Economics of Health Care - Assignment Example

 Economics of Health Care 1. Hurley, Ch. 4 End-of-Chapter Question A.1 True It is true that cost effectiveness is poorly suited for programs with multiple types of health outcome. This is because cost effectiveness is most effective in situations where the dominant outcome of concern is only one. Cost effective analysis is easier to understand because its units of measure are in natural form (units). This leads to its adoption by many non-economist health professionals because they can easily interpret its results. The method is disadvantaged when a program produces multiple diverse outcomes. Cost effectiveness analysis cannot be able to integrate all the generated outcomes into a single summary that can be used for the analysis (Hurley 2010, 111). 2. Hurley, Ch. 4 End-of-Chapter Question A.5 False The statement is false because the incorporation of a subjective utility weight in the calculation of quality adjusted life years does not affect the question of allocative efficiency. An allocative efficiency deals with allocation of resources; on the other hand, cost utility measures the quality of adjusted life years. The use of cost utility will, therefore, be inappropriate when subjective utility weight is incorporated. According to Hurley (2010, 109), to address the question of allocative efficiency, it requires the use of the cost-benefit analysis. This is because the potential Pareto criterion method is required for the analysis (p.109). 3. Hurley, Ch 4 End-of-Chapter Question B Program A prevention year Cost ($) 3% factor DPV Effects (QALYs) 3% factor DPV 0 2500 2500 0 0 1 2500 1 2575 0 1 0 2 2500 1.03 2652.25 0 1.03 0 3 2500 1.0609 2731.8 0 1.0609 0 4 2500 1.09272 2813.775 0 1.09272 0 5 0 1.12551 0 0 1.12551 0 6 0 1.15927 0 0 1.15927 0 7 0 1.19405 0 0 1.19405 0 8 0 1.22987 0 0 1.22987 0 9 0 1.26678 0 1.0 1.26678 1.30477 10 0 1.30477 0 2.5 1.30477 3.3598 11 0 1.34392 0 2.5 1.34392 3.460575 12 0 1.38423 0 5.0 1.38423 7.1288 13 0 1.42576 0 5.0 1.42576 7.34265 14 0 1.46853 0 5.0 1.46853 7.56295 Total 12500 13272.825 21 30.159545 Program B treatment year cost 3% factor DPV effects 3% factor DPV 0 1000 1 1000 1 1 1 1 1000 1.03 1030 1 1.03 1.03 2 1000 1.0609 1060.9 1 1.0609 1.0609 3 1000 1.09272 1092.72 1 1.09272 1.09272 4 1000 1.12551 1125.51 1 1.12551 1.12551 5 1000 1.15927 1159.27 1 1.15927 1.15927 6 1000 1.19405 1194.05 1 1.19405 1.19405 7 1000 1.22987 1229.87 1 1.22987 1.22987 8 1000 1.26678 1266.78 1 1.26678 1.26678 9 1000 1.30477 1304.77 1 1.30477 1.30477 10 1000 1.34392 1343.92 1 1.34392 1.34392 11 1000 1.38423 1384.23 1 1.38423 1.38423 12 1000 1.42576 1425.76 1 1.42576 1.42576 13 1000 1.46853 1468.53 1 1.46853 1.46853 14 1000 1.51259 1512.59 1 1.51259 1.51259 Total 15000 18598.9 15 18.5989 ICER ICER = (CB – CA) / (EB – EA) =  = 5326.075 / (-11.560645) = (460.7074) 4. Question on Cost Benefit Analysis Net Benefit = (Benefit A - Benefit B) - (Cost A - Cost B )4 Population 2.3 million Vaccinated 80% of 2.3 million Vaccine cost $30 per dose Severe reaction 1 per 100000 of (80% 0f 2.3m) Cost $1830 per case Prevent 58 cases among vaccinated saving $8,145 per case Save 9 lives out of the 58 cost $1m Costs = vaccinated student 80% of 2.3m = 1,840,000 students Cost = 1,840,000× $30 = $55,200,000 Severe reaction = 1,840,000/100000 = 18 Cost = 18×$1,830 =$32,940 Benefits Prevention = 58×$8,145 = $472,410 Saved lives = 9×$1,000,000 =$9,000,000 a) The total annual benefits Prevention + saved lives = $472,410 + $9,000,000 = $9,472,410 b) Total annual costs Vaccine dose + severe reaction cost = $55,200,000 + $32,940 = $55,232,940 c) Total annual net benefits Benefits – costs = $9,472,410 - $55,232,940 = ($45,760,530) The result is negative. This means that the annual costs for carrying out the exercise is very expensive compared to the benefits that the university gets in terms of savings. Basing on the cost-benefit analysis, it is recommended that the university does not carry out the vaccination process. This is because of the high cost of this process. The program does not pass the cost-benefit analysis test because it gives a negative net benefit. Negative net benefit means that the implementation of the exercise would result in losses rather than gain in comparison to the effort used. 5. Question on Health production Theory The theory states that education induces greater taste for health. This means that health and education are causally related in instances where a third factor is missing. Focusing on the graph, it shows that both a better taste for more education and higher levels of learning are caused by introduction of a third factor such as time. In this case, the lower rate of time leads to a greater investment in both variables resulting in a negatively sloping graph. For this graph, the two are not causal but have a correlation brought in by introduction of a third factor that affects both variables. 6. Question on Flat of the Curve The flat of the curve is a medical situation that means exhaustion of marginal benefit. When used in public health, it simply translates to no additional marginal benefit for further production of population health. Hurley (2010, 172) agrees to this statement, indicating that medicine is at the flat of the curve. Preventive care is still a large field that requires a lot of medical attention. This field is still at its early stages and it will take some time before it reaches flat of the curve. It is especially difficult to prove this hypothesis in acute situations and emergencies as benefits for extra effort bring great results. The best investment in improving public health is education. In the field of public health, there is continuous evolvement of health conditions and newer threats coming up. The best way to deal with this is to be ready to tackle each situation once it emerges, and this can be achieved only through preparedness, which is education. 7. Hurley, Ch. 7 End-of-chapter Question 9 False The statement is false because in this situation, the allocative efficiency hypothesis does not apply. The health care facilities are only built for the sake of the anticipation that there will be a risk of illness occurring. Putting health care needs as people in the society fall ill does not guarantee that its needs will be met, keeping in mind that illness is an unfortunate event. The society works towards preventing the occurrence of a health effect on an individual; therefore, if this statement were true, then there would be no health facilities. 8. Hurley, Ch. 8 End-of-Chapter Question 8 False The statement is false because the work of physicians cannot be substituted by the introduction of psychologists in the public insurance plan. Psychologists will be able to offer the public a wide range of knowledge concerning their healthcare. However, a good insurance plan or knowledge offered by psychologists on health issues does not take away the risk of health problems. It is, therefore, clear that the two appear parallel to each other, meaning there will be very little or no effect of this decision on physicians. 9. Hurley, Ch. 8 End-of-Chapter Question 9 True This statement is true because the orthopedic care is a very vital condition and wrong care for patients suffering from orthopedic ailments can result in severe cases. Regional referral centers have heath physicians that hold more specialized qualifications than those found at the local clinics. Reduction of a medical problem requires specialized physicians to better handle the illness before it worsens. Most patients with skeletal or orthopedic conditions when treated early by the right physician reduce the probability of the same illness occurring. When comparing specialized service at local clinics on this patient with those at the regional referral centers, such a move will yield positive results. References Hurley, Jeremiah E. 2010. Health economics. St. whitby: McGraw-Hill Ryerson. Read More