THINKING ABOUT HEALTH POLICY: An Economist’s Perspective Victor R. Fuchs Stanford University Kalsman Institute 23 January 2005

Ten Keys to the Economic Perspective 1.There is no free lunch.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes).

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes). 6.Nature doesn’t make leaps.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes). 6.Nature doesn’t make leaps. 7.You can’t change only one thing.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes). 6.Nature doesn’t make leaps. 7.You can’t change only one thing. 8.Heroes (heroines) are born, not made (or is it vice versa).

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes). 6.Nature doesn’t make leaps. 7.You can’t change only one thing. 8.Heroes (heroines) are born, not made (or is it vice versa). 9.No man (woman) is an island.

Ten Keys to the Economic Perspective 1.There is no free lunch. 2.There is more than one way to skin a cat. 3.One man’s (woman’s) meat is another man’s (woman’s) poison. 4.The road not taken. 5.A bird in the hand is worth two in the bush (sometimes). 6.Nature doesn’t make leaps. 7.You can’t change only one thing. 8.Heroes (heroines) are born, not made (or is it vice versa). 9.No man (woman) is an island. 10.If you don’t know where you’re going, any road will get you there.

RELATIONSHIP BETWEEN HEALTH ECONOMICS AND HEALTH POLICY ECONOMICS Concepts Data OTHER DISCIPLINES ANALYSIS VALUES GOALS INTERESTS POLICY

The need to choose, to sacrifice some ultimate values to others, turns out to be permanent characteristic of the human predicament. Isaiah Berlin

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control 3. Today vs. Tomorrow

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control 3. Today vs. Tomorrow 4. Should benefit-cost calculations influence the delivery of care? If so, how should benefits be calculated?

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control 3. Today vs. Tomorrow 4. Should benefit-cost calculations influence the delivery of care? If so, how should benefits be calculated? 5. How egalitarian should access to health care be?

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control 3. Today vs. Tomorrow 4. Should benefit-cost calculations influence the delivery of care? If so, how should benefits be calculated? 5. How egalitarian should access to health care be? 6. How should people pay for health care: Taxes? Premiums? Lower wages? Fee-for-service?

Fundamental Health Policy Issues (To be discussed during breakouts) 1. Individual responsibility vs. Social responsibility 2. Autonomy vs. Societal control 3. Today vs. Tomorrow 4. Should benefit-cost calculations influence the delivery of care? If so, how should benefits be calculated? 5. How egalitarian should access to health care be? 6. How should people pay for health care: Taxes? Premiums? Lower wages? Fee-for-service? 7. How should health care be controlled? Exchange system (Market competition) Threat system (Government regulation) Integrative system (Professional norms)

Proposals For Reform of Health Care Finance Incremental reform - Mandates on individuals, firms, or insurance companies - Subsidies to individuals or firms - Higher income levels for means-tested public insurance - Lower age levels for Medicare - Consumer directed approaches e.g. medical savings accounts Major reform - Comprehensive mandates with extensive, explicit subsidies - Single Payer - Social insurance combined with market elements

True or False 1.Employers who provide health insurance pass on all or most of the cost to employees in lower wages or to consumers in higher prices. 2.Expenditures of Medicare plus Medicaid are larger than defense expenditures. 3.Drug industry profits account for at least 8 percent of U.S. health care expenditures. 4.An American who has a heart attack is more than twice as likely as a Canadian with a heart attack to have an angiogram, angioplasty or bypass surgery. 5.Between 25 and 30 percent of all Medicare expenditures are incurred during patients’ last year of life.

True or False (continued) 6.If the uninsured had health insurance their use of medical care would at least double. 7.The net income (after practice expenses) of physicians accounts for at least 20 percent of health care expenditures. 8.The increase in the 5-year survival rate from breast cancer between 1980 and 2000 shows that more emphasis on early detection had a favorable effect on female life expectancy. 9.Greater use of screening tests and periodic check-ups would lower health care expenditures in the long run. 10.Per capita health care expenditures in the U.S. are more than double the average of France, Germany, Italy and the United Kingdom.