Chapter 7
Medical Care: Costs Out of Control?
Activity 7.1Medicaid Services
Type: Take-home assignment
Topics: substitutes, complements, elasticity
Materials:Web page: http://www.hcfa.gov/medicaid/mservice.htm
"Medicaid Services" worksheet
Class limitations: Works in any size class
PURPOSE
This activity looks at the services provided by Medicaid. Many of these services could be substitutes for each other, and others complement each other. A discussion of cost effectiveness can be introduced, as well as a discussion of elasticity and externalities.
INSTRUCTIONS
This activity asks students to determine which services are complementary and which are substitutes. In-class discussions can be introduced regarding cost effectiveness, elasticity, and externalities.
Remind students of the definitions of complements and substitutes from the textbook:
Complements: Goods that are used together. An increase in the price of the original good results in a decrease in the demand for its complement.
Substitutes: Goods that satisfy similar needs or desires as other goods. An increase in the price of the original good results in an increase in demand for the substitute good.
Refer to the Web page on Medicaid Services (URL above) for detailed Medicaid program information.
Name______Course______
Medicaid Services
Review the list of a sample of services provided by Medicaid programs at http://cmh.hhs.gov. Are any of these services substitutes for each other? Are any of these services complements of each other? (Refer to services by number and make a list in the right column.)
Medicaid Services / Substitutes & Complementsin-patient and out-patient hospital services
medical and surgical dental services
physician services
nursing facility (NF) services
family planning services and supplies
rural health clinic services
laboratory and x-ray services
pediatric and family nurse practitioner services
early and periodic screening, diagnosis, and treatment (EPSDT) services for individuals under age 21
prenatal care and delivery services for pregnant women
ambulatory services to individuals under age 18 and individuals entitled to institutional services
home health services to individuals entitled to nursing facility services
optometrist services and eyeglasses
prescribed drugs
prosthetic devices
Common Answers and Points for Discussion
Medicaid Services / Substitutes & Complementsin-patient and out-patient hospital services / 1 is a complement to 2, 3, 7, 10,
medical and surgical services / 2 is a complement to 1, 3, 7
2 is a substitute to 9
physician services / 3 is a complement to 1, 2, 6
nursing facility (NF) services / 4 is a substitute to 11, 12, 15
family planning services and supplies / 5 is a complement to 9
rural health clinic services / 6 is a complement to 2, 3,
6 is a partial substitute to 1
laboratory and x-ray services / 7 is a complement to 1, 2, 3, 8, 9, 10
pediatric and family nurse practitioner services / 8 is a complement to 1, 9
8 is a substitute to 3
early and periodic screening, diagnosis, and treatment (EPSDT) services for individuals under age 21. / 9 is a complement to 1, 8, 13
9 is a substitute to 2
prenatal care and delivery services for pregnant women / 10 is a complement to 1
ambulatory services to individuals under age 18 and individuals entitled to institutional services / 11 is a substitute for 15 and 4
home health services to individuals entitled to nursing facility services / 12 is a substitute for 4
optometrist services and eyeglasses / 13 is a complement to 9
prescribed drugs / 14 is a complement to 1, 9
prosthetic devices / 15 is a substitute for 11
The substitute and complement relationships between services is not as simple as this table wants it to be, but it is a good starting point for discussion.
Some clear substitutes are:
prosthetics and ambulatory services In some cases people with mobility impairments can improve their mobility with prosthetic limbs. If the price of ambulatory services increases, then the demand for prosthetic limbs may increase.
home health services and nursing facilities – People in institutions, like nursing facilities, could often receive all the services that they need in their homes or communities. For example, portable ventilators make it possible for a person in need of a ventilator to leave the nursing facility and live in their family home or community. If the price of portable ventilators goes up, then the demand for nursing facilities will increase.
Some clear complements are:
laboratory / x-ray services and hospital services If the price of laboratory / x-ray services increases, then the demand for hospital services could decrease.
nurse practitioner services and EPSDT services – If the price of nurse practitioner services increases, then the demand for EPSDT services could decrease.
Cost Effectiveness Discussion
Tell your students that home health services are cheaper to provide than nursing facility services. Then tell them that Medicaid mandates that states provide nursing facility services but gives them the option to provide home health services. Is this a cost-effective practice?
Have students assume that the same is true for other services that are substitutes for each other (you choose which services) and continue the discussion.
Elasticity Discussion
Ask your students to classify the services by elasticity of supply and demand.
1) Which services could be easily expanded to reach more people?
Nursing facility services, laboratory and x-ray services, and rural health clinic services cannot be easily expanded because they are limited by the physical facilities in which they are provided, i.e., in order to provide more nursing facility services, the state will need to build new nursing facilities. Home health services, EPSDT services, and prosthetic devices could be easily expanded because they are not dependent on building new facilities.
2) Which services are people dependent on to survive?
Prescribed drugs, laboratory and x-ray services, and home health services / nursing facility services.
Externalities Discussion
Ask your students to consider the positive and negative externalities of Medicaid services.
For example, medical benefits like EPSDT and prescription drugs are not limited to the person who receives the services. For instance, people who interact with a person who is immunized will not be subjected to harmful contagions.
Prescription drugs can also have a negative externality. Some studies have found that the over-prescription of antibiotics has led to the development of illnesses that no longer respond to the antibiotics.
Activity 7.2The Uninsured in America
Type:Take-home assignment and in-class debate
Topics:health care, the medically uninsured
Materials:Koosh ball (found at most toy and drug stores)
"Uninsured in America" worksheet
Time:50 minutes
Class limitations:Works best in classes with 50 or fewer students
PURPOSE
This activity will get students to examine the complicated issues surrounding the medically uninsured in America.
INSTRUCTIONS
The plight of the medically uninsured in America tends to get a lot of press coverage during national election campaigns. After the election, the problems of the medically uninsured do not disappear, but the press coverage often diminishes. Through this activity, students gather some of the latest information on the medically uninsured and consider the options to solve this problem.
Instruct students to find a recent article on the medically uninsured in America. Have them use the handout that follows to summarize the article. In class, start the discussion with a volunteer. When this student is done presenting their article, have them toss the Koosh ball to another student to keep the discussion going.
POINTS FOR DISCUSSION
Health care and health insurance are very complicated issues. The problems associated with the medically uninsured are particularly interesting. A large portion of the people without health insurance are under 30 years old. A lot of people on the lower end of the socioeconomic scale also lack health insurance coverage. Some starting points for discussion are:
1) Is the government responsible for people who cannot afford private sector health insurance?
2) What can be done to make health care and health insurance more affordable?
3) How should the government provide health insurance?
4) Should people be forced to have health insurance coverage?
Name______Course______
Uninsured in America
Find an article in a recent newspaper or magazine that reports on the medically uninsured in the United States. Answer the following questions. Turn in a copy of the article along with your explanation. (Be sure to include the source and the date of the article.)
1) Who is the author of the article? A policy maker? An adviser to the president? An economist? How does the author’s role influence his or her stance?
2) What data does the author cite to prove his or her thesis? Give examples of the supporting details the author provides in the article.
3) Is the article from an economist's perspective or a medical perspective? What, if any, are the contradictions of the author’s argument?
4) What is the author’s recommendation? Do you agree with this recommendation?