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Application: Efforts at Containing Costs in Health Care

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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?

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

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

·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


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

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

·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


·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
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

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
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

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,
(9), 999-1000.
Retrieved fromhttp://jama.ama-assn.org.ezp.waldenulibrary.org/cgi/content/full/302/9/999
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:
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