- Explain scarcity and tradeoffs in health-policy decisions.
- Analyze relationships among healthcare cost, access, and quality.
- Apply the marginal-care model to insurance, overuse, and underuse.
- Identify policy aims and levers related to spending, access, and integrated care.
Economics, Spending, and Health-System Performance
Scarcity makes choices central to health policy. Spetz argues that proposed policies usually involve tradeoffs.
- U.S. healthcare spending is nearly $4.5 trillion.
- U.S. healthcare spending exceeds $13,000 per person.
- Average U.S. life expectancy is below that of countries spending less than half as much per person on healthcare.
What does economics study, and how does average U.S. life expectancy compare with that of countries spending less than half as much per person on healthcare?
Economics studies how people and groups make decisions when resources are scarce. Average U.S. life expectancy is lower than that of those countries.
Financing, Coverage, and Affordability
Government sources fund roughly half of U.S. healthcare spending. Households fund 27% through items such as premiums, copayments, and direct purchases, while private businesses fund 17% through employer-sponsored insurance.
- In the 2021 racial and ethnic comparison, Native American and Alaska Native people had the highest uninsured rate in the displayed data.
- In that comparison, people identifying as Hispanic or LatinX had the second-highest uninsured rate in the displayed data.
- In the 2021 state comparison, the uninsured rate in states that had not expanded Medicaid was approximately twice the rate in expansion states.
An average family premium of nearly 75,000 median household income.
A learner separates U.S. healthcare financing into government, household, and private-business shares. What approximate share belongs to each group, and what is one household payment item?
Government sources fund roughly half, households fund 27%, and private businesses fund 17%. Household items include premiums, copayments, or direct purchases.
Cost, Access, Quality, and Policy Values
Allocating more public money to healthcare leaves less available for uses such as schools and roads.
What spending change may accompany an expansion of healthcare access?
Expanding access to healthcare may increase spending.
Marginal Care, Insurance, and Unmet Needs
Within the stylized marginal-care model, the additional benefit from each increment of healthcare generally declines as the amount of care increases.
- For insured care with patient cost sharing such as a copayment, insurance can make the patient-visible price lower than the social cost of providing care.
- A lower out-of-pocket price makes an insured patient more likely to seek care.
- People without health insurance may not have access even to the care options available to insured patients.
In the stylized model, where is the socially optimal quantity of care, and what generally happens to the additional benefit of care as care increases?
The socially optimal quantity occurs where marginal cost intersects marginal benefit, and the additional benefit generally declines as the amount of care increases.
Broad Policy, Structural Conditions, and Equity
Spetz argues that health policy must be defined more broadly than policies explicitly labeled as healthcare policy.
- Clinical care contributes to health outcomes alongside health behaviors, social factors, and the physical environment.
- Health outcomes include quality of life as well as length of life.
- Substantial health improvement is difficult without addressing people's full set of social needs.
Redlining restricted access to home loans and affected community tax bases.
Which four categories contribute to health outcomes, and which two dimensions are included in health outcomes?
Clinical care, health behaviors, social factors, and the physical environment contribute to health outcomes. Health outcomes include quality of life and length of life.
Policy Aims, System Levers, and Cost Controls
- Professional education is a policy lever for changing the number, types, and preparation of healthcare workers.
- Regulation of drugs and equipment provides policy levers within the health system.
- The commercial health-insurance market is heavily regulated.
The hospital sector receives nearly one-third of healthcare spending, while physician and clinical services account for 20%.
What three concurrent goals make up the triple aim?
The goals are improving an individual's experience and quality of care, improving population health, and lowering the cost of care.
Opioid-Treatment Policy and Value-Based Care
As a semi-agonist, buprenorphine carries substantially less risk of overdose and harm than other opioids.
- Physicians initially had to complete eight hours of training before applying to prescribe buprenorphine outside a narcotics treatment program.
- Nurse practitioners and physician assistants became eligible for the buprenorphine waiver in 2016.
- The special waiver program for prescribing buprenorphine ended in 2023.
According to Spetz, what scope must value-based financial incentives have to meaningfully affect a provider's practice?
Spetz argues that the incentives must apply to a large share of the provider's patients.
Common misconceptions
Watch out: Additional healthcare always makes a patient better off.
Instead: At sufficiently high levels of care, or when treatment risks exceed benefits, additional healthcare can eventually make a patient worse off.
Watch out: Price transparency alone is sufficient to reduce healthcare spending significantly.
Instead: Price transparency alone is insufficient to reduce healthcare spending significantly.
Watch out: Spetz judges value-based care to be a present reality for achieving health equity.
Instead: Spetz judges value-based care to be more an aspiration than a present reality for achieving health equity.
Lesson recap
- Economics examines decisions made under scarce resources, and Spetz argues that proposed policies usually involve tradeoffs.
- Healthcare cost, access, and quality tend to affect one another.
- Clinical care contributes to health outcomes alongside health behaviors, social factors, and the physical environment.
- The triple aim combines care experience and quality, population health, and lower cost as concurrent goals.
- Fee-for-service reimbursement makes it difficult to finance the social workers, therapists, or peer providers that could support holistic opioid treatment.