This question deals with the theory of economic regulation. Imagine there are 40

Question

This question deals with the theory of economic regulation. Imagine there are 4000 primary care physicians in the state of Lincoln. They oppose changes to scope of practice regulations currently being debated in the legislature that would bring new increased competition from non-MD providers (changes that would allow nurse practitioners to practice independently). It is expected that these changes would reduce physician incomes by $10,000 and reduce health insurance premiums by $10 for each of the state’s 4 million residents a. Discuss the impact of the policy change on the average primary care physician and resident of Lincoln and the aggregate impact on the two groups. b. Based on the theory of economic regulation what action would you expect from the state’s legislature. c. What is the purported public interest argument in favor of scope of practice regulation. Assess the validity of these concerns in this context.

Explanation / Answer

a. Due to the policy change specified in the scenario the income of the physicians would reduce which can impact the life style of this group. When their basic income gets reduced and if they are allowed to practice independently, then they can charge higher for the private consultations. This can impact the residents of the L badly as their health care costs increases. Hence the proposed policy change can produce a negative impact on two groups of people resulting in the rise in the health care costs.

b. The theory of economic regulation specifies that the government regulates the economic changes if any economic conditions ruin the welfare of the society. Since this policy regulation hinders the public living as well as that of the healthcare professionals, the state can take necessary actions. It can put a control on the policy change so that the impact on these two groups would be reduced.

c. When considering the public interest argument, if the practice regulation is implemented effectively, the health care professionals would start practicing independently at their own chosen locations. IT can make the health care services more accessible which can comfort the people at remote places.

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