1. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Chapter 7 Building Healthy Public Policy and Introduction to Health Economics

2. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy “A course of action or inaction chosen by public authorities to address a given problem or interrelated set of problems” (Pal, 2001) Act as a set of guidelines or as a framework for action Made by elected officials Three categories of policy instruments: 1.Do nothing 2.Act indirectly (e.g., educate, provide funds) 3.Act directly through state agencies and corporations or in partnership with private or nonprofit organizations

3. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy Development Not a linear process There may be several iterations for each before a public policy is stated

4. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy Development

5. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy Development—Agenda Setting The process through which problems come to the attention of elected officials or policy makers –The problem recognition stage Decision-makers receive feedback from both external and internal sources The way a problem is defined shapes the options available.

6. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy Development—Policy Formulation Experts and analysts pose solutions to the problem Proposed solutions must align with the current political stream (social and political context) The media play an influential role.

7. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Question Which of the following events is most likely to prompt the agenda-setting phase of the policy development process? A. Changes in the price of a common analgesic B. Public outcry regarding media reports about surgical wait-times C. Changes in the demographics of a Northern community D. The completion of a community health promotion initiative

8. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Answer B Rationale: Agenda setting is the problem identification stage of policy development in which problems come to the attention of elected officials or policy makers.

9. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Public Policy Development—Decision Making Policy makers select from among policy options. Economic analysis is conducted. –Estimating both the costs and benefits Policy development may or may not continue, depending on public opinion.

10. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Policy Implementation and Evaluation Evaluation includes processes by which results of policies are monitored. Can lead back to a fuller understanding of either the problem or potential solutions. Evaluations can help to assess whether social change has occurred and how it occurred.

11. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Policy Communities Made up of people who are concerned about a particular policy issue May include members of the general public, representatives of organizations, government employees, and elected or appointed officials Some members of the policy community interact on a regular basis, and these form a policy network. –These require a varied membership. Discussion and analysis of power and equity must be a central focus. It is important to develop partnerships.

12. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Question Tell whether the following statement is True or False: Policy communities are made up of members of the public who are concerned about an issue and who are not government employees or officials.

13. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Answer False Rationale: Policy communities may include members of the general public, representatives of organizations, government employees, and elected or appointed officials.

14. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Economic Thinking The study of the allocation of scarce resources What a population wants, and what it values, defines its policy objectives. Prior to economic analysis, the following questions must be answered: –Does a proposed treatment or intervention improve patient or population health? –Does treatment A provide a greater improvement in health than treatment B? –Is the treatment or intervention safe?

15. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Concepts Central to Economics 1.People face trade-offs 2.The cost of something is what you give up to get it. –Opportunity costs 3.Sunk costs and fixed costs are not economic costs. 4.Decision-makers should think on the margin.

16. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Question Which of the following costs would be considered to be a sunk cost? A. Staffing costs of a health promotion campaign that has recently finished B. Supplies and equipment for a proposed screening program C. Purchase of new office space for a team of community health nurses D. Purchase of pressure-reduction beds on a hospital unit

17. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Answer A Rationale: A sunk cost is something that cannot be recovered no matter what happens and, as such, should not bear on the decision-making process once it has been spent. The costs of real estate and equipment are partially or wholly recoverable.

18. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Concepts Central to Economics (cont’d) 5.Incentives matter. 6.Trade can make everyone better off. 7.Markets are usually a good way to organize economic activity.

19. Copyright © 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins Concepts Central to Economics (cont’d) 8.Governments can sometimes improve on market outcomes. –Externalities –Information asymmetry –Uncertainty with respect to the need and effectiveness of health care –An absence of competition –Markets that are missing