Application: Efforts at Containing Costs in Health Care

Application: Efforts at Containing Costs in Health Care

Many people believe that health care in the United States is unaffordable. Do you agree? If so, what can and should be done to address this?

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For this Application, you will propose ways to contain costs by altering demand or supply in one particular area of the health care industry. As you do this, it is important to consider the distinction between the costs incurred by particular consumers, providers, and insurance companies or payers versus the overall expenditures endured throughout the health care system. Although some strategies may shift the financial burden from one entity to another, this assignment asks you to take a broad, analytical view and examine the potential impact of cost containment efforts on society as a whole.

To prepare for this Application:

·In your view, are the overall costs associated with health care too high? On what grounds do you base your conclusion?

·Select one of the following submarkets of health care:


oPhysician services

oNursing services

oMedical technician services

oPhysical facilities (e.g., hospitals, specialized, imaging, long-term care)

oMedical technology

o Pharmaceuticals

· Review this week’s Learning Resources, including the articles “Cost Shifting Does Not Reduce the Cost of Health Care” and “Market Failure and the Failure of Discourse: Facing Up to the Power of Sellers.”

· Use the Library and credible websites to conduct research on cost containment efforts related to this submarket. Find at least one resource that describes a specific effort to address costs in this health care submarket in relation to supply or demand of the service or good. Evaluate the strengths and weaknesses of this approach.

· With regard to this submarket, what else do you think could be done to contain costs? What specific aspects of supply or demand could be shifted to help bring down market price or otherwise contain costs?

· Evaluate possible unintended consequences that may result from these efforts.

· Identify one specific approach for cost containment that you would recommend. Do you think this approach would reduce—or increase—overall expenditures in the long term? Could the results differ in the short term? If you are proposing a strategy that might increase total expenditures or shift the costs to another entity, evaluate your rationale for selecting it and be prepared to support your argument.


Write a 2- to 3-page paper in which you address the following:

·Briefly summarize your views on whether the total expenditures for health care in the United States are too high. Provide your rationale, including the criteria you are using for your assessment.

·Propose one specific approach to help contain costs in some way. How would supply and demand be affected? Explain how this shift could be brought about.

·Describe the benefits of this approach. How much do you think this approach would lower market price? Could the outcomes differ in the short term and long term?

·Assess potential unintended consequences of this cost-containment effort.

·Do you think this is a feasible approach for reducing overall costs? Why or why not? Provide the rationale for your response.

Your written assignment must follow APA guidelines. Be sure to support your work with specific citations from this week’s Learning Resources and additional scholarly sources as appropriate. Refer to thePocket Guide to APA Styleto ensure your in-text citations and reference list are correct.

Resources that can be used:


·Course Media:Health Policy and Economics


o”Determination of Market Price” (Dr. Steve Stoller and Dr. Gerald Kominski)
This media segment examines how prices for health care services and products are determined, and whether competition functions well in the health care market.


·Course Text:Essentials of Health Policy and Law

oChapter 8, “Health Economics in a Health Policy Context” (pp. 153-155 only, “Economic Basics: Markets”; stop at “Public Goods”)
This section explains how the presence of health insurance alters the dynamics of a standard economic transaction within the health care market. Focus on the concepts of perfect competition and monopoly (see especially Table 8.1).

·Appendix for course text,Health Economics and Financing

oAppendix A4,”Markets”
The Appendix offers numerous examples of how market price is affected by shifting supply and demand curves. A further explanation of monopoly pricing and perfect competition is provided.

·Course Text:Health Economics and Financing

oChapter 6, “Physicians” (the following section only):

§Section 6.6, “Licensure: Quality or Profits?”

As you read this section, note how the supply and demand of physician services is impacted by licensure. How does this compare with unlicensed professions?

oChapter 7, “Medical Education, Organization, and Business Practices”
This chapter provides insight into how physician education, requirements, and practice affect market price.

oChapter 13, “Macroeconomics of Medical Care” (the following section only):

§Section 13.5: “Cost Controls: Spending Gaps and the Push to Regulate”

This section explains why cost-control measures can fail to reduce total costs of health care.

oChapter 14, “The Role of Government and Public Goods” (the following section only):

§Section 14.1: “The Roles of Government”

·Article: Fuchs, V. A. (2009). Cost shifting does not reduce the cost of health care.JAMA: Journal of the American Medical Association, 302(9), 999-1000.
Retrieved from
This article examines why health care spending is so high in the United States. It explains how cost shifting—in the form of subsidies and cost reductions in a particular area—fails to achieve a more substantive goal of reducing spending.

·Article: Weinstein, M. C., & Skinner, J. A. (2010). Comparative effectiveness and health care spending—Implications for reform.New England Journal of Medicine,362,460–465.
Retrieved from the ProQuest Central database in the Walden Library.
This article explores the complex relationship between health care spending and health outcomes. Consider whether it is possible to contain health care costs without negatively impacting health outcomes.

·Article: Vladeck, B., & Rice, T. (2009). Market failure and the failure of discourse: Facing up to the power of sellers.Health Affairs, 28(5), 1305–1 315.
Retrieved from the ProQuest Central database in the Walden Library.
While U.S. health care spending is far higher than that of other countries, Americans do not necessarily receive more or better health services in comparison. This article identifies flaws, with conventional solutions to containing cost—eliminating inefficiencies, improving quality, and reducing demand—and proposes alternate ways to control health spending.

Optional Resources

·Website: HSC: Insurance Coverage & Costs
This web page on the HSC site includes links to briefs, reports, and articles on challenges and policies concerning health care costs.
These Optional Resources may be useful for you this week and during the rest of the course as you complete assignments on issues of market price, the industry structure, and regulation versus competitive market models.

·Article: Aiken, L. H. (2008).Economics of nursing.Policy, Politics, and Nursing Practice, 9(2), 73–79. DOI: 10.1177/1527154408318253
Retrieved from the Health Sciences: SAGE database in the Walden Library.

·Article: Schneider, J. E., Miller, T. R., Ohsfeldt, R. L., Morrisey, M. A., Zelner, B. A., & Pengxiang, L. (2008). The economics of specialty hospitals.Medical Care Research and Review, 65(5) 531–553. DOI: 10.1177/1077558708316687
Retrieved from the Health Sciences: SAGE database in the Walden Library.

·Article: Unruh, L. Y., & Fottler, M. D. (2005). Projections and trends in RN supply: What do they tell us about the nursing shortage?Policy, Politics, and Nursing Practice,6(3), 171–1 82. DOI: 10.1177/1527154405278856
Retrieved from the Health Sciences: SAGE database in the Walden Library.

·Website: CMS: National Health Expenditures Data

·Website: HHS: Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey

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