Assignment 1
1. Discuss the two views of government intervention in a market-based health care system. What role does the politician play in both of these views?
2. Health officials have suggested that the spread of AIDS can be partly contained if more males use condoms while engaging in sexual intercourse. Use the concept of a demand-side externality to explain why the number of condoms sold in the United States is likely to be lower than the optimal number. Explain some ways the government might promote a more optimal use of condoms.
3. The discussion on price ceilings supposed that the medical industry faces increasing marginal costs of production. Suppose a for-profit, monopolistic hospital is experiencing economies of scale (i.e., downward-sloping average and marginal cost curves) in the relevant range. Show graphically and discuss in writing the problems associated with a price ceiling set where the demand curve intersects the marginal cost curve and a price ceiling set where the demand curve intersects the average cost curve. Think in terms of allocative efficiency and financial solvency.
4. Allied health professionals (e.g., social workers) are required by law to possess a professional certificate in some states; in others, they are not. Assuming sufficient data exist, discuss how you might test empirically whether this law exists to protect the public interest or to provide benefits to special interests.
5. Minnesota and Tennessee, among other states, have recently begun to tax the sales of health care providers, such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios:
(a) the demand for medical services is completely inelastic, while the supply curve is positively sloped to the right;
(b) the demand curve is downward sloping and supply is completely inelastic (for this case, it is best to shift the demand curve downward by the amount of the per-unit tax); and
(c) the demand curve is downward sloping and the supply curve is positively sloped. When does the consumer or the health care provider pay a larger portion of the tax? Why? 23 BUS508 - Economics of Health and Medical Care Course Syllabus
6. Do you think subsidies should be provided to lower the cost of a medical education? Why or why not? Use a graphical model in your explanation, if possible.
7. Define price fixing, boycotting, exclusive dealing contracts, tying contracts, and market allocations. How have these business practices been viewed by the courts? Explain.
8. Discuss why the courts use a rule of reason when determining whether to allow a horizontal merger.
9. Explain the logic behind the welfare-reducing tendency of a price ceiling in cell 4 of Table 9- 1.
10. According to Lindsay (1976), why are the average costs of production likely to be lower for a public hospital than for an otherwise identical private hospital?
Assignment 2
1. Physician assistants have long argued that they have the ability to provide as much as 70 percent of the medical services provided by primary care physicians at a much lower cost, yet government regulations limit their ability to work independently of physicians. Explain what would happen to the level of competition in the physician services market if all the statutes limiting the activities of physician assistants were eliminated.
2. Discuss how enhanced competition in the physician services market may have affected the ability of physicians to induce the demand for medical services.
3. Analyze the alternative compensation schemes discussed in this chapter that private insurers use to pay physicians. Think in terms of how these different compensation schemes may affect the incentive of physicians to provide an excessive amount of medical services.
4. As you know, various medical groups are in the process of developing medical guidelines. Assuming guidelines are developed and widely adopted by physicians, how will this affect the physician services market?
Economics of Health and Medical Care Course.
5. Some argue that practice variations exist because information on practice style is disseminated slowly. Phelps (1992) argues that physicians should be allowed to patent and sell their practice strategies. Explain how this policy might affect practice variations.
6. Discuss the theoretical and empirical issues surrounding the supplier-induced demand theory. 7. Discuss the factors that have contributed to the increase in expenditures on physician services over the past decade.
8. Explain the many institutional and structural changes that might make physician licensing obsolete.
9. Use each of McGuire's quantity setting models to explain how a physician is likely to react to price controls. In particular, explain how the physician continues to earn economic profits despite the implementation of price controls.
10. As we learned, MRI and CT scanning facilities have been growing at a fast pace over the last decade. Consider the case in which physicians make referrals to facilities in which they have an ownership stake. Identify and describe some of the incentives such arrangements provide to physicians. Are there countervailing forces that may act as controls on those incentives?
Assignment 3
1. Explain how the relevant product market is typically defined for community hospitals. Why? How is the relevant geographical market defined? Why?
2. What are some possible sources of barriers to entry into the hospital industry? What has the literature concluded about the severity of these barriers?
3. According to the text, empirical studies have not uncovered any strong evidence to indicate that cost savings result from a hospital belonging to a multihospital system, yet, hospitals continue to consolidate and form multihospital systems. Why do you suppose that is the case?
4. Given the not-for-profit nature of most hospitals in the United States, do you think advertising and other types of promotion expenditures are warranted from a societal perspective? Explain.
5. Your roommate is working on a paper for a medical sociology class. You are asked by her if the typical hospital in the United States possesses any market power. How would you respond? Use theory and empirical evidence to support your argument.
6. A study by Mark (1996) finds that not-for-profit psychiatric hospitals are no more efficient than their for-profit counterparts after controlling for quality. At the same time, the study finds that not-for-profit psychiatric hospitals provide a higher quality of care as measured by the number of violations and complaints received. Use the quality/quantity maximization model to explain these results.
7. Some economists have suggested that the best way to control medical costs is to remove the profit incentive for health care providers, particularly hospitals. This would involve making all hospitals not-for-profit institutions. Use the utility maximization model to explain the likely impact such a policy would have on the cost of producing hospital services. What would happen if instead a policy was instituted that reduced barriers to entry in the hospital sector and therefore made the market more competitive?
8. Studies using data prior to 1983 found that increased hospital competition led to higher rather than lower hospital prices. How do researchers explain that result? What have more 29 BUS508 - Economics of Health and Medical Care Course Syllabus recent studies concluded about the relation between competition and prices in the hospital industry? What accounts for that change?
9. Explain the theoretical reasoning why economists suspect that hospitals with different ownership forms will behave differently with respect to price, quality, and access. Also, explain some of the reasons why most empirical studies have not found any significant differences between for-profit and not-for-profit hospitals with regards to their performance.
10. Given that empirical studies find that both HMOs and state rate-review programs have been relatively successful at containing costs, would you prefer more managed care competition or a single-payer system? Explain your choice
Assignment 4
1. Describe three benefits associated with pharmaceutical products. Cite one example of each.
2. As mentioned in the chapter some empirical studies have shown that new drugs improve health status. Does that finding invalidate the flat-of-the-curve medicine discussed in Chapter 2? Why or why not?
3. How do the six-digit North American Industry Classification System (NAICS) and the therapeutic market definition of the pharmaceutical industry differ in terms of seller concentration? Which do you think is a better measure? Why? Think in terms of actual and potential competition.
4. Explain some methods adopted by third-party payers to control drug prices.
5. Explain the purpose and functioning of a PBM company. What are the antitrust concerns about a drug manufacturer purchasing a PBM company? What is the efficiency justification for such an acquisition?
6. The main economic rationale for a patent system is that quick imitation and commercialization reduces the expected profits of drug companies which thereby diminishes innovative activities. Given market realities, do you think a patent system is truly necessary? Can you think of other alternatives to a patent that might maintain innovation but preserve competition?
7. How would you describe the current market structure of the pharmaceutical industry? Do you think that the typical drug firm possesses any market power based on market structure? Why or why not?
8. This chapter argues that the FDA faces an incentive to delay the approval of new drugs, whereas pharmaceutical firms face an incentive to accelerate the introduction of new drugs. Explain some market realities that may force pharmaceutical firms to introduce new drugs at a more efficient pace. 32 BUS508 - Economics of Health and Medical Care Course Syllabus
9. What general conclusions have empirical studies reached concerning drug price competition?
10. One suggested remedy for high drug prices in the United States is the re-importation of lower-priced drugs from other countries. Do you think re-importation of drugs is a good idea? Why or why not? What are the costs and benefits of that practice?
Assignment 5
1. Explain the various differences between the demand for long-term care and medical services.
2. List the different types of providers of long-term care.
3. Explain the profile of the typical informal long-term caregiver.
4. Identify the structural characteristics of the typical nursing home. Think in terms of ownership status, size, chain membership, entry barriers, and so on.
5. Who is the main purchaser of nursing home services?
6. Discuss the role that entry barriers play in the nursing home industry.
7. Discuss the factors that researchers must consider when estimating the cost of informal care.
8. Provide a profile of the typical nursing home resident. How is this profile likely to change in the future and why?
9. Use the Scanlon model to identify the impact of an increase of the Medicaid reimbursement rate on the private price for nursing home care and the number of private-pay and Medicaid patients given a completely vertical marginal cost curve.
10. What roles do the Medicare and Medicaid programs serve in the home health care industry?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.