Health Insurance Markets and Reform of the Affordable Care Act

This activity is most effective at the end of a principles course or a course in health economics, after students have covered basic market operations, taxes, subsidies, and market failure. It relies on an understanding of markets in general and health insurance markets in particular. In regards to the latter, I suggest having students come to class having read articles on the health insurance debate in the U.S.

This activity requires a great deal of in-group discussion and significant preparatory reading. Therefore, it is best suited to run across two class periods where one class is devoted to in-group discussion and one class is devoted to open classroom discussion/debate.

This activity is appropriate for both large and small class sizes becasue the open ended nature of the question and options ensures debate.

While this activity can stand-alone, it also can be used as one stage of a longer policy evaluation, perhaps in a Health Economics course. Specifically, this activity can be modified and/or repeated during subsequent class periods to focus on alternative health insurance policy options by swapping the text below for the italicized text under "Text that students see" in the original question:

...for or against continuation of the current partially subsidized private health insurance system in which consumers are required to purchase insurance from privately owned insurance companies, either directly or through their employers, but where the cost of such insurance is subsidized by the government for low income households.

...for or against a government health insurance system in which consumers are guaranteed health insurance paid for by tax revenue and provided through a US government agency. Such a "single payer plan" is currently in operation in Canada and Britain.

In this way, each policy option might be considered in isolation over separate days, and then all three policy options could be combined into a final AE that includes all 3 choices and asks the student groups to pick the best choice among the three options.

Overview

This activity has students consider the relative importance of a series of microeconomic concepts (asymmetric information, monopoly, monopsony, common resources, externalities, economies of scale) in evaluating various Affordable Care Act policy reform options and identify and justify which concept they believe should be most important to the decision-making of voting citizens. The goal of the activity is to have students learn to apply economic models in policy contexts in order to be able to make their own informed policy decisions.

This question is most effective at the end of a principles course, after students have covered basic market operations, taxes, subsidies, and market failure. It relies on an understanding of markets in general and health insurance markets in particular. In regards to the latter, I suggest that students come to class having read articles on the health insurance debate at play in the U.S.

Expected Student Learning Outcomes

In this exercise, students will be able to connect one or more of a list of core economic concepts to the health insurance policy reform debate and explain the relevance of those concepts in evaluating the costs and benefits of laissez-faire vs. intervention in health insurance markets.

Information Given to Students

Text that students see
As a newly registered voter, you have to make a decision on whether to vote for or against a repeal of the Affordable Care Act (i.e., "Obamacare"). If the repeal passes, the country will return to a health insurance system in which employers can choose whether or not to offer insurance as well as what type of insurance to offer and consumers who are not covered under Medicare, Medicaid, or an employer's plan are free to purchase or not purchase insurance from regulated privately owned and operated insurance companies.

Which is the most important economic concept to consider in your decision-making process before you vote?

A. Asymmetric information
B. Monopoly or monopsony
C. Common resources
D. Externalities
E. Economies of scale

Student Handout for Health Insurance Assignment (Microsoft Word 2007 (.docx) 21kB Jul23 18)

Prefatory remarks:
The US is one of a very small number of countries that does not provide some level of health insurance to all of its citizens. The many decades debate over national health insurance that resulted in the creation of the Affordable Care Act under President Obama and its partial repeal under President Trump impacts almost everyone in the United States, either directly or indirectly, and has the potential to influence markets as diverse as the pharmaceutical and labor markets. As such, it provides an excellent topic around which to apply the core microeconomic models covered over the course of the semester.

Discussion Prompts:
Students will need to be prompted to fully articulate the connections between the microeconomic concepts and policy, and you may find that they at first provide either superficial or incomplete justifications for their choices.

During the discussion session, you will want to push students to explain exactly how the microeconomic concepts that they identify as important would be used to evaluate the costs and benefits of the reform option under consideration. Thus, you should be prepared to ask them for clarification / explanation of:

• The meaning or a definition of the concept,
• The outcome(s) in the health insurance market associated with the concept, and why that association exists,
• Whether the concept would lead one to favor or vote against the reform option, and why

Additionally, you may need to prompt students to use the material from the assigned articles to support claims that they make. Students do not always naturally integrate readings assigned out of class into class-based activities, even when those readings can facilitate decision making during class activities.

Closing remarks:
Often, there is no clear answer to policy questions, but economics provides a reasonable framework in which to consider the trade-offs. In the final 10 minutes of class,

• First, determine which of the question options (A-E) you would select, given what you have learned. This need not be the same as your group choice or what you would have selected before the classroom discussion.
• Then, write one sentence justifying this choice ("I believe _______ is the most important economic concept to consider because...").
• Finally, provide a one sentence statement that summarizes what you feel that you learned through the group exercise and class debate.

Students are asked, at the end of this activity, to identify their own answer to the activity prompt. This need not be what they originally thought or what their team decided. Then they are asked to justify why they made the choice that they did. Finally, they are asked to provide a one sentence statement that summarizes what they learned through the group exercise and class debate. This material is collected from a sample of students and assessed against a rubric [TBD] to determine if the learning outcome has been met.