Chapter 8

Economic Influences

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 Objectives
 Relate public health and economic principles to
nursing and health care.
 Identify major factors influencing national health
care spending.
 Describe the role of government and other third-
party payers in health care financing.
 Identify mechanisms for public health financing of
services.
 Discuss the implications of health care rationing
from an economic perspective.
 Evaluate levels of prevention as they relate to public
health economics.

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 Introduction
 Link between poverty and poorer health outcomes
 Approximately 97% of all health care dollars are
spent for individual care while only 3% is spent on
population level health care.
 The U.S. spends more on health care than any
other nation.
 The current health care system is at the point where
it is not affordable.
 Knowledge about health economics is particularly
important to community-oriented nurses.

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 Public Health and Economics
 Economics
 Health economics
 Public health economics
 The goal of public health finance is “to support
population focused preventive health services”

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 Factors Affecting Resource
Allocation in Health Care
 The Uninsured
 The Poor
 Access to Care
 Medicaid
 Safety net providers
 Patient Protection and Affordable Health Care Act
 Rationing Health Care

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 Healthy People 2020
 Healthy People 2020 goals are examples of
strategies to provide better access for all people.
 Levels of Prevention
 Economic Prevention Strategies
• Primary Prevention
• Secondary Prevention
• Tertiary Prevention

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 Primary Prevention
 Behavior and lifestyle have been shown to have
the greatest effect, with the environment and
biology accounting for the greatest effect on the
development of all illnesses.
 Despite the significant impact of behavior and
environment on health, estimates indicate that
most health care dollars are spent on secondary
and tertiary care.

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Context of the U.S. Health System
 The U.S. health care system is a diverse collection
of industries that are involved directly or indirectly in
providing health care services.
 Health care systems have developed in four phases
from the 1800s to today. These developmental
stages correspond to different economic conditions.
 First Phase
 Second Phase
 Third Phase
 Fourth Phase

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 Challenges for the
Twenty-First Century
 Reemergence of old communicable and infectious
diseases
 Larger foodborne disease outbreaks
 Acts of terrorism
 Chronic disease
 Electronic medical records
 Labor force changes
 Changes in nursing education
 Doctorate of Nursing Practice
 Affordable Care Act

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 Trends in Health Care Spending
 Given that economics in general and health care
economics in particular are concerned with
resource use and decision making, any
discussion of the economics of health care must
consider past and current health care spending.
 Past spending reflects past decision making;
likewise, past decisions reflect the values and
beliefs held by society and policy makers that
undergird policy making at any given point in
time.

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 Factors Influencing Health Care
Costs
 Demographics Affecting Health Care
 Technology and Intensity
 Chronic Illness

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 Financing of Health Care
 Public Support
 Medicare, Medicaid, Prospective Payment System (PPS),
Diagnosis-related Groups (DRGs)
 Public Health
 Other Public Support
 TRICARE, Veterans Administration, Indian Health Service
 Private Support
 Evolution of Health Insurance
 Employers, individuals, managed care, medical savings
accounts

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 Health Care Payments Systems
 Paying Health Care Organizations
 Retrospective reimbursement
 Prospective reimbursement

 Paying Health Care Practitioners

 Fee-for-service
 Capitation
 Reimbursement for nursing services

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 Economics and the Future of
Nursing Practice
 Plan for future changes in health care
 Continue to focus on improving the overall
health of the nation
 Effect changes in the health care system
 Nursing leadership

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