Chapter 25 - The Economics of Health and Healthcare, 7/E

Chapter 25 – Epidemiology and Economics: HIV/AIDS in Africa Key Ideas The marginal benefits of preventive activity, including vaccination, generally decrease with the amount of activity. The marginal costs increase. Figure 25-1 shows that the optimal amount of prevention may quite plausibly be less than 100% of the population. The prevalence elasticity of demand indicates the extent to which the change in disease prevalence changes the demand for prevention. A high prevalence elasticity may limit epidemics; a low elasticity may allow epidemics to grow. It is usefully analytically to compare the contraction of an infectious disease to a tax, in that it may lead to costly responses to avoid the harm. These avoidance costs are logically part of the cost of illness. The cost of an epidemic HIV/AIDS, in number of deaths, as noted in Table 25-2, has been enormous for many countries. Teaching Tips The 2009 H1N1 “swine flu” epidemic brought forth particular interest in the relationship of economics and epidemiology. Several related issues come to mind. The optimal level of illness prevention. The economic costs of the illness. The costs of bringing vaccinations to the market. The distinction between wage rate and output in Figure 25-3 makes an important distinction between the effects of epidemics on national product (output) and on the standard of living for those who are not infected. Routine smallpox vaccinations ended in the United States in 1972. In 2002 there was considerable debate in the United States about the advisability of resuming smallpox vaccinations due to perceived terrorist threats of germ warfare. Analyze the debate in terms of marginal benefits and marginal costs. Students might be asked to attribute monetary values (given local wages) of lives lost due to HIV/AIDS for different countries. Table 25-2 performs a rather crude but informative “back of the envelope” calculation of the costs of HIV/AIDS. Instructors may wish to pick one or two countries and have students perform a more detailed analysis. Chapter 25 – Epidemiology and Economics: HIV/AIDS in Africa The marginal benefits of a vaccination program decrease with the number of vaccinations because: those with the highest valuations are likely to be vaccinated earliest. as more are vaccinated, there are fewer to catch the disease. it is harder to reach the last few people who have not been vaccinated. Answers (a) and (b) are correct.* The marginal costs of a vaccination program increase with the number of vaccinations because: those who are easiest to reach are likely to be vaccinated earliest.* some people are naturally immune to the disease. vaccinations usually are done through government programs. Answers (a) and (b) are correct. Flu vaccinations are different from year to year, because the strains of flu differ. Suppose that for a given year, because the nature of the particular strain of flu, it is twice as expensive (the marginal cost is twice as high at any output level) to vaccinate. According to the economic analyses the optimal level of vaccination will: rise because the disease is more dangerous. rise because people will make greater effort to be vaccinated. fall because at the previous level, marginal cost will exceed marginal benefit.* fall because fewer people need the vaccine. The 2010-2011 Burkina Faso MenAfriVac program ____ because ______. succeeded in reducing meningitis; it lowered the vaccine cost and improved distribution.* succeeded in reducing meningitis; the vaccine was more potent than previous vaccines. failed to reduce meningitis; the vaccine was too expensive for people to buy. failed to reduce meningitis; the population would not cooperate in the vaccination programs. Figure 25-2 shows that the external effects of vaccination are best modeled as a: parallel horizontal shift in the marginal benefits curve because everyone benefits from vaccination. clockwise pivoting of the marginal benefits curve because benefits are higher when prices are higher. bulge that increases with more vaccinations because in early stages of vaccination a disproportionate number are protected due to reduced exposure.* vertical shift because people are willing to pay more for disease protection. Figure 25-2 shows that the maximum total benefit per influenza vaccination is about ___ cases prevented per vaccination. 0.6 1.6 1.8* 2.5 The optimal level of vaccination will most often be __________ because ______.: 100 percent; vaccinations benefit everyone. less than 100 percent; the high marginal costs of the last few may exceed the marginal benefits.* 50 percent; most who really need the vaccinations will get them. variable; some groups are more susceptible to a disease than others. If a 50 percent increase in disease prevalence leads to a 30 percent increase in prevention demand, then the prevalence elasticity of demand for prevention is: 0.0 +0.6.* +1.0 +1.6. If the prevalence elasticity of demand for prevention is +0.2, a 50 percent increase in disease prevalence leads to a ____ percent increase in prevention demand. zero 2 10.* 20. If the prevalence elasticity of prevention demand is _______, then demand for treatment may ______, because the epidemic has abated. small; increase large; decrease* zero; decrease infinite; increase Economists feel one can analyze a disease like a tax because: it leads to a loss of income, hence utility. it can lead to efforts to avoid it. it requires sophisticated accounting to understand. Answers (a) and (b) are correct.* Which of the following activities does not reflect a cost of an adult influenza epidemic? routine immunization for Measles-Mumps-Rubella (MMR) for the infant children of those become infected.* immunization for the susceptible elderly population. reduced productivity of those who become infected. increased absenteeism of those who become infected. Refer to the diagram above. If a plague reduces both labor demand and labor supply, it will: increase real wage and decrease the amount of labor provided decrease the real wage and decrease the amount of labor provided increase or decrease the real wage and increase the amount of labor provided increase or decrease the real wage and decrease the amount of labor provided* Refer to the diagram above. If a plague reduces both labor demand and labor supply, national income, or GDP will: rise. stay the same. fall.* one cannot determine from the information given. If, as a result of a plague, the equilibrium wage level has risen, one can conclude that: the plague has imposed no costs on society. supply of labor has decreased more than demand for labor.* demand for labor has increased more than supply of labor. Answers (a) and (b) are correct. HIV/AIDS can be passed: through drinking water. by mosquitoes. through contact with blood, blood products or other bodily fluids.* Answers (a), (b), and (c) are correct. The HIV/AIDS epidemic has had its greatest toll in: Europe. the United States. Southeast Asia. Africa.* Figure 25-4 shows that in the United States after 1995: the number of diagnosed AIDS cases declined dramatically. the number of deaths from AIDS declined dramatically. the number of persons living with AIDS continued to increase. Answers (b) and (c) are correct.* Table 25-1 indicates that the rate of HIV infection for African-Americans is about ___ times as large as for the general population: 1.3. 2.7. 3.9.* 7.6 Assuming that the 20 million dead in Africa were still working and could have earned $500 per year, implies an annual cost attributed to HIV/AIDs of at least: $150 million. $300 million. $1.5 billion. $10 billion.* Table 25-2 calculates the annual cost of HIV/AIDS as approximately $84 billion per year in terms of foregone production. If one adds hospital treatment costs, as well as pain and suffering to family: there is no change because such costs are not comparable. the total costs increase.* the total costs decrease because wages would have been lower. the total costs decrease because existing workers are now more productive. If one re-evaluates the U.S. loss of life at $500,000 in Table 25-2, the costs to the United States ____ and the total world costs ____. are unchanged; are unchanged. rise to $1 billion; rise to $85 billion. rise to $2 billion; rise to $86 billion. rise to $8.5 billion; rise to over $92 billion.* Costs of HIV/AIDS include: costs of treating those with the disease. foregone production of those who died from the disease. costs of preventing the transmission of the disease to others. Answers (a), (b) and (c) are correct.* Current figures show a GDP of Mozambique of about $10 billion per year. Based on Table 25-2, HIV/AIDS imposes costs equal to approximately _____ percent of the GDP on Mozambique. 5 15 25 37* In Thailand _______ condom use by sex workers accompanied _______ rates of sexually transmitted diseases: decreasing; stable. prohibition of; increasing decreasing; increasing. increasing; decreasing.* As of 2010 the price of the least expensive first line HIV/AIDS treatment had _____ to ___ dollars per year. fallen; 64* fallen; 88 risen; 153 risen; 294 Between 2008 and 2010 the price of the least expensive second-line HIV/AIDS treatment: fell by 15 percent* ell by 50 percent rose by 10 percent rose by 40 percent As of 2007 the costs of the least expensive “second line” drugs for treating HIV/AIDS were about ____ percent of the costs of least expensive “first line” drugs. 130 415 565 1200* In Table 25-3 Oster compares (1) interventions to reduce risky sexual behavior with (2) interventions to reduce viral transmission rates. She finds that: type (1) interventions are less effective than type (2) interventions. type (2) interventions are less cost-effective than type (2) interventions. the two interventions are equally cost-effective. Answers (a) and (b) are correct.* Oster’s Table 25-3 figures suggest that it is about _____ times as expensive per life-year to treat HIV/AIDS with education as it is to treat it with STI treatment. 2.0 3.3 4.6* 5.9