health insurance research paper

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A full set of resources to accompany this feature can be downloaded for free here. Calling all English teachers: does this sound familiar? As structure gcse english lit essay go through extracts in the last lesson on Friday afternoon, you ask carefully crafted questions, and note with satisfaction how students shoot their hands up in a flash, like Barry Allen on the run. Later, back at home, you mark them. What went wrong?

Health insurance research paper kitzer essay

Health insurance research paper

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Employment status is related to measures of well-being, which are also associated with absenteeism and presenteeism. To implement an Employee Total Health Management ETHM model-based questionnaire and provide estimates of model program elements among a statewide sample of Iowa employers. Survey a stratified random sample of Iowa employers, and Survey a stratified random sample of Iowa employers, and characterize and estimate employer participation in ETHM program elements.

The ETHM questionnaire-based survey provides estimates of progress Iowa employers are making toward implementing components of Total Worker Health programs. Use of Complementary Medicine in Switzerland. Within the framework of the Swiss governmental Program of Evaluation of Complementary Medicine PEK we assessed the prevalence, use, perceived effectiveness and appreciation of complementary medicine CAM in Switzerland, according to Within the framework of the Swiss governmental Program of Evaluation of Complementary Medicine PEK we assessed the prevalence, use, perceived effectiveness and appreciation of complementary medicine CAM in Switzerland, according to published surveys.

Search was performed through electronic databases, by hand-searching and by contacting experts at universities, hospitals, health insurances, patient organizations and pharmaceutical companies. The number of publications increased strongly between and When asked about favored general improvements in healthcare, 6. Approximately half of the Swiss population has used CAM. The aim of this literature review, performed within the framework of the Swiss governmental Program of Evaluation of Complementary Medicine PEK , was to investigate costs of complementary and alternative medicine CAM.

A systematic A systematic literature search was conducted in 11 electronic databases. All retrieved titles and reference lists were also hand-searched. Studies investigated different kinds of costs direct or indirect and used different methods prospective or retrospective questionnaires, data analyses, cost-effectiveness models.

In two analyses phytotherapy proved to be cost-effective. One study revealed a reduction of 1. Another study, performed by a health insurance company reported a slight increase in direct costs for CAM. Costs for CAM covered by insurance companies amounted to approximately 0. Publications had several limitations, e. As compared to conventional patients, CAM patients tend to cause lower costs. Results suggest lower costs for CAM than for conventional patients, but the limited methodological quality lowers the significance of the available data.

Further well-designed studies and models are required. ABSTRACT In order to face the growing expenditure of health services, it is argued that health insurance systems should take into account that individuals may be held responsible for risky behaviour. Public health insurance should no Public health insurance should no longer cover health care related to such behaviour.

This position is argued for not only to limit expenditure but also on the basis of ethical considerations. Philosophers and economists, notably Ronald Dworkin, have argued that social policy should rely on a clear distinction between chance and choice. More precisely, it should take into account the lack of personal, e. On the basis of this viewpoint, one could arguably advance that that public insurance should similarly distinguish between responsibility and circumstances.

Measuring the health-related Sustainable Development Goals in countries: a baseline analysis from the Global Burden of Disease Study The SDGs specify 17 universal goals, targets, and indicators leading up to We provide an analysis of 33 health-related SDG We applied statistical methods to systematically compiled data to estimate the performance of 33 health-related SDG indicators for countries from to We rescaled each indicator on a scale from 0 worst observed value between and to best observed.

We used spline regressions to examine the relations between Medicine: Yesterday, to-day and to-morrow. Despite substantial evidence of socioeconomic differences in the use of breast and cervical cancer screening, the mechanisms explaining these differences, and therefore their policy implications are not well understood. We investigated Data were from a population-based telephone survey of 2, rural Wisconsin women aged 40 years and older.

Logistic regression analyses and simulation exercises were conducted. The strongest barriers to screening in this rural population were nonfinancial impediments to access. Removing economic barriers did not lead to significant increases in screening when other types of barriers were present. Policies and interventions that focus on the most visible differences that exist between rural women of differing socioeconomic levels ie, differences in the ability to afford health services and do not simultaneously address knowledge, attitudinal, and health-care access barriers will fall short of their goal to increase breast and cervical cancer screening.

Burns as a result of assault: associated risk factors, injury characteristics, and outcomes. The purpose of this study was to identify specific premorbid factors and injury characteristics associated with intentional burn injuries and to compare outcomes for individuals injured by assault and those with unintentional injuries The purpose of this study was to identify specific premorbid factors and injury characteristics associated with intentional burn injuries and to compare outcomes for individuals injured by assault and those with unintentional injuries.

Participants sustaining major burns from May to August and consenting to a multisite, prospective, longitudinal outcome study were included. Etiology of the injury was classified as intentional i. Statistical analysis was performed with t-tests, chi2 tests, and analysis of variance.

Eighty patients sustained intentional burn injuries and subjects sustained nonintentional burn injuries. Compared to patients with nonintentional burns, those with burns related to assault were more likely to be female, black, and unemployed and to have higher rates of premorbid substance use. Between the groups, there were no significant differences in prein Identifying the active general practice workforce through public domain databases. To identify the non-specialist medical practitioner workforce engaged in active general practice in the region served by the Division of General Practice-Northern Tasmania and to determine the usefulness of public domain databases for To identify the non-specialist medical practitioner workforce engaged in active general practice in the region served by the Division of General Practice-Northern Tasmania and to determine the usefulness of public domain databases for enumeration of individual non-specialists providing general practice services.

This masterlist was used in calculating the sensitivity and positive predictive value PPV of each of the nine databases for enumerating non-specialist practitioners in active general practice. Combining the databases resulted in a list of practitioners, which was refined to practitioners who, by our criteria, were in active general practice. Databases had a range of sensitivities and PPVs, but those with high sensitivity tended to have low PPVs, and vice versa.

When used alone, no single database had both high sensitivity and high positive predictive value for identifying the active general practice workforce. Firms that do not offer coverage are expected to pay a financial penalty, which is then used by the government to subsidize public provision of health insurance to individuals without access to employer-provided insurance.

By forcing the expansion of the group market, more consumers will get access to the benefits of risk pooling. Employer mandates will certainly have additional impacts outside of health care on the market for labor.

A simple theoretical analysis of mandates is presented in Summers Figure Requiring employers to provide insurance to their workers adds to the cost of hiring labor, which will reduce demand from D no insurance to D insurance. However, providing access to insurance at work may also increase the supply of labor from S no insurance to S insurance. The overal impact on the market will be to lower wages to cover some fraction of the added costs of insurance.

As in any market where there is a simultaneous decrease in demand and increase in supply, the impact on the equilibrium number of workers hired is ambiguous. The new equilibrium could fall anywhere in the shaded area. Where exactly the new equilibrium falls depends on whether labor supply increases more, less, or the same amount as the decrease in demand for labor. If supply increases at the same rate as the demand decreases, the number of employed workers would remain unchanged and the wage offset exactly equals the cost of providing insurance.

If supply increases more than demand decreases, which occurs if workers value the insurance more than it costs the employer to provide the insurance, the equilibrium quantity of workers could even increase. This latter effect could exist because of the benefits in risk pooling through group insurance in combination with the preferential tax treatment of health insurance purchased at work, which is described in more detail below. Even with mandates, adverse selection problems may remain, however, in the sorting of consumers and groups into different policies.

Some insurers could attract relatively high-risk pools while others low-risk pools, reducing some of the subsidization of the high-risk individual. Mandates are not a complete answer to the market failure caused by asymmetric information. A single-payer system is one in which the public sector takes on the role of the only insurer. Financing of the care is typically through income taxes in which the healthy and wealthy subsidize the sick and poor.

Universal health coverage is achievable without single-payer financing, but single payer has the advantage of virtually eliminating the problem of adverse selection, depending on how comprehensive the benefits associated with this form of financing are. The Canadian health care system is one example of single-payer financing that retains private markets for the health care providers.

In contrast, in the United Kingdom, the public sector is both the main financer and provider of health care. In the United States, Medicare is a single-payer financing mechanism for the elderly and disabled. In each of these examples, some private financing of health care coverage occurs through out-of-pocket payments by the patients themselves and the existence of supplementary insurance.

We now turn to the second major market failure in insurance: moral hazard. He was less careful about securing the car when he knew the radio would be replaced if stolen. Economists characterize this behavior as moral hazard. Economists do not generally view the problem of moral hazard in health insurance as being primarily related to the idea that people engage in riskier activities because they are insured, although this behavior could be one aspect of moral hazard.

Rather, the main problem with moral hazard in health insurance is that once an individual is insured, the marginal private cost of receiving care is reduced from the true marginal resource social cost of production of that care. The price facing the insured patient could even be zero; in other cases, the price is reduced from the full cost to a modest co-payment or coinsurance rate. The efficiency, or welfare, costs of moral hazard are shown in Figure To keep things simple, we will assume constant marginal costs, which represent the true, social resource costs of production.

In perfectly competitive markets, the equilibrium market price will also be equal to the marginal cost of production. The uninsured, whether their demand curve is represented by D1 or D2, pay the full marginal costs of care, and the quantity demanded for this group is Q1, where the market price MC curve intersects the demand curve. This point is the efficient level of production. Whether a deadweight loss from moral hazard exists depends on the elasticity of demand for health care.

Full insurance moves the marginal personal cost price facing the individual from the market price to zero. If demand is perfectly inelastic, the quantity demanded of health care remains the same, Q1, and the efficient level of consumption is maintained. When demand is elastic, the rational, utility-maximizing individual will optimally consume doctor visits up to Q0, where the demand curve intersects the x-axis.

As is evident, Q0 is greater than Q1, and the individual is consuming an inefficiently high amount of medical care. The efficiency losses from moral hazard are greater the more elastic the demand for medical care. What determines the elasticity of demand for health care? Demand tends to be more elastic for goods that are not considered necessities and goods with substitutes. Different types of medical care are likely to differ in their elasticity; one might have more elastic demand for the doctor with a sore throat versus a heart attack, for instance.

Even if it is a strep throat, which requires a prescription for antibiotics, consumers with no insurance may wait for a bit to determine whether the sore throat will get better on its own. Because heart attacks are more life threatening and there are not many true substitutes to medical care, demand for cardiac care is likely to be more inelastic. The RAND health insurance experiment discussed below provides some evidence on the elasticity of demand for different types of health care services.

The overconsumption from moral hazard is rational for the individual, who receives positive marginal benefits from the additional care. The welfare problem is that his or her marginal benefits are less than the true resource cost of production. The amount of the efficiency loss can be measured if the marginal benefits of care are known.

The deadweight loss of moral hazard is shown by the area of the shaded triangle in Figure The welfare losses are not equal to the full resource costs of production because we still do count the marginal benefits accruing to the individual. The problem of moral hazard can be minimized by patient cost-sharing mechanisms. If designed well, the addition of deductibles and coinsurance can reduce the amount of welfare loss produced by insurance by returning some of the costs back to the patient.

The introduction and encouragement of consumer-directed health care is an example of a market solution intended to combat moral hazard. These plans are typically a very high deductible catastrophic insurance plan. These insurance policies are then priced more cheaply than more generous coverage. The deductibles in these plans force the patient to face the full marginal cost of the first few thousand dollars of care. Presumably, consumers will then be less likely to go to the doctor for minor problems like colds and to think about less expensive options for other types of care.

The success of patient cost sharing at reducing use of health care presupposes that the consumers know the true marginal benefits of the health care and that they fully direct their health care expenses. The problem with these assumptions is that there is asymmetric information in the health care markets as well.

Physicians and other health care professionals have considerably more technical knowledge than patients, and patients therefore rely on them to be good agents when prescribing care. In addition, can the average patient distinguish between the medical problems that require medical intervention from those that will resolve on their own? The heart attack example is illustrative; perhaps the symptoms experienced by the patient are nothing more than heartburn, but without medical personnel to assess the patient, the consumer really does not know.

To the extent that physicians direct the consumption of medical care, this limits the responsiveness of consumers to price. Patients may not be presented with a range of options for a particular health problem or may not possess the information to adequately assess the different costs and benefits of different options. While there is evidence that co-payments do reduce the quantity of care demanded, in a global sense, they seem to be fairly ineffective at reducing costs for the entire health care sector.

Other countries, which rely more on cost containment strategies directed at the supply of health care, have lower per capita health care costs than the United States. In essence, total compensation received by workers in efficient markets is equal to the marginal revenue product that worker brings to the firm his or her productivity. Workers could receive compensation in the form of wages or other benefits, including health insurance, pensions, and so on.

To receive health insurance, workers must exchange wages for that benefit. The worker pays for the insurance directly through the employee share of the premium and indirectly in the form of lower raises and reduced wages. The growth in employer-provided group health insurance in the United States has been fueled in part by the differential treatment of health insurance compensation versus wage and salary compensation. We are taxed on the latter but not the former at the federal and some state levels.

This disparate handling in the tax code is rooted in the wage and price controls imposed during World War II. Having a large military mobilization increased both the domestic demand for goods and the domestic labor demand. Policy makers recognized that both factors would likely lead to considerable inflation. In the wartime environment, the government took a much more active role in regulating the economy, and one policy was the wage freeze.

However, firms still required some means of trying to attract more workers in the tight labor market and began to offer additional, nonwage, fringe benefits. This circumstance led to some questions about how nonwage compensation would be taxed. In , the Internal Revenue Service IRS issued a judgment that these parts of compensation were not part of taxable income. In effect, the treatment acts like a tax deduction; it reduces taxable income by the value of the insurance.

In addition, it reduces payroll taxes. Policies such as this one are termed tax expenditures; they represent foregone tax revenues for the government. How much the tax bill is reduced for the family depends on which tax bracket the household falls into. The value of a deduction is equal to the premium multiplied by the highest marginal tax rate the household faces. Because of the artificial lowering of the price of health insurance at work, workers may demand more of their compensation in the form of health insurance than is optimal.

Insurance policies traditionally covered rare, catastrophic events; now they often cover routine, smaller ticket items. In essence, health insurance now takes on an additional role beyond that of taking away uncertain risks; it becomes the predominant form of financing for health care. If no market failures existed in health insurance, the special tax treatment would artificially reduce the price of health insurance and cause inefficiently high levels of health insurance coverage.

However, asymmetric information does exist. Increasing the quantity of health insurance in this context may imply that the tax treatment improves efficiency. Second, equity considerations are also considered to be relevant. Society may view access to health care as being a special good that should not be allocated by the market. Many believe that low income should not prevent access to health care. If the tax treatment of health insurance improves access to health care for disadvantaged groups, society may value that outcome even if some efficiency costs exist in increasing the equity of outcomes Okun, The tax treatment, however, does not appear to be accomplishing the goal of increasing equity of coverage.

Critics argue that the favorable tax treatment of employer-provided health insurance has led to an inefficiently high level of coverage. Health insurance has become less health insurance and more health care financing, with benefits including small, regular expenses such as checkups, in addition to the coverage of big-ticket, uncertain expenses. More generous benefits lead in turn to more potential for moral hazard, as patients become increasingly insulated from the full marginal cost of care.

As discussed above, the amount of inefficiency caused by this moral hazard depends on how elastic the demand for medical care is. What is the evidence on elasticity of demand for health care? Estimating the elasticity of demand for health care by varying the levels of co-payments patients pay is subject to selection bias since, as we have described above, individuals choose their level of coverage based in part on their health status. In other words, consumers who are relatively unhealthy are more likely to opt for fuller insurance coverage with lower patient out-of-pocket expenses.

The RAND health insurance study provides the cleanest estimates of the elasticity of demand for health care. In this study, individuals were randomized to different levels of health insurance coverage, and their medical care use was tracked, so their level of insurance was uncorrelated with their health status. Inelastic demand for medical care then implies relatively small losses from moral hazard. How the tax treatment affects access to disadvantaged groups the poor or the sick, for instance is another societal concern.

The tax benefits are highly inequitably distributed and make the relative access to private health insurance worse. The reasons for the inequity are twofold. Workers must first have an offer of insurance from their employer to take advantage of the tax subsidy. In addition, the size of the tax subsidy depends on the marginal tax rate facing the household receiving the insurance. Because the U. Sheils and Haught estimate that the bulk A horizontal inequity is also created by the policy.

Otherwise similar individuals are treated differently, depending on where they access health insurance. While self-employed individuals are also now able to deduct their insurance, the treatment for individuals purchasing insurance in the nongroup market is quite different.

Individuals who have medical expenses exceeding 7. In other words, individuals must have substantial expenses before they are able to take advantage of this deduction. Now that we have a better sense of the workings of the health insurance market, we turn our attention to the public insurance policies in the United States. The U. While there are a variety of government-run and funded health programs, including coverage for military personnel and veterans, this research paper will focus on the three main programs: Medicare, Medicaid, and SCHIP.

Medicare, established in , is the public coverage for individuals age 65 and older, individuals younger than age 65 with disabilities, and anyone with end-stage renal failure. In essence, for most recipients, it is a single-payer-type plan. These benefits are not subject to a premium. Beneficiaries contribute premiums for this coverage. Other funding is from payroll taxes and general tax revenues.

The government pays the premium for the individual, and the private insurance plan takes over the insurance role. With the passage of the Medicare Modernization Act of , prescription drug coverage was added in Part D includes some premiums for individuals. In addition to this basic level of coverage, elderly individuals may purchase supplemental, or gap, insurance to cover expenses that are not covered by Medicare.

Retiree health insurance plans often fill this role, as does Medicaid coverage for the elderly poor. Individuals who receive both Medicare and Medicaid coverage are called dual eligibles. They are jointly state and federally funded and administered insurance for the poor. Eligibility for Medicaid varies by state, with the federal government establishing minimum criteria. As a means-tested program, individuals must have incomes below a specific cutoff based on the federal poverty line and hold limited assets to qualify for the benefits.

The income eligibility cutoffs also vary by characteristics of the individual, with higher thresholds for infants, children, and pregnant women, for example. Individuals with very high medical expenses may qualify under the medically needy category; Medicare dual eligibles often qualify through this route.

Not everyone in the United States has access to coverage. Given the market failures and the structure of public coverage, it is possible to predict characteristics that will be associated with lack of insurance. Individuals with preexisting conditions who do not have access to the group market will be particularly vulnerable. The elderly receive coverage through Medicare, so the uninsured will be found among the nonelderly. The uninsured are by and large in families with one or more full-time workers and in families that are under or near the poverty line.

Since the benefits of risk pooling increase with the size of the group, uninsured workers are more likely to be employed at smaller firms, in occupations and industries with considerable job turnover, and in low-wage occupations.

After long investigations, the underlying cause was determined. Acquired immune deficiency syndrome AIDS was identified, an infectious disease caused by a retrovirus named human immunodeficiency virus HIV.

In the early years of the epidemic, HIV was a virtual death sentence, and until a blood test was approved by the Food and Drug Administration FDA in , most cases were not identified until late in the disease stage, when the immune system had already been so compromised that opportunistic infections had already attacked the system.

The disease has a long latency period, on aver-age 6 to 10 years, in which the individual is infected with the virus before developing full-blown AIDS. During the latency period, the individual may show few or no debilitating symptoms.

In the beginning of the epidemic, treatment of the opportunistic infections was the only course of action available until the introduction of azidothymidine AZT , which inhibits the replication of the virus itself. For many during this period, life expectancy was extended only a few months. It was not until the development of highly active antiretroviral therapy HAART in that medicine was able to significantly extend the life expectancy of HIV-positive individuals and the death rate from AIDS began to fall.

HAART is characterized by treatment with more than one drug; each drug targets a different aspect of the viral infection and replication process. Success of the regimen depends on the strict adherence to the treatment; treatment cannot be stopped once started, or the virus may gain resistance, and the disease progression will resume.

AIDS fit this model quite well early on in the epidemic since it was an acute problem, although the outcome was often death and not recovery.

Universal health coverage has become a policy goal in most developing economies.

A levels without coursework In terms of the drilling rig resume examples for self-selection, Government schemes and SHI are mandatory in nature i. Any discordance was resolved through discussion and re-visiting the household. This is because of high operating and treatment expenses. Gidengil, Courtney A. The impact of voluntary health insurance on health care utilization and out-of-pocket payments: new evidence for Vietnam. Avilla-Burgos et al[ 95 ]. Health insurance sector will take a massive hit, as tax benefit is going to be optional from this financial year.
Health insurance research paper Socio-demographic characteristics of sample population by their health insurance status. Interpretation Increased health insurance coverage generally appears to increase access to health care facilities, improve financial protection and improve health status, although findings are not totally consistent. While evidence shows that majority of the OOP expenditures is on account of outpatient consultation, the same is not covered under current popular research paper editor website gb financed HI schemes. Nguyen[ 74 ]. This study uses insurance claims data and changes in plan offerings within firms over time to estimate treatment effects of high-deductible plans on spending on 24 low-value services received in the outpatient setting. Social Health Protection.
Health insurance research paper So, new ideas need to be incorporated to reduce losses if not making profits. Duration of health insurance We also found that the longer an insurance programme has been in place prior to the timing of the evaluation, the higher the odds of improved health outcomes. We particularly used the 3 rd health insurance research paper based on consumption expenditures. Twelve studies were identified i. Rivera-Hernandez et al[ 61 ]. New Delhi: Centre for Policy Research;
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We use cookies to enhance our website for you. Proceed if you agree to this policy or learn more about it. Type of paper: Research Paper. The article of the authors addresses the ongoing debate on the mechanism that is being used to measure poverty in the United States. Opponents of the mechanisms have long argued that the data, given that the mechanism where it is derived from is flawed, is inherently unreliable.

As the work deals with medical spending as a component of the definition of poverty, then the method by which medical spending is integrated into the understanding of poverty in the United States. In the work of the authors, there are several points worth noting. One, medical expenditures, integrated into the construction of the definition of poverty, has a considerable impact on the definition of poverty.

This comprehension differs greatly from the definition being offered with the use of prevailing data sets. Two, that by integrating the factor of prudent medical spending costs, the definition of poverty is largely unaffected compared to the subtraction of real medical costs taken from family resources. The factor of the health condition of a person or members of a certain economic demographic is once again articulated in the work of the organization. In the opinion of the group, the level of income that the person enjoys is directly related to the standard of health as well as access to health care services that the person will be able to acquire.

Simply put, to the general society, the premise is that the person will be healthier in correlation to the level of prosperity that the person has. Inversely, if the person is poor, then it is anticipated that the level of health of the person will be decrepit and weakened. Much of the research of the IRP is focused on the mental as well as physical health make up of people in lower income economic levels. The group also provides papers on various topics related to health and income levels.

The article discusses the comprehension of the World Health Organization describing as one of the greatest human crisis. It also describes poverty as potentially stigmatizing and isolating, and the authors particularly note the direct as well as the indirect impacts of poverty on the advancement and the control of psychiatric, emotional as well as dispositional issues. In assessing the instance of poverty and health, it was shown that income levels have a direct link to the state of health as well as quality of health care services that the person can avail of.

The associations of the socioeconomic station in life of the person and the racial background on the health condition as well as the collective health trajectories of the people in the poverty thresholds have been the focus of several studies. In the context of the elderly, the factors of being African American as well as elderly are closely associated with a number of predictors of the individual having poor health, inclusive of the onset of chronic diseases and the possibility that the individual may be afflicted with a disability associated with the factor of being poor.

One of the elements being examined and investigated by analysts and researchers among the elderly is the factors of earlier experiences in the life course of the individual. The poverty level of the person increases parallel to the level of exposure of the person to adverse factors, impacting the overall health of the person.

The body of work of the authors states that though there have great strides in the care of women and children, there are still visible signs that there are considerable discrepancies in the level of access that are in operation locally as well as in the global community. It was seen that women in the lower economic brackets are more likely to be inflicted with poorer levels of health than those in more affluent economic levels.

Though the provision of high quality prenatal as well as postpartum care is regarded as one of the main pillars in eradicating poverty and threats to the health of the women, regrettably, access to quality and even sufficient health care is one of the number of health issues that is being tackled by policy as well as lawmakers.

Aside from lack of access, other issues regarding health care services include an inadequacy to up-to-date health care services, and the inequalities have also been seen in the provision of care to the women in poverty threshold demographics. The article addresses the comprehension of the United Nations on the comprehension of poverty. Among the billions of people that are living in the global community, the great majority of the people that are wallowing in poverty are women.

With the rapid changes being experienced in the global society, what is being stated by the organization is the increasing incidents of poverty being experienced by women that varies by region. In addition, the rising incidents of racial as well as gender disparities in the global work force are major contributors to the poverty being experienced by women across the globe.

In this light, the evidences of poverty are also shown to highlight the plight being experienced by women in the poverty level thresholds. The work of the authors focuses on the debates regarding the issue on what actually comprises poverty and arriving at a universally acceptable definition of poverty. In this light, when policy makers arrive at a mutually acceptable accurate definition of poverty, then the conflict of crafting policies in order to address poverty.

The authors note the research being done by Canadian authorities in recognizing that poverty as well as health is closely and intrinsically linked to each other. The authors argue that policy makers must recognize that poverty and poor health is linked to each other; the mechanisms that measure the poverty in Canada, however, is said to be severely flawed to come up with an accurate and acceptable definition of poverty.

Without an accurate as well as acceptable definition of poverty, policies and laws designed to address these twin issues will always be at odds and loggerheads with each other. We accept sample papers from students via the submission form. If this essay belongs to you and you no longer want us to display it, you can put a claim on it and we will remove it.

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Type of Paper. Essay Topics. Educational Tools. Burtless, Gary, Siegel, Sarah. Brookings Institute The article of the authors addresses the ongoing debate on the mechanism that is being used to measure poverty in the United States.

Murali, Vijaya, Oyebode, Femi. Kasper, Judith D. Journals of Gerontology 63 4 pp. Schor, Juliet. The Overworked American: the unexpected decline of leisure. Because consumers are utility maximizing, the consumers who find it worthwhile to purchase insurance are the relatively high-risk consumers in this free entry and exit model. Insurers, consumers, and the public have developed mechanisms to at least partially solve the problems caused by adverse selection.

We explore several of the most important solutions below, although this list is not exhaustive. If insurers could find a way to have a pool of consumers with both high and low risks, they could continue to make normal profits, and everyone would have access to insurance. Low-risk individuals would pay a higher premium than their average expected losses, and high-risk individuals would pay a lower premium than their average expected losses.

This risk pooling mechanism is essentially group insurance. In the United States, the grouping mechanism traditionally has been employers, for reasons we will explore more fully below. If we now remember that there are administrative costs to add to the premium, we can find one additional advantage above that of risk pooling to group insurance.

Administrative costs decrease rapidly with the size of the group. If a salesperson contracts to insure a group of employees, he or she has, in essence, sold policies in one fell swoop, a less expensive alternative to selling separate policies to consumers. The employer offers the insurance to all employees as a work benefit. Why would a low-risk individual be willing to, in effect, subsidize a high-risk individual through coverage at work? Several reasons exist; first, because of risk aversion, everyone is willing to pay something more than the value of their expected losses.

Third, a low-risk individual today might be a high-risk individual tomorrow, and there might be barriers to purchasing insurance later. In this situation, workers will find it to their advantage to obtain coverage early. In essence, insurers separate risks and price the policies appropriate to the risk level. They also make use of observable characteristics correlated with health care expenses in setting the availability of the product.

To discuss these options, let us first define several characteristics or terms related to health insurance coverage. The premium is the price the consumer pays in exchange for the insurance coverage. If the consumer has a loss, he or she makes a claim and is reimbursed, or providers are paid directly.

Deductibles are exemptions from reimbursement for the first dollars of losses. Coinsurance is an arrangement where the insurance company pays a certain percentage of the claims and the consumer pays the remaining percentage out-of-pocket. A co-payment is either a fixed-dollar payment made by the consumer or the actual out-of-pocket payment by the consumer resulting from a coinsurance arrangement.

As an example of how benefit design can separate risks, insurers may increase the premiums but also increase the level of benefits by decreasing the deductibles, co-payments, and coinsurance rates. Compared to a policy with a low premium but high deductibles and co-payments, the premiums of both policies can be designed jointly with the benefits so that relatively high-risk individuals will find one policy more attractive and relatively low-risk individuals will find the other policy more attractive.

Insurers also spend considerable effort identifying observable characteristics age, gender, etc. These factors include past medical conditions and other risk behaviors such as smoking. In addition to charging different premiums to different groups, insurers have written in a number of preexisting conditions clauses that exempt coverage from medical bills related to health problems that have already been diagnosed.

All of these efforts at risk segmentation add considerable costs to the loading factor associated with health insurance. These costs are partly incurred by the insurers themselves in their benefit design and pricing mechanisms, but they also add administrative costs to the providers, who must deal with multiple payers with different reimbursement mechanisms.

The underlying problem with asymmetric information is that healthy consumers opt out of policies, leaving sicker consumers in the pool. Insurers are wary of the very consumers who are most likely to want to purchase insurance.

If everyone in the community is covered, however, and opting out can be prevented, then the problem of adverse selection is alleviated. Several policies can be used to address this problem. We will focus on three: individual mandates, employer mandates, and single-payer plans.

The recent extensive health care reforms in Massachusetts rely in part on the use of both types of mandates, although the subsidization of risk pools for individuals and small groups is another feature of this plan. In this case, everyone is now forced to demand insurance, and the willingness to purchase insurance is no longer a signal of hidden high risk to the insurer. Single payer, where the government is the insurer, is an option where the entire population is in one risk pool. Minimum requirements for automobile insurance are one example of individual mandates.

Car insurance differs from mandated health insurance, however, in that if one cannot afford to purchase the policy, one can simply not drive. Health insurance mandates, in contrast, require everyone to purchase a policy. Unlike driving, one cannot simply forego medical treatment in all cases because emergency rooms are required to give treatment in cases of potentially life-threatening health problems.

Creating or fostering risk pools outside of the existing group market is another feature that enhances the success of individual mandates. Penalties for not purchasing insurance under a mandate plan are also typically enacted through the income tax code. But because everyone is required to purchase insurance, low-risk individuals cannot opt out of the pool. The desire to purchase insurance is no longer an indicator of adverse selection.

Employer mandates differ from individual mandates in several ways. Individuals may have alternative access to insurance through a spouse, for example. Firms that do not offer coverage are expected to pay a financial penalty, which is then used by the government to subsidize public provision of health insurance to individuals without access to employer-provided insurance. By forcing the expansion of the group market, more consumers will get access to the benefits of risk pooling. Employer mandates will certainly have additional impacts outside of health care on the market for labor.

A simple theoretical analysis of mandates is presented in Summers Figure Requiring employers to provide insurance to their workers adds to the cost of hiring labor, which will reduce demand from D no insurance to D insurance. However, providing access to insurance at work may also increase the supply of labor from S no insurance to S insurance. The overal impact on the market will be to lower wages to cover some fraction of the added costs of insurance.

As in any market where there is a simultaneous decrease in demand and increase in supply, the impact on the equilibrium number of workers hired is ambiguous. The new equilibrium could fall anywhere in the shaded area.

Where exactly the new equilibrium falls depends on whether labor supply increases more, less, or the same amount as the decrease in demand for labor. If supply increases at the same rate as the demand decreases, the number of employed workers would remain unchanged and the wage offset exactly equals the cost of providing insurance.

If supply increases more than demand decreases, which occurs if workers value the insurance more than it costs the employer to provide the insurance, the equilibrium quantity of workers could even increase. This latter effect could exist because of the benefits in risk pooling through group insurance in combination with the preferential tax treatment of health insurance purchased at work, which is described in more detail below. Even with mandates, adverse selection problems may remain, however, in the sorting of consumers and groups into different policies.

Some insurers could attract relatively high-risk pools while others low-risk pools, reducing some of the subsidization of the high-risk individual. Mandates are not a complete answer to the market failure caused by asymmetric information. A single-payer system is one in which the public sector takes on the role of the only insurer. Financing of the care is typically through income taxes in which the healthy and wealthy subsidize the sick and poor.

Universal health coverage is achievable without single-payer financing, but single payer has the advantage of virtually eliminating the problem of adverse selection, depending on how comprehensive the benefits associated with this form of financing are. The Canadian health care system is one example of single-payer financing that retains private markets for the health care providers. In contrast, in the United Kingdom, the public sector is both the main financer and provider of health care.

In the United States, Medicare is a single-payer financing mechanism for the elderly and disabled. In each of these examples, some private financing of health care coverage occurs through out-of-pocket payments by the patients themselves and the existence of supplementary insurance. We now turn to the second major market failure in insurance: moral hazard. He was less careful about securing the car when he knew the radio would be replaced if stolen. Economists characterize this behavior as moral hazard.

Economists do not generally view the problem of moral hazard in health insurance as being primarily related to the idea that people engage in riskier activities because they are insured, although this behavior could be one aspect of moral hazard. Rather, the main problem with moral hazard in health insurance is that once an individual is insured, the marginal private cost of receiving care is reduced from the true marginal resource social cost of production of that care.

The price facing the insured patient could even be zero; in other cases, the price is reduced from the full cost to a modest co-payment or coinsurance rate. The efficiency, or welfare, costs of moral hazard are shown in Figure To keep things simple, we will assume constant marginal costs, which represent the true, social resource costs of production.

In perfectly competitive markets, the equilibrium market price will also be equal to the marginal cost of production. The uninsured, whether their demand curve is represented by D1 or D2, pay the full marginal costs of care, and the quantity demanded for this group is Q1, where the market price MC curve intersects the demand curve. This point is the efficient level of production. Whether a deadweight loss from moral hazard exists depends on the elasticity of demand for health care.

Full insurance moves the marginal personal cost price facing the individual from the market price to zero. If demand is perfectly inelastic, the quantity demanded of health care remains the same, Q1, and the efficient level of consumption is maintained. When demand is elastic, the rational, utility-maximizing individual will optimally consume doctor visits up to Q0, where the demand curve intersects the x-axis. As is evident, Q0 is greater than Q1, and the individual is consuming an inefficiently high amount of medical care.

The efficiency losses from moral hazard are greater the more elastic the demand for medical care. What determines the elasticity of demand for health care? Demand tends to be more elastic for goods that are not considered necessities and goods with substitutes. Different types of medical care are likely to differ in their elasticity; one might have more elastic demand for the doctor with a sore throat versus a heart attack, for instance.

Even if it is a strep throat, which requires a prescription for antibiotics, consumers with no insurance may wait for a bit to determine whether the sore throat will get better on its own. Because heart attacks are more life threatening and there are not many true substitutes to medical care, demand for cardiac care is likely to be more inelastic.

The RAND health insurance experiment discussed below provides some evidence on the elasticity of demand for different types of health care services. The overconsumption from moral hazard is rational for the individual, who receives positive marginal benefits from the additional care. The welfare problem is that his or her marginal benefits are less than the true resource cost of production.

The amount of the efficiency loss can be measured if the marginal benefits of care are known. The deadweight loss of moral hazard is shown by the area of the shaded triangle in Figure The welfare losses are not equal to the full resource costs of production because we still do count the marginal benefits accruing to the individual.

The problem of moral hazard can be minimized by patient cost-sharing mechanisms. If designed well, the addition of deductibles and coinsurance can reduce the amount of welfare loss produced by insurance by returning some of the costs back to the patient. The introduction and encouragement of consumer-directed health care is an example of a market solution intended to combat moral hazard.

These plans are typically a very high deductible catastrophic insurance plan. These insurance policies are then priced more cheaply than more generous coverage. The deductibles in these plans force the patient to face the full marginal cost of the first few thousand dollars of care. Presumably, consumers will then be less likely to go to the doctor for minor problems like colds and to think about less expensive options for other types of care.

The success of patient cost sharing at reducing use of health care presupposes that the consumers know the true marginal benefits of the health care and that they fully direct their health care expenses. The problem with these assumptions is that there is asymmetric information in the health care markets as well. Physicians and other health care professionals have considerably more technical knowledge than patients, and patients therefore rely on them to be good agents when prescribing care.

In addition, can the average patient distinguish between the medical problems that require medical intervention from those that will resolve on their own? The heart attack example is illustrative; perhaps the symptoms experienced by the patient are nothing more than heartburn, but without medical personnel to assess the patient, the consumer really does not know.

To the extent that physicians direct the consumption of medical care, this limits the responsiveness of consumers to price. Patients may not be presented with a range of options for a particular health problem or may not possess the information to adequately assess the different costs and benefits of different options. While there is evidence that co-payments do reduce the quantity of care demanded, in a global sense, they seem to be fairly ineffective at reducing costs for the entire health care sector.

Other countries, which rely more on cost containment strategies directed at the supply of health care, have lower per capita health care costs than the United States. In essence, total compensation received by workers in efficient markets is equal to the marginal revenue product that worker brings to the firm his or her productivity.

Workers could receive compensation in the form of wages or other benefits, including health insurance, pensions, and so on. To receive health insurance, workers must exchange wages for that benefit. The worker pays for the insurance directly through the employee share of the premium and indirectly in the form of lower raises and reduced wages.

The growth in employer-provided group health insurance in the United States has been fueled in part by the differential treatment of health insurance compensation versus wage and salary compensation. We are taxed on the latter but not the former at the federal and some state levels. This disparate handling in the tax code is rooted in the wage and price controls imposed during World War II. Having a large military mobilization increased both the domestic demand for goods and the domestic labor demand.

Policy makers recognized that both factors would likely lead to considerable inflation. In the wartime environment, the government took a much more active role in regulating the economy, and one policy was the wage freeze. However, firms still required some means of trying to attract more workers in the tight labor market and began to offer additional, nonwage, fringe benefits.

This circumstance led to some questions about how nonwage compensation would be taxed. In , the Internal Revenue Service IRS issued a judgment that these parts of compensation were not part of taxable income. In effect, the treatment acts like a tax deduction; it reduces taxable income by the value of the insurance. In addition, it reduces payroll taxes.

Policies such as this one are termed tax expenditures; they represent foregone tax revenues for the government. How much the tax bill is reduced for the family depends on which tax bracket the household falls into. The value of a deduction is equal to the premium multiplied by the highest marginal tax rate the household faces. Because of the artificial lowering of the price of health insurance at work, workers may demand more of their compensation in the form of health insurance than is optimal.

Insurance policies traditionally covered rare, catastrophic events; now they often cover routine, smaller ticket items. In essence, health insurance now takes on an additional role beyond that of taking away uncertain risks; it becomes the predominant form of financing for health care.

If no market failures existed in health insurance, the special tax treatment would artificially reduce the price of health insurance and cause inefficiently high levels of health insurance coverage. However, asymmetric information does exist. Increasing the quantity of health insurance in this context may imply that the tax treatment improves efficiency. Second, equity considerations are also considered to be relevant.

Society may view access to health care as being a special good that should not be allocated by the market. Many believe that low income should not prevent access to health care. If the tax treatment of health insurance improves access to health care for disadvantaged groups, society may value that outcome even if some efficiency costs exist in increasing the equity of outcomes Okun, The tax treatment, however, does not appear to be accomplishing the goal of increasing equity of coverage.

Critics argue that the favorable tax treatment of employer-provided health insurance has led to an inefficiently high level of coverage. Health insurance has become less health insurance and more health care financing, with benefits including small, regular expenses such as checkups, in addition to the coverage of big-ticket, uncertain expenses.

More generous benefits lead in turn to more potential for moral hazard, as patients become increasingly insulated from the full marginal cost of care. As discussed above, the amount of inefficiency caused by this moral hazard depends on how elastic the demand for medical care is. What is the evidence on elasticity of demand for health care?

Estimating the elasticity of demand for health care by varying the levels of co-payments patients pay is subject to selection bias since, as we have described above, individuals choose their level of coverage based in part on their health status. In other words, consumers who are relatively unhealthy are more likely to opt for fuller insurance coverage with lower patient out-of-pocket expenses.

The RAND health insurance study provides the cleanest estimates of the elasticity of demand for health care. In this study, individuals were randomized to different levels of health insurance coverage, and their medical care use was tracked, so their level of insurance was uncorrelated with their health status.

Inelastic demand for medical care then implies relatively small losses from moral hazard.