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Health insurance and pay per performance

Question #1

A. How does the concept of economies of scale relate to the trend of larger group practices?
B. How does the concept of economies of scale relate to the success or failure of insurance companies?
C. How does the current system of financing health care affect the number of uninsured or underinsured people?
D. Why could this vary state-by-state? How would a national market help this?
E. Consider the connection between economies of scale on an organizational level for health care and economies of scale on an organizational level for insurance schemes.

Question #2

A. In health care, most physicians and facilities are paid for services rendered instead of the quality of the performance, known as pay for performance. What other ways can physicians be paid? Explain.
B. Discuss how (1) current trends in consumerism may change the way health care professionals are paid and (2) the possibility of â??health care reformâ? may change the way health care professionals are paid. Do you think it will get to a point where they are only paid for performance? Support your position.

References and citations are required. Please include references and citations.

Solution Preview

When economies of scale are present, an increase in output results in a a lower of per unit costs. Thus, larger firms have an advantage over smaller firms. Thus, larger group practices would tend to form when economies of scale are present. Smaller firms would merge in order to save on costs. Such costs could include office overhead and administrative costs.

Likewise, larger insurance companies might also benefits if per unit costs are lower. The larger the company, the greater the risk pool. Thus, a single expensive procedure will not be as damaging to a large company, who has many healthy subscribers to keep its profits up.

When health care is financed through employment, it leaves many people unable to afford it. They do not have access to the lower rates that are afforded larger risk pools. Self-employed individuals find it difficult to obtain affordable policies. When the economy falters, many people lose their health care as well as their jobs. Thus, financing health care through employment causes there to be large numbers of uninsured.

States with the lowest number of uninsured are along the East Coast. These states have large urban areas and more educated citizenry who understand the importance of ...

Solution Summary

Economies of scale and state by state variations in health insurance coverage; efficiency of pay per performance

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