Unit 3: Discussion Introduction Synopsis of Mini-Case 8.1:Mental Health Policy(pp. 131-132; Lee textbook): This case addresses the issues of mental health parity with a company. There are those who believe that the company’s health plan should provide the same level of coverage for mental health services as it does for other medical services. It is posited that failing to treat mental health problems results in lower productivity and “…a waste of money in getting treated for other stuff.” This case also makes mention that in a RAND study, it was found that mental health services were more price elastic that the demand for ambulatory care services. A board member, and internist, presented another study that appears to contradict the findings from the RAND study.
This mini-case demonstrates the value that elasticity plays when performing quick calculations of the effect of strategic and operational decisions. It also represents a very real scenario in terms of the types of decisions healthcare leaders face and the potential economic implications associated with their decisions. Once of the largest operating expenses a company has is it’s labor costs, which is not only the salaries, but the employer’s portion of the payroll taxes and, of course, the benefits (e.g., health insurance, dental insurance, short- and long-term disability, tuition assistance, life insurance, retirement, etc.); however, many employees accept or leave organizations based on the benefit package offered by the employer. This, of courses, can impact the supply of labor necessary to provide the goods and services to the consumers. The case did a nice job pointing out that economic data can be used to assess potential productivity issues. Sources Lee, R. H. (2015) Economics for Healthcare Managers Third edition. Chicago, Ill: Health Administration Press. Unit Learning Outcomes ULO 4. Use elasticity to calculate the effects of strategic and operational choices. (CLO 6 and 7) Directions The student, functioning as Director of Human Resources, for XYZ Company, and based on information presented to the Board and on his or her own economic analysis, will prepare a written recommendation to the Benefits Committee on whether or not it makes sense to include mental health coverage in the company’s health plans with supporting rationale. You should take into consideration how you would respond to the following questions when preparing your recommendation:
1. Why does it matter whether demand for mental health services is more elastic than demandfor other services?
2. The price elasticity of demand for ambulatory mental health services appears to be about -0.8, and the price elasticity for general ambulatory medical services appears to be about -0.3.How much would spending increase for each type of care if copays were cut from $40 to$25?
3. What managed care techniques do insurers use to control spending?
4. Is there evidence that better treatment of mental health problems reduces other spending?
5. Is there evidence that better treatment of mental health problems improves productivity?
In addition to how you would respond to the above questions, you should also consider utilizing credible, outside sources to support preparation of your formal recommendation to the Benefits Committee.
This analysis should be prepared as a Microsoft Word document, and then attached to the unit discussion thread. There is no minimum or maximum in terms of the word count; however, the response should explicitly address all required components of this discussion assignment. The document should be prepared consistent with the APA writing style (6thedition) and reflect higher level cognitive processing (analysis, synthesis, and or evaluation).
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