Question

In: Economics

2. Black men have the lowest life expectancy of any major demographic group in the United...

2. Black men have the lowest life expectancy of any major demographic group in the United States. Black men live, on average, 4.5 fewer years than non-Hispanic white men. Given what we’ve learned in class, list at least 2 demand and 2 supply side factors in health and healthcare markets that may explain this disparity.

Solutions

Expert Solution

Life expectancy at birth reflects the overall mortality level of a population. It summarizes the mortality pattern that prevails across all age groups in a given year – children and adolescents, adults and the elderly. Although we know from previous research that lifespan for blacks is more variable than for whites, the causes of this disparity remain unexplored. Instead, analyses of the black-white mortality gap centered on life expectancy. Latest figures from the National Center for Health Statistics show that the black-white life expectancy difference is now around 3.8 years, which is his own. Black men’s health disparities must be viewed within the larger context of public health, community wellness, and family formation. Healthy People 2020 recognizes both ecological and individual factors that determine health and wellness across the life span. Life expectancy summarizes the impact of risk across the life course.

Supply-Side Approaches

Most tools that have been used to control health care costs focus on the supply side. These approaches, in general, are aimed at getting providers such as hospitals and physicians to change their behavior, rather than focusing on the patient's behavior. To give a few examples:

  • Public programs, notably Medicaid, traditionally have paid physicians very low fees to treat patients. The result – and in some instances, perhaps the intent – is to dissuade physicians from providing more services to program beneficiaries.

  • Utilization review and practice guidelines are aimed at ensuring that physicians provide services that are seen as medically appropriate.

Demand increases, resulting in a higher market clearing prices and higher profits, firms will increase supply to meet this demand and reap these profits. In contrast, changes in supply are not supposed to influence people's demand.There are two major tools available for containing costs through demand. One mentioned is patient cost sharing. If people have to pay more, it is generally assumed that they use fewer services, a finding almost always supported in the health care literature. There are, in turn, two ways in which cost sharing is traditionally applied to consumers:by paying for insurance premiums, and by paying coinsurance, copayments, and/or deductibles when they receive services. During the 1990s, the consumer expenditures towards cost sharing in job-based coverage was fairly steady in real dollars, although there was a shifting in these expenses to higher premiums and lower copayments (Gabel et al., 2001).

The other tool available for containing costs through demand is giving people better information. This information can pertain to particular services (e.g., informing people what services are medically appropriate) or to insurance itself (e.g., letting them know the price and quality of alternative insurance choices that may reflect different benefits, provider networks, etc.). The idea is to facilitate consumer sovereignty so that peoples' demand is informed, and therefore, most optimal for meeting their intended purposes. Providing consumers with more information has been one of the major developments in the health care services market in recent years. The main avenue has been by supplying consumers with information about the quality of alternative health plan choices, although there has also been some movement towards reporting on the quality of hospital and physician groups as well. Parallel to that, there has been a vast expansion of medical information available to the lay public through the Internet, even though the accuracy of this information is, by its nature, often suspect. Whether the availability of such information does in fact lead to better consumer choices is a hotly debated topic, and the resolution is still up in the air. Some published studies have found little impact of quality information on bettering consumer choice , although others have found a positive impact .


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