Health Production

Health Production

Health Economics First Problem Set (There are 5 worksheets to this assignment) Learning Objectives Upon completion of this problem set, students performing up to expectaion will be able to analyze and calculate: 1. the economic relationship between health care and health 2. an individual or organization’s costs and benefits of a health care decision 3. the cost-effectiveness of a health care decision 4. moral hazard and deadweight loss under the traditional and Nyman perspective of health insurance.

Health Production

Non-Smoker 0 1 2 3 4 5 6 7 8 9 10 11 0 0 0 0 0 0 0 0 0 0 0 0 Smoker 0 1 2 3 4 5 6 7 8 9 10 11 0 0 0 0 0 0 0 0 0 0 0 0Health Care

Health

Health Production Suppose an individual’s health (H) depends on: the individual’s basic health status (HO), the consumption of health care (HC), the consumption of cigarettes (S), and the concentration of pollutants in the air (P). The relationship between these four inputs and the individual’s health (H) can be expressed as: H = HO – 400*S – P3 + [HC*(5*S + 12*P)] – 3*[(HC/S)2] (NOTE: The last term in brackets is (HC/S) raised to the 2nd power.) (Also note: Excel only allows parentheses, which means you’ll need to use parentheses where I have brackets above.) Let: HO=900, P=2.5. Also, S=1 if an individual does not smoke (i.e. is a non-smoker) S=2 if an individual is a smoker Use this information in the problem, which consists of two parts: Part 1: Enter a formula for Health (H) in the first cell of each column for a member of each group (non-smoker and smoker). Copy this formula for the remaining cells in each column (To copy, click and hold the small cross in lower right-hand corner of the cell you want to copy, then drag the cursor down the column). (Note: A graph of the health production functions will appear in the chart to the right) In the second row of each “Marginal Product of Health Care” column, calculate the marginal product of health care for each member. Copy this formula down each column. Part 2: Answer the questions below the table.

Cost_Benefit Analysis

Cost-Benefit Analysis: Education of Hospital Nurse Staff to Reduce Stage 3 and 4 Pressure Ulcers Stage 3 and 4 pressure ulcers (i.e. severe bedsores) are serious adverse events that a patient in a hospital can experience if not properly monitored by nursing staff. It is estimated that, for a typical hospital, total cases of stage 3 and 4 pressure ulcers lead to about $1.2 million (i.e. $1,200,000) in annual excess costs, costs for which the hospital cannot be reimbursed by insurance. However, specific hospital-based education programs that teach nurses how to recognize and prevent pressure ulcers can reduce the excess costs by 18 percent (i.e. 0.18). The annual cost of conducting one of these programs–which would have to be offered each year by the hospital due to regular staff turnover–is $160,000. Use the information above to answer the questions below.

Cost Eff. Analysis (I)

Cost Effectiveness Analysis (I): Treatment for Opioid Use Disorder (OUD) Opioid use disorder (OUD) has become a significant cause of morbidity and mortality in the U.S., with the cost of treating the disorder rising by more than eight-fold since 2004 (Kaiser Family Foundation, 2018). A recent study analyzed the cost effectiveness of various interventions to treat the disorder, including medication-assisted treatment (MAT) and cognitive approaches, such as patient education and psycotherapy. Over a five-year period, the study looked at a cohort of 100,000 patients, finding that MAT, alone, reduced the incidence of fatal overdoses by 6 percent (0.06), while a combination of MAT and a cognitive approach (“MAT + Cognitive”) reduced the incidence of fatal overdoses by 15 percent (i.e. 0.15).   NOTE: In answering the questions below, assume the average remaining life expectancy among the patients in the study (in the absence of OUD) is 30 years.

Cost Eff. Analysis (II)

Production Possibilities

0 0Health Care Services

All Other Goods

Cost-Effectiveness (II): Pneumococcal Vaccine for Young Children A medical study indicates that administering a routine vaccination of the pneumococcal conjugate vaccine, recently approved by the FDA, to a cohort of newborn infants could reduce the risk of death from pneumococcal infection by 6 for every 100,000 (i.e. 0.00006). To be effective, the vaccine has to be administered 4 times to each infant, at 2, 4, 6, and 12 months. Alternatively, giving only 1 dose of the vaccine to children age 3 could reduce the risk of death by 12 for every 100,000 (0.00012), due to the fact that children at this age are more at risk of acquiring the infection in day-care settings.  In answering the questions below, use the following information for a cohort of infants born in the same year (e.g. 2018): Total number of cohort births: 3.99 million (i.e. 3,990,000) Average life expectancy at birth: 78.5 years

Health Care Demand

Health Care Demand An individual’s demand for physician office visits in a given year is given by, Q = 11 – 0.045P, where Q is the number of office visits and P is the out-of-pocket price paid by the individual for each visit. Assume the market price of an office visit is $180. Use this information to answer the questions below.