Health economics

Order Description 1. Discuss the practice of “balance billing” in the Medicare program and further, discuss how it affects the financial risk confronting Medicare enrollees. 2. What is meant when we use the term “market failure”? What is the potential role of government in each instance of market failure found in the health care services sector? 3. In what sense can information [related to medical care] considered to be a public good? Explain whether private markets will oversupply or undersupply public goods? 4. The new method of paying for doctor services under the Medicare program increases payments for “cognitive services” (thinking and counseling) and decreases the payments for “procedures” (surgery and invasive diagnostic tests). Discuss what you think will happen to the demand for residency training in orthopedic surgery, geriatric medicine, and pediatrics (?). What effect, if any, would you expect for hospital use? 5. The hospital prospective payment system introduced in 1984 created obvious incentives to shorten length of stays in hospitals. Notwithstanding that, how do you account for the dramatic spike in hospital admissions from 1980-1983 and then the precipitous drop in 1984 that appear in Figure 12.3b in the Phelps textbook? 6. U.S. hospitals saw plummeting “margins” following the introduction of prospective payment system (PPS) and again in 1997 following the programmatic reductions in hospital payments from the Balanced Budget Act. Because U.S. hospitals are (in general) not-for-profit organizations, what do you think the primary response will be to deal with the reduced funding stream from Medicare patients? Be sure your answer addresses the possibilities of changing the scope of services offered by the hospital, changing the general quality of care, and changing the efficiency of the hospital’s operation. Also, why do you expect that any (or all) of these might be areas of change?