Deck 7: Healthcare Economics

Question 1

During a pandemic, what factors pressure healthcare systems? What are the economic implications of these factors?

Answer 1

A pandemic alters the processes and systems that constitute healthcare systems. Healthcare systems that are self-sustaining are susceptible to turbulence with an external shock as large as a pandemic. Early in the coronavirus pandemic, for example, health departments were hampered by a shortage of testing capacity. This problem left them without the information necessary to track and contain the disease. While some countries strengthened testing capacity, many struggled with detection and the procurement of testing equipment.
A pandemic may lead to shortages and alter the economic viability of hospitals. Pandemics create shortages of medical equipment and supplies, including ventilators, dialysis units, drugs, and masks. In the presence of a shortage, quantity demanded exceeds quantity supplied at a price below equilibrium. Moreover, during a pandemic, hospitals postpone elective surgeries, scans, and other well-reimbursed services to meet the needs of patients and maintain surge capacity. The result is less revenue for private hospitals and less compensation for healthcare workers. Therefore, a pandemic raises a question about the economic viability of the hospital system.

Question 2

What are the costs and benefits of public health? How does a pandemic impact these costs and benefits?
Public health includes disease prevention, the extension of life, and the promotion of health through informed choices. The objective of public health is to identify and establish the conditions for healthy lives.

Answer 2

Costs of public health
• The payoff is not immediate.
• Campaigns of prevention are expensive.
Benefits of public health
• A healthier workforce is a more productive workforce.
• The payoff is extraordinary in terms of lifetime health status and averting the need for extraordinarily costly, often ineffective intervention at the later stages of life.
• The per capita cost of health care in the U.S. is higher than in any nation in the world. If the U.S. can reduce the costs of health care over the long term - by preventing diseases that require costly medical procedures to treat and by making our existing health systems more efficient - the costs of American products can become more competitive in a global marketplace.
A pandemic raises questions about the past choices of governments in many ways, the management of health being one of them. People with pre-existing conditions are more susceptible to get sick. For example, people with obesity, diabetes, or heart conditions have a better risk of severe COVID-19 illness.

Question 3

List and explain the variables that determine population health: mortality, morbidity, and life expectancy. For a country, graph the change in these variables over time. Why do the trends exist? How did the coronavirus pandemic impact the variables?

Answer 3

Empirical answer with the gathering of data

Question 4

What types of market failure exist with healthcare? During pandemic, which types are most pronounced?

Question 5

How are excess deaths from a pandemic calculated? For a country, find data on excess deaths during the coronavirus pandemic. How would you characterize excess deaths?

Question 6

Graph a health production function. With respect to the dependent variable, what data requirements are involved? How do the independent variables, including public health, climate, education, environmental quality, equitable outcomes, income, and policy impact population health?

Question 7

For each of the following scenarios, demonstrate the impact on the health production function, noting the difference between a movement along the function and rotations of the function.
a. The level of public health expenditure increases as a percentage of GDP.
b. A pandemic reduces economic activity, which leads to fewer carbon dioxide emissions flowing into the atmosphere.
c. A pandemic reduces the amount of time students spend in school.
d. A pandemic reduces economic activity, lowering pollution levels and improving environmental quality.
e. A pandemic increases the inequity of healthcare outcomes.
f. A pandemic reduces economic activity, leading to lower income levels.

Question 8

A problem during a pandemic is a shortage of medical equipment such as ventilators, face masks, and gowns. On a supply and demand graph, draw the scenario. With respect to the problem, explain the market and ethical perspectives. During a pandemic, which perspective should prevail?

Question 9

How does a pandemic threaten the economic viability of hospitals? What measures may hospitals take to plan for a future pandemic?

Question 10

What is the ethical argument for universal healthcare during a pandemic?