Financing of Health Care

To prepare:

Read the following case study, “Hard Economic and Finance Choices in US Healthcare” (Milstead):

Case Study 1: Hard Economic and Finance Choices in US Healthcare

Applied economics is all about managing scarce resources. Economics is an amoral field of study: it is neither moral nor immoral. Morality and values are determined by individuals at the personal level and by group consensus or majority opinion at the national level. State and federal governments determine the ‘will of the people’ about how to use scarce resources for the good of a nation.

The U.S. health care system is an exemplar of scarcity: primary care physicians, substance abuse treatment centers, trauma centers, registered nurses, and the money to pay for goods and services. Finance is all about how to pay for goods and services. The Medicare Payment Advisory Commission (MedPAC) is appointed by the Executive branch of the federal government to make decisions about what the Medicare program will and will not pay for. In this role, MedPAC makes decisions about medications, procedures and treatments. Examples of MedPAC decisions include coverage for left ventricular assistive devices as a destination therapy, coverage for bariatric surgery, and in 2010, coverage of the drug Provenge™. By law, MedPAC is not allowed to use price or cost of any treatment in its decision-making processes.

Review the information in the Washington Post article “Review of Prostate Cancer Drugs Provenge Renews Medical Cost-Benefit Debate” in the Learning Resources.

Consider how policy decisions currently are made about what will and will not be paid for and what changes, if any, could improve the process.

Reflect on how the Washington Post example illustrates the tension between cost and care.

QUESTION: your analysis and assessment of the ethical and economic challenges related to policy decisions such as those presented in the Washington Post article. How does this type of situation contribute to the tension between cost and care? Substantiate your response with at least two outside resources.