MHA5030 WEEK 2 DISCUSSION AND PROJECT
This week will begin to take on some of the assumptions of the free market and how they are met in the current healthcare system. Looking at the assumptions, you will take on the topics of the demand for health services, health insurance, and health status. First, you will focus on whether consumers have enough information to overcome the tendency toward asynchronous information. Then you will look at the demand for health and subsequently the demand for health insurance. Finally, in this week, we are going to tackle behavioral economics as it applies to healthcare and spend some time looking at the famous RAND Health Insurance Experiment (HIE). It is the Oregon Health Insurance Experiment where these experiences provided great insight into our healthcare system. Along with the behavioral economics, you will begin to look at how to create behavior through programs such as patient cost sharing.
So in this week, you will look at the first five important assumptions in the chapter “Demand for Health, Insurance, and Services.” In a special chapter, “Topics in Demand: Externalities of Consumption and the Formation of Preferences Supply,” you will take on assumptions, which deal with externalities, that is, things that are caused by an activity that are outside of the activity. An example of an externality would be generating electricity by burning coal, which is an efficient activity, but it creates an externality regarding air pollution. This air pollution becomes a problem that must be dealt with and has an added cost on the original activity’s goal of generating electricity.
Your Learning Objectives for the Week:
- Interpret the factors that affect the supply and demand for health services in order to predict responses, price, quality, and other factors commonly influenced by health policies.
- Analyze current-day delivery of healthcare policy related to concepts involving efficiency and equality.
MHA5030 Week 2 Discussion Instructions
Discussion Question
Before beginning work on this discussion forum, please review the link
Doing Discussion Questions Right,
the expanded grading rubric for the forum, and any specific instructions for this topic.
By the due date assigned, respond to the assigned discussion questions and submit your responses to the appropriate topic in this Discussion Area. Respond to the assigned questions using the lessons and vocabulary found in the reading.
The Health Insurance Experiment (HIE) is perhaps the greatest experiment in the history of healthcare finance as it explores the interface of people and insurance and the methods for reducing waste in the consumption of healthcare through moral hazard.
Tasks:
Describe the results of the experiment and analyze how it affects healthcare today.
Your initial posting should be addressed at 300–500 words as noted in the attached PDF. Submit your document to this Discussion Area, by the due date assigned. Be sure to cite your sources using APA format.
Respond to your peers throughout the unit. Justify your answers with examples, research, and reasoning. Follow-up posts need to be submitted by the end of the unit.
Be sure to include textbook reference and scholar references only.
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359328&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 1/3
Criteria
Unacceptable
0 points
Emerging (F
through D
Range)
27 points
Satisfactory (C Range)
31 points
Above Average (B
Range)
35 points
Exemplary (A
Range)
40 points
Criterion
Score
Quality
of
Initial
Posting
/ 40No initial posting to
evaluate
The information
provided is
inaccurate, not
focused on the
assignment’s topic,
and/or does not
answer the
question(s) fully.
Response
demonstrates
incomplete
understanding of the
topic and/or
inadequate
preparation.
The information provided is
accurate, giving a basic
understanding of the
topic(s) covered. A basic
understanding is when you
are able to describe the
terms and concepts
covered. Despite this basic
understanding, initial
posting may not include
complete development of
all aspects of the
assignment.
The information provided is
accurate, displaying a good
understanding of the topic(s)
covered. A good
understanding is when you
are able to explain the terms
and topics covered. Initial
posting demonstrates sincere
reflection and addresses
most aspects of the
assignment, although all
concepts may not be fully
developed.
The information
provided is accurate,
providing an in-depth,
well thought-out
understanding of the
topic(s) covered. An in-
depth understanding
provides an analysis of
the information,
synthesizing what is
learned from the
course/assigned
readings.
Criteria
Unacceptable
0 points
Emerging (F
through D
Range)
13 points
Satisfactory (C
Range)
15 points
Satisfactory (C
Range)
17 points
Exemplary (A
Range)
20 points
Criterion
Score
Participation
in
Discussion
/ 20No responses to
other classmates in
this discussion forum
May include one or
more of the
following:
*Comments to only
one other student’s
post.
*Comments are not
substantive, such as
Comments to two or
more classmates’ initial
posts but only on one
day of the week.
Comments are
substantive, meaning
they reflect and expand
Comments to two or
more classmates’ initial
posts on more than one
day. Comments are
substantive, meaning
they reflect and expand
on what the other
student wrote.
Comments to two or
more classmates’ initial
posts and to the
instructor’s comment (if
applicable) on two or
more days. Responses
demonstrate an analysis
of peers’ comments,
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359328&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 2/3
Total / 80
Overall Score
Writing
Mechanics
(Spelling,
Grammar,
APA) and
Information
Literacy
/ 20
just one line or
saying, “Good job” or
“I agree.
*Comments are off
topic.
on what the other
student wrote.
building on previous
posts. Comments extend
and deepen meaningful
conversation and may
include a follow-up
question.
No postings for
which to evaluate
language and
grammar
Numerous issues in
any of the following:
grammar, mechanics,
spelling, use of slang,
and incomplete or
missing APA
citations and
references. If
required for the
assignment, did not
use course, text,
and/or outside
readings (where
relevant) to support
work.
Some spelling,
grammatical, and/or
structural errors. Some
errors in APA
formatting (citations
and references). If
required for the
assignment, utilizes
sources to support
work for initial post but
not
comments to other
students. Sources
include course/text
readings but outside
sources (when relevant)
include non-
academic/authoritative,
such as Wikis and .com
resources.
Minor errors in grammar,
mechanics, or spelling in
the initial posting. Minor
errors in APA formatting
(citations and references).
If required for the
assignment, utilizes
sources to support work
for both the initial post
and some of the
comments to other
students. Sources include
course and text readings
as well as outside sources
(when
relevant) that are
academic and
authoritative (e.g., journal
articles, other text books,
.gov web sites,
professional organization
web sites).
Minor to no errors in
grammar, mechanics, or
spelling in both the initial
post and comments to
others. APA formatting is
correct. If required for
the assignment, utilizes
sources to support work
for both the initial post
and the comments to
other students. Sources
include course and text
readings as well as
outside sources (when
relevant) that are
academic and
authoritative (e.g.,
journal articles, other
text books, .gov web
sites, professional
organization web sites).
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359328&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 3/3
Close
Unacceptable
0 points
minimum
Emerging (F through D
Range)
1 point minimum
Satisfactory (C
Range)
54 points minimum
Above Average (B
Range)
62 points minimum
Exemplary (A
Range)
70 points minimum
MHA5030 Week 2 Project Instructions
Introduction
In the traditional market model, there are major assumptions that impact the ability of the model to function efficiently. So far in the course, we have reviewed the first eight of these assumptions. It is important to relate them to the current provision of healthcare to determine the workability of the traditional market model.
Tasks:
· List the first eight assumptions of the free market.
· Discuss how each assumption is important.
· Explain your conclusions for each of the assumptions relating to today’s provision of healthcare.
Submission Details:
· The project should be 500 words or more and contain at least three references from peer-reviewed articles written in a Microsoft Word document. Save it as SU_MHA5030_W2_Project_LastName_FirstName .
· Submit the report to the Submissions Area by the due date assigned.
· Cite any sources you use in APA format on a separate page.
BE SURE TO USE TEXTBOOK REFERENCE AND SCHOLARLY REFERENCES ONLY.
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363099&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 1/3
Criteria
No Submission
0 points
Emerging (F
through D
Range) (1-10)
10 points
Satisfactory (C
Range) (11-12)
12 points
Proficient (B
Range)
13 points
Exemplary (A
Range) (14-15)
15 points
Criterion
Score
Researched
the
changes needed to
the organization
structure i.e.
reporting
structures,
information
and
communication
structures, HR
management
policies, locations
and facilities etc.
/ 15Student did not
submit
assignment
Work minimally
meets
assignment
expectations. No
purpose
statement is
provided.
Assignment
meets some
expectations
with minimal
depth and
breath.
Purpose
statement is
vague.
Assignment
meets most of
expectations
with all
components
being addressed
in good depth
and breadth.
Purpose
statement is
present and
appropriate for
the
assignment.
Assignment
meets all
expectations
with exceptional
depth and
breath. A
comprehensive
purpose
statement
delineates all
requirements of
the assignment.
Criteria
No Submission
0 points
Emerging (F
through D
Range) (1-10)
10 points
Satisfactory (C
Range) (11-12)
12 points
Proficient (B
Range)
13 points
Exemplary (A Range)
(14-15)
15 points
Criterion
Score
Integrates and
understands
assignments
concepts and
topics.
/ 15Student did not
submit
assignment
Shows some
degree of
understanding of
assignment
concepts.
Demonstrates a
clear
understanding of
assignment
concepts.
Demonstrates the
ability to evaluate
and apply key
assignment
concepts.
Demonstrates the
ability to evaluate,
apply and integrate
key assignment
concepts.
Criteria No Submission
0 points
Emerging (F
through D
Satisfactory (C
Range) (11-12)
Proficient (B
Range)
Exemplary (A Range)
(14-15)
Criterion
Score
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363099&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 2/3
Total / 50
Range) (1-10)
10 points
12 points 13 points 15 points
Synthesizes,
analyses,
and
evaluates
resources
to apply
concepts in
the
assignment.
/ 15Student did not
submit
assignment
Does not
interpret, apply,
and synthesize
concepts, and/or
strategies.
Summarizes
information
gleaned from
sources to support
major points, but
does not
synthesize.
Provides minimal
justification to
support major
topics. Uses 1
credible resource
in the assignment.
Synthesizes and
justifies (defends,
explains, validates,
confirms)
information
gleaned from
sources to support
major points
presented. Uses a
minimum of 2
credible resources
in the assignment.
Synthesizes and
justifies (defends,
explains, validates,
confirms) information
gleaned from sources
to support major
points presented.
Uses 3 credible
resources for the
assignment, including
at least 1 scholarly
peer-reviewed
resource.
Criteria
No Submission
0 points
Emerging (F
through D Range)
(1-2)
2 points
Satisfactory (C
Range)
3 points
Proficient (B
Range)
4 points
Exemplary (A
Range)
5 points
Criterion
Score
Uses correct
spelling,
grammar,
and professional
vocabulary.
Provides credible
resources using
correct APA
format.
/ 5Student did not
submit
assignment
Contains many (≥
5) grammar,
spelling,
punctuation and
APA errors that
interfere with the
reader’s
understanding.
Contains a few
(3–4) grammar,
spelling,
punctuation and
APA
errors.
Uses correct
grammar,
spelling, and
punctuation with
no errors.
Contains a few
(1–2) APA
format errors.
Uses correct
grammar,
spelling, and
punctuation with
no errors. Uses
correct APA
format with no
errors.
1/19/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University
https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363099&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 3/3
Overall Score
Close
No Submission
0 points
minimum
Emerging (F through D
Range)
1 point minimum
Satisfactory (C
Range)
35 points minimum
Proficient (B
Range)
40 points minimum
Exemplary (A
Range)
45 points minimum
MHA5030
WEEK 2
LECTURE NOTES 1
Asynchronous Information in Healthcare
In the free-market system, it is assumed that people maximize their benefits when they are allowed the freedom of making choices on their own. This assumption includes that the government, if allowed to choose for the person, would not make the best choices. For a person to maximize his or her benefits by making intelligent choices, it is clear that good information is necessary. These choices face some restrictions provided by the government, as it is assumed by the government that not all people will make the best choices. Examples are the personal use of drugs or excessive gambling. The government justifies this by showing that it is expensive for the government to take care of the people if they make these choices. In some cases, the government takes a paternalistic view rather than a criminalistic view, like in France. In the case of pharmaceutical drugs, their use is legal, but they are not the best thing to take without a prescription.
In regard to the availability of information, it is important to consider where the information originates from. For example, there are many advertisements on TV and the Internet that describe pharmaceuticals that a person should ask his or her physician to provide. The source of information, of course, being the manufacturers of the pharmaceuticals, leaves us with the question of whether this is unbiased information.
In this unit, you will continue to look at various problems with people making decisions, for example, the status quo bias, present bias, loss aversion, and decision fatigue that make it difficult for people to make completely logical decisions about their health and its maintenance.
Additional Materials
From your course textbook, The Economics of Health Reconsidered, read the following chapter:
· Demand for Health, Insurance, and Services
From the South University Online Library, read the following article:
·
Will Quality Report Cards Help Consumers?
Demand for Healthcare
Few people in this country have unlimited funds to spend on healthcare; so spending money on healthcare is somewhat of a zero-sum game, that is, money spent on healthcare cannot be spent on food or clothing or other activities. To maximize a person’s utility, it is necessary to decide how much healthcare is enough to create good health in that person. This desire to create health is what creates demand in healthcare.
Insurance is one way that people attempt to level out healthcare expenses, which may be large in one month and zero in the next. One of the serious problems with health insurance comes from moral hazard. A hazard is the overuse of, in this case, healthcare, although it could be any other service when that service is free. When something is free, people tend to want as much as they can get. The problem with this, among other things, is that society at large is degraded when one person uses too much and leaves little, if any, for another person. Insurance has this tendency as a problem to solve.
It is important to study the price elasticity of demand for healthcare and know that demand will decrease as price increases, which by itself seems obvious. But it is impossible to calculate how much of a decrease there will be and, therefore, estimate how much service should be provided so that there will be no wastage. The reason this calculation is important is that the public exchanges created by the Affordable Care Act of 2010 would be less than effective if it were not for the subsidies provided to the lower-income population to overcome this price elasticity of demand.
In the next section of this unit, you will spend time discussing the RAND Corporation’s HIE, which was the largest experimental study ever conducted on healthcare in this country. It provides the foundation of cost sharing in healthcare, which is intended to control the overuse of services and moral hazard.
Additional Materials
From your course textbook, The Economics of Health Reconsidered, read the following chapter:
· Demand for Health, Insurance, and Services
From the South University Online Library, read the following articles:
·
The Economics of Moral Hazard: Comment
·
A New Estimate of the Welfare Loss of Excess Health Insurance
Externalities of Consumption
Externalities are created when the actions of one person affect the well-being of another person.
There are two types of externalities, production and consumption. When one organization or person manufactures a product and, as a product of that manufacturing, harms another organization or person, this is called a production externality. Earlier, we discussed the example of generating electricity as a production activity and a product of that being air pollution, which harms others. There are also both positive and negative externalities. For example, the production of apples in a tree farm as a product of reducing carbon dioxide is a positive product. It is common for economists to tax negative externalities and provide incentives for positive ones.
Consumption externalities occur on a more personal level—for example, a positive consumption externality is immunization. When one person consumes an immunization, the product of that is a lowered risk of other people contracting the disease. Society is enhanced through a positive consumption externality quite often. A classic case of a negative consumption externality is smoking. A mention of secondhand smoke provides an image that is not easy to forget.
It can easily be shown that a completely free market would be disrupted by these externalities in many cases. It is, however, difficult for the government to establish taxes, tariffs, and incentives that both maintain a free market and avoid many negative externalities.
Many economists believe that the consumer is the best judge of what will maximize his or her utility, and this is the foundation of a free market. One of the problems with this assumption is that it assumes people will demand things that will make them the best off. However, there are many instances, such as addiction, whether to drugs or cigarettes or obesity, that counter this argument.
So we are left with the question of how many choices are enough, although economic theory suggests that the more the number of choices, the better. One finds that too many choices make them more difficult, or nearly impossible, to manage. It becomes incumbent upon the government then to, at least in some ways, limit the number of choices in order to promote a fair market.
Additional Materials
From your course textbook, The Economics of Health Reconsidered, read the following chapter:
· Special Topics in Demand: Externalities of Consumption and the Formation of Preferences
From the Internet, read the following article:
· Deaton, A. (2003). Health, income, and inequality. NBER Reporter: Research Summary. Retrieved from http://www.nber.org/reporter/spring03/health.html