1. © 2008 Delmar Cengage Learning. Chapter 1 Values in Health Policy: Understanding Fairness and Efficiency Deborah Stone

2. © 2008 Delmar Cengage Learning. 2 Values in Health Care: Fairness and Efficiency Broad agreement on desirability of both values in principle –But difficult, if not impossible, to achieve consensus on realizing both “Inherent tension” between the two Multiple definitions of both –Depending on one’s perspective

3. © 2008 Delmar Cengage Learning. 3 Efficiency Defined Most simply, efficiency can be conceived as a bargain –With the ideal of achieving the highest ratio of outputs to input Myth: efficiency can be measured –Efficiency can only be properly defined in reference to an individual, party, or constituency

4. © 2008 Delmar Cengage Learning. 4 Efficiency in Practice “The Waiting Room Game” –Efficiency from doctor’s point of view Always having patient available to treat, thus filling waiting room –Does not factor in wasted time on the part of patients –One person’s efficient outcome represents another’s wasted time/resources

5. © 2008 Delmar Cengage Learning. 5 Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle Actuarial fairness stressed by certain insurers beginning in 1980s –Tied cost of insurance premium to an individual’s risk –Rhetorically asking why one should be forced to finance another’s risks

6. © 2008 Delmar Cengage Learning. 6 Contesting Fairness: Actuarial Fairness vs. the Solidarity Principle Solidarity principle/ideal more closely approximated in European systems –Society at large funds the care of the sick and those (otherwise) least able to finance care

7. © 2008 Delmar Cengage Learning. 7 Actuarial Fairness in Practice Insurers first sought to exclude racial minorities for their “greater risk” Despite laws seeking to reform such practices: –Minorities in some areas, as well as those suffering from certain diseases, find themselves unable to receive coverage

8. © 2008 Delmar Cengage Learning. 8 Actuarial Fairness in Practice Many insurers continue to perfect ways to further fragment market –Closely matching premiums to level of risk While excluding certain groups altogether

9. © 2008 Delmar Cengage Learning. 9 The Solidarity Principle in Practice Seeks to accomplish the ideal of basing distribution of medical care on the basis of need –Not ability to pay Assumes that the community should be responsible for the cost of care for the infirm

10. © 2008 Delmar Cengage Learning. 10 The Solidarity Principle in Practice Represents subsidy from the vast majority to the minority –Underlying principle of social insurance

11. © 2008 Delmar Cengage Learning. 11 Efficiency and Fairness in the American Health Care System Current system infused with the spirit of actuarial fairness –Difficult to overcome

12. © 2008 Delmar Cengage Learning. 12 Efficiency and Fairness in the American Health Care System Neither efficiency, nor fairness are “neutral criteria” through which to judge quality of health care system –They are values that have different meanings to different people

13. © 2008 Delmar Cengage Learning. 13 Efficiency and Fairness in the American Health Care System There will always be winners and losers in nearly any health care system

14. © 2008 Delmar Cengage Learning. 14 Chapter 1 Summary Fairness and efficiency –Two values crucial to any health policy debate Idea of efficiency requires one to define specific perspective

15. © 2008 Delmar Cengage Learning. 15 Chapter 1 Summary Central to the idea of fairness –Tension between actuarial fairness and the solidarity principle Contemporary health care system tends to favor actuarial fairness over solidarity