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This week will take a brief look at utility and demand production costs and supply, which is microeconomics as it relates to healthcare. Let’s take a look at the economy as a whole, where you will discuss the market versus the government as a leader or regulator of healthcare. You will further discuss the assumptions underlying the competitive model and its implications for markets and the government. With this brief background into the economics of healthcare, the learner will be prepared to delve deeper into the economics of healthcare as it is in the twenty-first century.

Your Learning Objectives for the Week:

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WEEK 1 MHA5030 CURRENT ECONOMICS IN HEALTHCARE– DISCUSSION AND PROJECT INSTRUCTIONS
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  • Assess the U.S. Health Care System in terms of the business enterprise, economic systems, and basic economic principles.
  • Evaluate economic issues relevant to the healthcare policy debate.
  • Interpret the factors that affect the supply and demand for and health services in order to predict responses price, quality, and other factors commonly influenced by health policies.

MHA5030 Week 1 Discussion Instructions

Discussion Questions  

Before beginning work on this discussion forum, please review the link Doing Discussion Questions Right, the expanded grading rubric for the forum, and any specific instructions for this topic.

Before the end of the week, begin commenting on at least two of your peers’ responses. You can ask technical questions or respond generally to the overall experience. Be objective, clear, and concise. Always use constructive language, even in criticism, to work toward the goal of positive progress. Submit your responses to the Discussion Area.

One of the major assumptions in an efficient marketplace is that people have equal information concerning an item that they wish to purchase. We wish to know the quality of an item before buying it and certainly the price we will pay. Hidden factors such as annual license fees or hidden taxes not stated in the advertisement give one party an advantage over the other. For example, when you sign up for cable TV, the price quoted does not often include a near doubling of the final cost due to taxes and fees added after the sale. In healthcare, such items as quality of an implant and expected life are not something that the average patient is aware of, and he or she is then unaware that the price may differ on the basis of these factors. Stainless steel hip joints may be less expensive than titanium ones but may not last as long, for example. Information asymmetry is common in healthcare as you, as a patient, are perhaps dealing with someone with decades of training in a field you are not knowledgeable about. This may make the market assumption invalid.

Tasks:

One of the major assumptions in the free-market model is that consumers and providers have all the information that is needed to make decisions on purchases:

· Discuss areas of information that a prospective patient might need concerning a surgical procedure at a surgical center.

· Discuss whether that information is available.

· Discuss how that information might be made available.

To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.

Your initial posting should be addressed at 300–500 words as noted in the attached PDF. Submit your document to this Discussion Area by the due date assigned. Be sure to cite your sources using APA format.

TEXTBOOK INFORMATION

Rice, T. (2015). The Economics of Health Reconsidered. [VitalSource Bookshelf]. Retrieved from https://bookshelf.vitalsource.com/#/books/9781567937237/

Log in is the same and you should see continue reading for the book when you log in.

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359327&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 1/3

Criteria Unacceptable 0 points

Emerging (F through D Range) 27 points

Satisfactory (C Range) 31 points

Above Average (B Range) 35 points

Exemplary (A Range) 40 points

Criterion Score

Quality

of

Initial

Posting

/ 40No initial posting to evaluate

The information

provided is

inaccurate, not

focused on the

assignment’s topic,

and/or does not

answer the

question(s) fully.

Response

demonstrates

incomplete

understanding of the

topic and/or

inadequate

preparation.

The information provided is

accurate, giving a basic

understanding of the

topic(s) covered. A basic

understanding is when you

are able to describe the

terms and concepts

covered. Despite this basic

understanding, initial

posting may not include

complete development of

all aspects of the

assignment.

The information provided is

accurate, displaying a good

understanding of the topic(s)

covered. A good

understanding is when you

are able to explain the terms

and topics covered. Initial

posting demonstrates sincere

reflection and addresses

most aspects of the

assignment, although all

concepts may not be fully

developed.

The information

provided is accurate,

providing an in-depth,

well thought-out

understanding of the

topic(s) covered. An in-

depth understanding

provides an analysis of

the information,

synthesizing what is

learned from the

course/assigned

readings.

Criteria Unacceptable 0 points

Emerging (F through D Range) 13 points

Satisfactory (C Range) 15 points

Satisfactory (C Range) 17 points

Exemplary (A Range) 20 points

Criterion Score

Participation

in

Discussion

/ 20No responses to other classmates in

this discussion forum

May include one or

more of the

following:

*Comments to only

one other student’s

post.

*Comments are not

substantive, such as

Comments to two or

more classmates’ initial

posts but only on one

day of the week.

Comments are

substantive, meaning

they reflect and expand

Comments to two or

more classmates’ initial

posts on more than one

day. Comments are

substantive, meaning

they reflect and expand

on what the other

student wrote.

Comments to two or

more classmates’ initial

posts and to the

instructor’s comment (if

applicable) on two or

more days. Responses

demonstrate an analysis

of peers’ comments,

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359327&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 2/3

Total / 80

Overall Score

Writing

Mechanics

(Spelling,

Grammar,

APA) and

Information

Literacy

/ 20

just one line or

saying, “Good job” or

“I agree.

*Comments are off

topic.

on what the other

student wrote.

building on previous

posts. Comments extend

and deepen meaningful

conversation and may

include a follow-up

question.

No postings for

which to evaluate

language and

grammar

Numerous issues in

any of the following:

grammar, mechanics,

spelling, use of slang,

and incomplete or

missing APA

citations and

references. If

required for the

assignment, did not

use course, text,

and/or outside

readings (where

relevant) to support

work.

Some spelling,

grammatical, and/or

structural errors. Some

errors in APA

formatting (citations

and references). If

required for the

assignment, utilizes

sources to support

work for initial post but

not comments to other

students. Sources

include course/text

readings but outside

sources (when relevant)

include non-

academic/authoritative,

such as Wikis and .com

resources.

Minor errors in grammar,

mechanics, or spelling in

the initial posting. Minor

errors in APA formatting

(citations and references).

If required for the

assignment, utilizes

sources to support work

for both the initial post

and some of the

comments to other

students. Sources include

course and text readings

as well as outside sources

(when relevant) that are

academic and

authoritative (e.g., journal

articles, other text books,

.gov web sites,

professional organization

web sites).

Minor to no errors in

grammar, mechanics, or

spelling in both the initial

post and comments to

others. APA formatting is

correct. If required for

the assignment, utilizes

sources to support work

for both the initial post

and the comments to

other students. Sources

include course and text

readings as well as

outside sources (when

relevant) that are

academic and

authoritative (e.g.,

journal articles, other

text books, .gov web

sites, professional

organization web sites).

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=359327&evalObjectType=5&userId=4901&groupId=0&rubricId=29&d2l_bod… 3/3

Close

Unacceptable 0 points

minimum

Emerging (F through D

Range) 1 point minimum

Satisfactory (C

Range) 54 points minimum

Above Average (B

Range) 62 points minimum

Exemplary (A

Range) 70 points minimum

MHA5030 Week 1 Project Instructions

Introduction

The Affordable Care Act of 2010 is perhaps the largest act passed by the government in regard to healthcare. Its impact is financially in the trillions of dollars and is designed to improve the health of millions of residents of the United States.

There has been and continues to be much controversy about the scope of the act and how it is financed. For this project, explore the economic theory of the government in regard to the act and apply the concepts of microeconomics to support your assertions.

Tasks:

· Discuss the use of economic theory by the government in creation of the Affordable Care Act of 2010.

· Use microeconomics as the basis for analysis and describe areas where the theory agrees or disagrees with the act.

Submission Details:

· The project should be 500 words or more and contain at least three references from peer-reviewed articles written in a Microsoft Word document and saved as SU_MHA5030_ W1_Project_LastName_FirstName

· By the due date assigned, submit it to the Submissions Area.

· Cite any sources you use in APA format on a separate page.

TEXTBOOK INFORMATION

Rice, T. (2015). The Economics of Health Reconsidered. [VitalSource Bookshelf]. Retrieved from https://bookshelf.vitalsource.com/#/books/9781567937237/

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363098&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 1/3

Criteria No Submission 0 points

Emerging (F through D Range) (1-10) 10 points

Satisfactory (C Range) (11-12) 12 points

Proficient (B Range) 13 points

Exemplary (A Range) (14-15) 15 points

Criterion Score

Researched the

changes needed to

the organization

structure i.e.

reporting

structures,

information and

communication

structures, HR

management

policies, locations

and facilities etc.

/ 15Student did not submit

assignment

Work minimally

meets

assignment

expectations. No

purpose

statement is

provided.

Assignment

meets some

expectations

with minimal

depth and

breath. Purpose

statement is

vague.

Assignment

meets most of

expectations

with all

components

being addressed

in good depth

and breadth.

Purpose

statement is

present and

appropriate for

the assignment.

Assignment

meets all

expectations

with exceptional

depth and

breath. A

comprehensive

purpose

statement

delineates all

requirements of

the assignment.

Criteria No Submission 0 points

Emerging (F through D Range) (1-10) 10 points

Satisfactory (C Range) (11-12) 12 points

Proficient (B Range) 13 points

Exemplary (A Range) (14-15) 15 points

Criterion Score

Integrates and

understands

assignments

concepts and

topics.

/ 15Student did not submit

assignment

Shows some

degree of

understanding of

assignment

concepts.

Demonstrates a

clear

understanding of

assignment

concepts.

Demonstrates the

ability to evaluate

and apply key

assignment

concepts.

Demonstrates the

ability to evaluate,

apply and integrate

key assignment

concepts.

Criteria No Submission 0 points

Emerging (F through D

Satisfactory (C Range) (11-12)

Proficient (B Range)

Exemplary (A Range) (14-15)

Criterion Score

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363098&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 2/3

Total / 50

Range) (1-10) 10 points

12 points 13 points 15 points

Synthesizes,

analyses,

and

evaluates

resources

to apply

concepts in

the

assignment.

/ 15Student did not submit

assignment

Does not

interpret, apply,

and synthesize

concepts, and/or

strategies.

Summarizes

information

gleaned from

sources to support

major points, but

does not

synthesize.

Provides minimal

justification to

support major

topics. Uses 1

credible resource

in the assignment.

Synthesizes and

justifies (defends,

explains, validates,

confirms)

information

gleaned from

sources to support

major points

presented. Uses a

minimum of 2

credible resources

in the assignment.

Synthesizes and

justifies (defends,

explains, validates,

confirms) information

gleaned from sources

to support major

points presented.

Uses 3 credible

resources for the

assignment, including

at least 1 scholarly

peer-reviewed

resource.

Criteria No Submission 0 points

Emerging (F through D Range) (1-2) 2 points

Satisfactory (C Range) 3 points

Proficient (B Range) 4 points

Exemplary (A Range) 5 points

Criterion Score

Uses correct

spelling, grammar,

and professional

vocabulary.

Provides credible

resources using

correct APA

format.

/ 5Student did not submit

assignment

Contains many (≥

5) grammar,

spelling,

punctuation and

APA errors that

interfere with the

reader’s

understanding.

Contains a few

(3–4) grammar,

spelling,

punctuation and

APA errors.

Uses correct

grammar,

spelling, and

punctuation with

no errors.

Contains a few

(1–2) APA

format errors.

Uses correct

grammar,

spelling, and

punctuation with

no errors. Uses

correct APA

format with no

errors.

1/12/2021 Rubric Assessment – MHA5030-Current Economics in Healthcare SU01 – South University

https://myclasses.southuniversity.edu/d2l/lms/competencies/rubric/rubrics_assessment_results.d2l?ou=74312&evalObjectId=363098&evalObjectType=1&userId=4901&viewTypeId=3&rubricId=218315&… 3/3

Overall Score

Close

No Submission 0 points

minimum

Emerging (F through D

Range) 1 point minimum

Satisfactory (C

Range) 35 points minimum

Proficient (B

Range) 40 points minimum

Exemplary (A

Range) 45 points minimum

2

MHA5030 CURRENT ECONOMICS IN HEALTHCARE Week 1 LECTURE

Economics of Healthcare

Economic theory holds the view that a free market is superior to a government-regulated system that mandates prices through controls on supply. The Affordable Care Act of 2010 is a mixture of controls and bows to the free market in some ways. It can be argued that the government’s role in healthcare should be to ensure a fair marketplace and ensure access to the market for all. The government does much more than this, as it is also involved in the finance of many other healthcare activities. Over the past few decades, the government has been viewed by some as an inefficient means to provide widespread healthcare in the country.

With markets and the political will of the country moving toward a more traditional, competitive marketplace, it is critical to take a look at how this works in the healthcare marketplace. Central to this discussion is whether the assumptions of the free-market theory are being met.

Additional Materials

From your course textbook, The Economics of Health Reconsidered, read the following chapter:

· Why Should the Economics of Healthcare Be Reconsidered?

From the South University Online Library, read the following articles:

· Can Efficiency in Health Care Be Left to the Market? 

· Uncertainty and the Welfare Economics of Medical Care 

· Why Is a Systemic View of Health Financing Necessary? 

The Traditional Competitive Model

The traditional model of competition relies on two basic principles: The first is that an individual is free to buy or sell as he or she wishes in the marketplace; the second is that when a person stops buying or selling, it is because he or she is satisfied with the market as it exists. This situation is called equilibrium.

Microeconomics focuses mainly on supply and demand and how they affect the price of an item in the marketplace. For example, take nurses in a hospital. If a hospital has 600 beds and there is a 6:1 ratio of patients to nurses, then it takes 100 nurses to care for the patients in the hospital. Since the hospital is operating 24–7, it takes 300 nurses, but to cover vacations and holidays and sick time, it will take at least 500 nurses to fully staff the hospital when it is full. If the average nurse makes $20 an hour and there are a little over 500 nurses available for work in this town, then supply and demand are in equilibrium and we have a price. If there’s a nursing school in this town and 50 nurses graduate next month, what do you suppose happens to the equilibrium? How about if a new hospital opens up nearby that needs several hundred nurses? In the traditional model of competition, these types of issues happen constantly in the marketplace, and exposure to this type of analysis is essential for managers in healthcare.

The second consideration concerns the incremental value of each additional item acquired. For example, if you are in a candy store, the first piece of candy you buy is the one you really want. The fifth piece that you buy will not have the same value as the first had. This is called diminishing marginal utility. A simple supply and demand chart will show us each of these concepts. Notice how the supply-demand curve tapers as the volumes increase in either direction.

A third consideration concerns elasticities of demand. If prices are determined by the demand for a particular item, it is good to consider that there may be substitutes for that item that satisfy purchasers at a lower price. When reviewing the price of an item, it is good to consider whether substitutes are available, whether this is a high-priced item that would encourage a purchaser to seek a lower-priced similar item, and what the time frame is for purchasing this item, which could be a simple drink at a ballgame or a major surgery in the near future.

Additional Materials

From your course textbook, The Economics of Health Reconsidered, read the following chapter:

· The Traditional Competitive Model

From the South University Online Library, read the following article:

· Acquisition of MRI Equipment by Doctors Drives Up Imaging Use and Spending 

From the Internet, read the following articles:

· Neumann, P. J. (2004). Why don’t Americans use cost-effectiveness analysis? American Journal of Managed Care, 10, 308–312. Retrieved from http://www.ajmc.com/journals/issue/2004/2004-05-vol10-n5/May04-1788p308-312

· Rand Corporation. (n.d.). The Health Insurance Experiment: A classic RAND study speaks to the current health care reform debate. Retrieved from http://www.rand.org/content/dam/rand/pubs/research_briefs/2006/RAND_RB9174.pdf

Assumptions of the Competitive Market

An Introduction to the Assumptions of the Competitive Market

To address the assumptions of a free-market system in a meaningful way, it is important to review why they are important. In a few words, market failure is the downside to not meeting the assumptions. Market failure is a situation in which the market has reduced allocative efficiency. That means the market uses scarce resources to make the products and provide the services that society demands and desires. When these scarce resources are not used in optimal ways to improve the health of the population, we have market failure.

Market failure will be the subject of much of this course through a look at the assumptions of a free market that create a market that avoids failure. Note that market failure is also a feature of a government-run system, but that is the reason for the current drive to move to a market-driven system, and another story.

Additional Materials

From your course textbook, The Economics of Health Reconsidered, read the following chapter:

· Assumptions Underlying the Competitive Model and Implications for Markets and Government

From the South University Online Library, read the following article:

· Some Simple Economics of Mandated Benefits 

From the Internet, read the following article:

· Posner, R. A. (n.d.). Theories of economic regulation. The Bell Journal of Economics and Management Science, 5(2). Retrieved from pascal.iseg.utl.pt/~carlosfr/ses/Posner.pdf

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