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Exam Question - Coggle Diagram
Exam Question
- Discuss the economic rationale for health insurance and explain the concepts of risk pooling, moral hazard, and adverse selection. How do these factors influence the design and function of health insurance systems?
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Economic Rationale - An Evaluation of the Impact of Performance-Based Incentive Programs on Healthcare Outcomes
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- Explain how agency theory is applicable to the health sector. Discuss the implications of information asymmetry between patients and healthcare providers, and outline potential strategies to manage supplier induced demand in healthcare settings.
Agency Theory - This is when a principle employs an agent to make decisions for them. The nature of the relationship assumes that the agent will make decisions in the best interest of the principal. Healthcare providers act as agents for patient. The health care industry relies on this as patients do not have knowledge of what healthcare services and products they require to attain good health, therefore requiring an agent. Relies on patient trusting healthcare provider. There is information assymtery in this relationship, with the healthcare provider having more information than the patient. Example when seeking help from Dr for the flu. Dr recommends meds and action to take and pt listens and trusts Dr because there is little knowledge on topic compared to usual market dynamics where consumer knows the most about what product they prefer (clothing taste). Agency problem is when agent acts against the principals best interests. This would be the Dr prescribing medication to the patient that is not the best medication to make them feel better, but the Dr receives a financial contribution for each bottle of medication sold. His own financial gain is more important than the patients welfare. (Hendrastuti & Harahap, 2023)
Supplier induced demand - information asymmetry can be taken advantage of when supplier of healthcare and products can recommend unnecessarily high levels of care or treatment due to an increased supply of these services. Example when a private surgeon recommends a surgery when conservative management may be applicable. More costly route taken and surgeon has availability of the surgical rooms and his calendar is open. Increased supply and the need for him to fill the space.
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Management of SID
Health Literacy: Increase health literacy among the population so that patients can make informed decisions about their healthcare. This involves public health campaigns and educational programs.
Strengthen Regulation: Implement and enforce stringent regulations to monitor and control healthcare providers' practices. This includes licensing requirements, standard treatment guidelines, and regular audits of medical practices.
Medical Audits: Conduct regular audits of healthcare providers to ensure compliance with clinical guidelines and to detect patterns indicative of SID.
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payment reform
Capitation Payment Systems: Shift from fee-for-service to capitation or bundled payment systems, where providers are paid a fixed amount per patient regardless of the number of services provided. This reduces the incentive to over-treat.
Performance-Based Incentives: Implement payment structures that reward quality and outcomes rather than the quantity of services rendered.
Shared decision making - Shared decision making - NICE - health care workers provide facts and evidence about all options and inform patient so that they can make decisions.
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- Using Grossman's model of health demand, explain how health is both a consumption and investment good. Discuss the implications of this dual role for healthcare demand, especially in terms of policy implications for low- and middle-income countries and use examples where appropriate.
Grossman's model
Health is considered a durable capital stock that produces an output of healthy time, which individuals derive utility from
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Individuals inherit an initial health stock that depreciates with age but can be increased through investment.
Like other forms of capital, health depreciates over time and requires investment to maintain or improve.
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- Drawing on your explanations above, describe why each of these three aspects (described in questions A,B, and C) are important for universal health coverage in a country like South Africa where large levels of inequity exists?
Prevention measures or measures that improve health without healthcare (equation) should be prioritized in order to increase health capital and stock and limit the strain on the healthcare system. Demand for healthcare increases with demand for health. Policy needs to include prevention strategies.