An analysis of the health care system

One study [10] based on data from the OECD concluded that all types of health care finance "are compatible with" an efficient health system. The study also found no relationship between financing and cost control.

An analysis of the health care system

These projects may be dams and highways or can be training programs and health care systems. The idea of this economic accounting originated with Jules Dupuit, a French engineer whose article is still worth reading. This act required that the U. Corps of Engineers carry out projects for the improvement of the waterway system when the total benefits of a project to whomsoever they accrue exceed the costs of that project.

Thus, the Corps of Engineers had created systematic methods for measuring such benefits and costs. The engineers of the Corps did this without much, if any, assistance from the economics profession.

Some technical issues of CBA have not been wholly resolved even now but the fundamental presented in the following are well established. Principles of Cost Benefit Analysis One of the problems of CBA is that the computation of many components of benefits and costs is intuitively obvious but that there are others for which intuition fails to suggest methods of measurement.

Therefore some basic principles are needed as a guide. There Must Be a Common Unit of Measurement In order to reach a conclusion as to the desirability of a project all aspects of the project, positive and negative, must be expressed in terms of a common unit; i.

This means that all benefits and costs of a project should be measured in terms of their equivalent money value. For example, a project may provide for the elderly in an area a free monthly visit to a doctor.

The value of that benefit to an elderly recipient is the minimum amount of money that that recipient would take instead of the medical care.

This could be less than the market value of the medical care provided. It is assumed that more esoteric benefits such as from preserving open space or historic sites have a finite equivalent money value to the public.

Not only do the benefits and costs of a project have to be expressed in terms of equivalent money value, but they have to be expressed in terms of dollars of a particular time.

This is not just due to the differences in the value of dollars at different times because of inflation.

An analysis of the health care system

A dollar available five years from now is not as good as a dollar available now. This is because a dollar available now can be invested and earn interest for five years and would be worth more than a dollar in five years.

This called the discounted value or present value of a dollar available t years in the future.

An analysis of the health care system

When the dollar value of benefits at some time in the future is multiplied by the discounted value of one dollar at that time in the future the result is discounted present value of that benefit of the project. The same thing applies to costs. The net benefit of the projects is just the sum of the present value of the benefits less the present value of the costs.

The choice of the appropriate interest rate to use for the discounting is a separate issue that will be treated later in this paper. For example, improvements in transportation frequently involve saving time.

The question is how to measure the money value of that time saved. The value should not be merely what transportation planners think time should be worth or even what people say their time is worth.

The value of time should be that which the public reveals their time is worth through choices involving tradeoffs between time and money. If people have a choice of parking close to their destination for a fee of 50 cents or parking farther away and spending 5 minutes more walking and they always choose to spend the money and save the time and effort then they have revealed that their time is more valuable to them than 10 cents per minute.

If they were indifferent between the two choices they would have revealed that the value of their time to them was exactly 10 cents per minute. The most challenging part of CBA is finding past choices which reveal the tradeoffs and equivalencies in preferences.

For example, the valuation of the benefit of cleaner air could be established by finding how much less people paid for housing in more polluted areas which otherwise was identical in characteristics and location to housing in less polluted areas.

Generally the value of cleaner air to people as revealed by the hard market choices seems to be less than their rhetorical valuation of clean air. Benefits Are Usually Measured by Market Choices When consumers make purchases at market prices they reveal that the things they buy are at least as beneficial to them as the money they relinquish.

Consumers will increase their consumption of any commodity up to the point where the benefit of an additional unit marginal benefit is equal to the marginal cost to them of that unit, the market price.

Therefore for any consumer buying some of a commodity, the marginal benefit is equal to the market price. The marginal benefit will decline with the amount consumed just as the market price has to decline to get consumers to consume a greater quantity of the commodity. The relationship between the market price and the quantity consumed is called the demand schedule.

Sep 18,  · To better understand one of the most heated U.S. policy debates, we created a tournament to judge which of these nations has the best health system. Health Care Quality Management: Tools andApplications. In today’s challenging health care environment, healthcare organizations are faced with improving patient outcomes,redesigning business processes, and executing quality and riskmanagement initiatives. Physicians for a National Health Program is a non-profit research and education organization of 20, physicians, medical students and health professionals who support single-payer national health insurance.

Thus the demand schedule provides the information about marginal benefit that is needed to place a money value on an increase in consumption. Gross Benefits of an Increase in Consumption is an Area Under the Demand Curve The increase in benefits resulting from an increase in consumption is the sum of the marginal benefit times each incremental increase in consumption.

As the incremental increases considered are taken as smaller and smaller the sum goes to the area under the marginal benefit curve.Apple Health outreach staff help spread the word about free and low-cost health insurance.

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