Reference no: EM133431549

Case 15.1 - Should Governments Participate in Price Negotiations?

Cardiac catheterization, which involves inserting a long, flexible tube into an artery or vein and threading it through to the heart, is used to diagnose and treat cardiovascular conditions. Patients who are having a heart attack often receive cardiac catheterization. In the United States, the average payment negotiated by private insurers for cardiac catheterization is $5,061 (International Federation of Health Plans 2016). The average payment in Australia is $487, and the average in the United Kingdom is $4,046. The average Medicare fee for outpatient cardiac catheterization is $2,549 plus a physician fee ranging from $149 to $448 (depending on the nature of the procedure).

High private insurance prices represent a fundamental reason that healthcare is so expensive in the United States. Switzerland also has private insurance, relatively high prices, and the second highest healthcare costs in the world. However, an abdominal CT (computed tomography) scan averages $461 less in Switzerland than in the United States, a colonoscopy averages $697 less, and an appendectomy averages $9,890 less (International Federation of Health Plans 2016). With some exceptions, most healthcare prices are much higher in the United States than in other rich countries. (This discussion is about amounts paid, not amounts charged.)

These high prices and the process that leads to them have many consequences. Out-of-pocket costs are much higher in the United States, and serious illnesses can result in medical bankruptcy. High prices increase private health insurance premiums, and many Americans cannot afford private insurance. Furthermore, private insurers increasingly rely on narrow networks of providers to get better prices. This reliance on narrow networks makes getting care more complex and can expose patients to high out-of-pocket costs if they get care from an out-of-network provider.

Discussion Questions

1. Why are private prices so high in the United States?
2. How are commercial insurance prices set for hospital services?
3. How are Medicare prices set for physicians' services?
4. How are Medicare prices set for hospital services?
5. Should governments be involved in private price negotiations?
6. Would consumers be better off if healthcare prices were nationally negotiated?
7. Are other countries' governments involved in healthcare pricing?

Case 16.2 - To Vaccinate or Not

When students start school, they have to prove that they were vaccinated against diseases such as chickenpox, polio, and measles, which can spread quickly through an unprotected group.  Students with compromised immune systems can be exempt from the requirement because the immunizations may be dangerous to them.  In most states, parents also can get exemptions based on personal beliefs.

California Senate Bill 277, passed in 2015, eliminated personal belief exemptions.  The law was prompted by a measles outbreak that started at Disneyland in 2014 and infected more than 150 people.  That outbreak was likely exacerbated by low vaccination rates.

California's law sought to remove personal-belief exemptions to increase vaccination rates and herd immunity, a form of indirect protection that occurs when a large percentage of population has become immune.  Herd immunity helps protect people who, because of medical reasons, cannot be vaccinated and are vulnerable to infections.  It seems to have worked.  The percentage of California's kindergartners with all required vaccinations rose from 93 percent in the fall 2014 to 96 percent in fall 2016 (Lin 2017).

Not everyone supported Senate Bill 277.  The president of A Voice for Choice, a group that opposed the bill, was quoted as saying, "It's not right for children to be prevented from going to school because of their vaccination status" (Siripurapu 2016).  This opinion appears to be a minority view, as a referendum to repeal the law got too few signatures to make the ballot.  "It's going to ensure that all children are safe in school from dangerous, preventable diseases," said state senator Richard Pan, the bill's author (Siripurapu 2016).

Discussion Questions

1. What are the external effects of a vaccine?
2. Are people who rely solely on herd affects free riders?
3. What are the scientifically verified potential harms of vaccines?
4. What are the possible health outcomes of chickenpox, polio, and measles?
5. What are the external effects of these diseases?
6. Have vaccination rates risen or fallen in the United States?
7. Would too few people be vaccinated if it were not mandatory?  Is there evidence?
8. Are vaccination rates lower in states with personal-belief exemptions?
9. What steps do governments take to increase vaccination rates?
10. What steps do private companies take to increase vaccination rates?  Why?