies Needed to Boost Adoption? Expected Benefits versus Costs Potential Market Failures Rationale for Investing Taxpayer Dollars in HITECH Subsidies HIT Adoption Rates Prior to the HITECH Act Challenges Impact of the HITECH Act Impact on HIT Adoption Impact on Outcomes Statewide versus Private-Sector HIE Conclusions Conclusion to Section II Conclusion References Index "This book provides key economic facts, explains the economic concepts needed to examine the implications of these facts, and summarizes the results of empirical studies regarding our healthcare system's access, cost, and quality problems as well as identifying six key trends that are reforming our system. The book helps readers understand the terminology, the facts, and the types of changes that are currently underway. The authors address the macro-problems, and micro-problems which will help assess practice opportunities, and identify viable strategies for adapting to the changes that will optimize the care provided"--Provided by publisher. "Healthcare economics is a topic of increasing importance due to the substantial changes that are expected to radically alter the way Americans obtain and finance healthcare. [This book] provides an evidence-based framework to help practitioners comprehend the changes already underway in the nation's healthcare system. It presents important economic facts and explains the economic concepts needed to understand the implications of these facts. It also summarizes the results of recent empirical studies on access, cost, and quality problems in today's healthcare system."--Provided by publisher This book provides an evidence-based framework to help practitioners comprehend the changes already underway in our nation's healthcare system. It presents important economic facts and explains the economic concepts needed to understand the implications of these facts. It also summarizes the results of recent empirical studies on access, cost, and quality problems in today's healthcare system. The material is presented in two sections. Section 1 focuses on the healthcare access, cost and quality issues that create pressures for change in health policy