Health Care Policy Applications: Addressing the Inefficiency of the U.S. Health System

This activity was designed for principles courses that cover health care markets. It could also be used in intermediate micro when covering insurance and asymmetric information or in health economics. It will take 50-75 minutes. The activity starts with a readiness-assessment quiz, which is followed by two policy application exercises. The quiz covers background information on basic concepts of asymmetric information, insurance and U.S. health care trends.

Overview

This activity is a team-based policy debate. The learning goal is for students to apply economic models and analysis to support their arguments on relevant policy issues. In this case, after learning about asymmetric information, the basics of insurance and some background on the U.S. health care market students are tasked with addressing the issues of rising costs as well as lack of access. The application exercise has policy questions with five specific options. The topics are chosen and options are designed so that there is not an intended correct answer. Rather, students should be able to make an argument for any of the choices. Here the focus is on making policy in the context of the known economic problems in the market, so their solutions should include discussion of the risk pool and the potential for information problems to limit access in the market. Students are instructed to discuss the issue and come to some consensus for the team choice. They should vote if they cannot come to consensus. The team discussion takes the first 15-20 minutes of the activity after the quiz. .
The instructor then facilitates a class discussion, which begins by having teams simultaneously reveal their choices (using large cards with letters). The teams are then called on in turn to defend their choices to the rest of the class. This begins a class wide discussion on what the best policy should be. The instructor facilitates this discussion for 10-15 minutes, after which it culminates in class vote. Students vote individually for the class vote, but extra credit can be offered for any team whose choice wins a majority of the class vote (thus incentivizing effective argument and persuasion).

Expected Student Learning Outcomes

In this activity students will use economic models to support policy arguments pertaining to health care in the United States. In particular they should present and defend policy options that account for the information problems in the market to address current challenges.

Information Given to Students

Student teams are given folders with both the quiz and application exercises.

Quiz - healthcare markets (Microsoft Word 2007 (.docx) 14kB May14 18)
Application Exercises - Health Care Policy (Microsoft Word 2007 (.docx) 13kB May14 18)

This activity includes both a readiness-assessment quiz and application exercises. It can be completed in one class period or spread over two. The quiz is ten multiple choice questions on background material that has been previously covered in both readings and class lectures or activities. The material is on asymmetric information and the basics of insurance as well as some overview of trends in U.S. health care. This material can be successfully covered in an information segment in a principles class, or it can be used (as may be more typical) in intermediate micro or a health economics course. The quiz is posted online for individual completion before class and then given to each team to take again in class along with immediate feedback scratch cards.

In the application exercise students are given two policy questions in teams. Their task as a team is to try to form a consensus around one of the five options for each policy. The first question asks them to address the lack of access to health insurance for millions of Americans, and includes options ranging from "universal health care is not a policy goal" to a full single-payer system. As they discuss these broad changes, the instructor should encourage them to address the economic problems that arise due to asymmetric information in health insurance markets. It is not acceptable for them simply say "let the free market work." The economic concepts they need to use include market failures. The second question asks them to address the rising costs of health care; again they must be cognizant that high premiums are a result of free insurance markets with asymmetric information and address those concerns in their answers. The policy questions are designed so that there is no "right" answer; the goal is for students to see how economics can inform policy debates.

Once all teams have made their choices they should all report them simultaneously. This can be easily done by giving each team large letters (A through E) and having them all hold up the letter of their choice at the same time. The instructor should select one member from each team to briefly defend that team's choice to the class (random selection is good here; it is better if students do not know who is presenting until it is time to present so everyone has to prepare and be engaged in the discussion). In their presentations students should aim to both address the underlying economic problems (asymmetric information in this case) and offer realistic solutions (if they choose single payer, how do they propose to transition?)

The instructor then leads a short class discussion on the topic, filling in or correcting flawed reasoning when necessary and also noting if there is a convergence to one or two options. It is good then to consider why other options were eliminated. The discussion culminates in a class-wide individual vote on each policy. Students do not have to choose the same policy from their group for the individual vote; the point of the class-wide individual vote is to see if a particular argument "won the day" by securing a majority of votes. If that is the case, the instructor can note that occurrence and discuss whether the policy might be successful in practice. If there is no consensus policy, the instructor can note and/or discuss the challenge of succeeding in democratically passing sound policies. If desired, additional incentives can be offered to any team whose policy choice secures a majority of class votes; a few extra credit points can motivate teams to build consensus and argue strongly for their preferred policy.

Quiz grades provide evidence of preparedness and general understanding. Exams using application type questions assess the students' ability to meet the learning goal for this activity.