Teaching Case: This American Life Episode 391: More is Less, 2009

This page authored by Christina Robinson, Department of Economics, Central Connecticut State University
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This material was originally created for Starting Point: Teaching Economics
and is replicated here as part of the SERC Pedagogic Service.

Summary

This case is based on an episode from NPR's show, This American Life (students can be assigned to either read the transcript or listen to the audio file). The story, "More is Less", originally aired in 2009. The case focuses on the rising costs of health care in the United States and consists of four acts. The first three each provide several short stories highlighting the role health care providers, patients, and insurance companies play in driving up the cost of care.

This case provides an excellent opportunity for students to apply the theoretical material from a Health Care Economics course to a variety of short, real world, scenarios. Students are assigned to either read or listen to the case in full and to act as a "lawyer" for one of the groups featured in the first three acts. Their mission is to use relevant economic tools and theories to defend their "client" and to demonstrate why the other two groups are truly to blame. From this experience students gain an understanding of the complex relationships and interactions that take place in health care markets.

Learning Goals

After completing the case students should have an increased appreciation for the complicated market interactions that take place between physicians, patients, and health insurance providers. They should see that there are no easy answers, and that no one group, is entirely to blame. Students should be able to explain these interactions using relevant economic theories and models and to predict the market effects of these interactions. A successful student should be able to perform similar analysis across a wide variety of other topical issues in Health Care Economics.

Context for Use

This case is best employed in a Health Care course and is most effective for students who have studied the demand for health, the demand for medical care, the supply of medical care, the role of physicians in the marketplace, as well as the supply and demand of health insurance.

I often use this case as an end of semester capstone activity. Students are required to read or listen to the case and to submit a detailed yet concise written defense for one of the featured groups—I usually limit students to 3-5 typed pages to make sure they keep on point and that their analysis remains focused. I then devote a 50 minute lecture period as a discussion class where students are asked to defend their group to other students. This often turns into a debate as students naturally want to defend the group they focused on in their written assignment. Student's understanding of the problems discussed expands throughout this class period as they hear their classmate's point of view and incorporate that information into their analysis.

This discussion can be run in a few different configurations. The two I have found most successful are:
- The classroom could be divided into three groups—one group for each act. The groups could be given a few minutes to talk and design a strategy for the defense of their group. The class could then be reconvened and conversation could occur at the classroom level. This is my preferred method as it provides students the chance to work with others who studied the case from the same point of view and to hear the work of students who focused on the other two groups.
- The classroom could be divided into several smaller groups of three or six students. If this configuration is chosen it is important to make sure each act is represented in each group.

Description and Teaching Materials

The transcript and audio file for the case can be found online by visiting: http://www.thisamericanlife.org/radio-archives/episode/391/more-is-less

There is one required handout for this assignment which introduces students to the case and describes both the written component of the case and the classroom discussion that will be held. The handout consists of three pages which are identical, except for the number in the top right hand corner—this number represents the act for which the student should act as a "lawyer". To make sure I have an adequate distribution in the classroom I typically have the handouts stacked with repeating sets in order from 1, 2, 3.

Student Handout for This American Life Episode 391: More is Less Case Study Assignment

Teaching Notes and Tips

This case provides students the valuable opportunity to apply the tools, theories, and concepts from health care economics to real world events. The following notes provide a brief overview of the first three acts from the program as well as a list of concepts that can be used in a discussion of the act (note: the concept lists are intended to be representative, not, comprehensive).
Act 1: Dartmouth Atlas Shrugged
- Focus: Across relatively small geographic areas large differences in diagnosis and treatment rates can be observed
- Story: This act opens with the story of Roxanne Tremblay of Maine who describes having a full hysterectomy at the age of 29. She tells her story and then describes the alarming number of other women in the area have also had hysterectomies.
o An independent study found that as many as 70% of women in the local area would have a full hysterectomy by the age of 70. In other areas nearby the number of women likely to have a full hysterectomy was only 25%.
 A similar study in Vermont revealed similar findings in regards to a prostate procedure and tonsillectomies.
o Possible reasons for these discrepancies are presented including: religious beliefs (leading to more hysterectomies as birth control), patients in some areas being less healthy or more prone to certain health conditions, physician education and beliefs, and profit motives.
- Relevant Concepts: Physician induced demand; small area variation; asymmetric information; profit maximization; utility maximization; risk aversion; physician supply; health care demand

Act 2: Every Cat Scan Has Nine Lives
- Focus: Roughly 33% of all medical expenditures are made on unnecessary treatments and tests
- Story 1: This act opens with the story of a young teenager who had been in a minor car wreck. She was brought to the emergency room on a backboard and wearing a neck stabilizer as a precautionary measure. After examining her, the doctor was able to determine (without using an X-ray) that her neck was not fractured. After her father arrives at the hospital he demands the doctor perform both an X-ray and a CAT scan on his daughter's neck. The doctor explains the unnecessary risks associated with both and does not order either test.
o He also provides a nice explanation about the opportunity cost of the time he has spent talking to the patient's father.
- Story 2: Act 2 also provides a second short story about PSA, a blood test for prostate cancer. On the surface we would all say catching and treating cancer as early as possible is important. However, in reality, the test sometimes catches slow growing cancer so early that it is treated, when in reality, it would never cause a problem during the patient's lifetime if it had been left untreated.
- Relevant Concepts: Asymmetric information; cost v. benefit analysis; risk aversion; health demand; health care demand; health production; advertising; uncertainty; opportunity cost
Act 3: Who would Win in a Fight Between a Polar Bear and an Insurance Company:
- Focus: Health insurance companies are a major player in determining health care costs, but they aren't alone. This act describes the negotiations that take place between insurance companies, health care providers, and patients.
- Story 1: Blue Cross of California was the biggest insurance provider in the state in 2000 and Sutter Health controlled the vast majority of California's health care facilities. Claiming that they had been underpaid for many years, Sutter demanded a 30-35% rate increase from Blue Cross. Upon being turned down by Blue Cross, Sutter threatened to stop accepting Blue Cross saying they could seek care elsewhere. There were not many non-Sutter options and patients would have had to drive long distances to receive what they felt was sub-par care elsewhere; as such, they let their displeasure be known and Blue Cross pursued further negotiations. Eventually a deal was reached, rates went up (by less than 30%), as did patient costs.
o The story provide a nice discussion of HMO plans and uses this as a backdrop to explain why insurance companies are often hesitant to fight providers about what is and is not necessary.
o The story also asks whether insurance companies have an incentive to keep costs low. The short answer, is no, not really.
- Story 2: Act 3 also tells a second short story about a man injured in a water skiing accident. He suffered a serious head injury, which probably should have been fatal. He was rushed to a nearby hospital (which was far from his home) and asked to be transferred to be near friends, family, and the doctors he trusts. The insurance company denies his request.
- Relevant Concepts: competition; market concentration; health insurance demand; health insurance supply; asymmetric information; quality control; explicit costs; travel cost; time cost

Assessment

There are a number of assessment tools that can be used to determine how effectively students grasped the concept(s) from the case study, including the student's written assignment. Students could be asked questions about the case on an upcoming exam or an exam could provide information about a similar case and students could be asked to analyze the case using 1-3 relevant economic concepts from the course.

References and Resources