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Using Systems Dynamics Modeling to Demonstrate the Impact of Medicare Out of Pocket Cost Increases on Medicare Recipient Well-Being. Open Access

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Complex social systems are governed by policies that are designed and implemented by legislators, boards of directors, executives, and government officials. At policy inception, policy designers predict positive impacts on society and minimize known negative impacts, which are often seen as tradeoffs for the greater good of the overall system (Adams, 1976). However, the unknown negative impacts cause unintended consequences. These unintended consequences create gaps in goal-seeking systems trying to stay balanced. The intent of this paper is to gather data, design a model in a sophisticated software package (iThink) and a common software package (excel) to show impact of gaps in large policies such as national healthcare. In particular, I will investigate and model the impacts of increasing out of pocket healthcare costs on the wellbeing of Medicare recipients. I also intend to demonstrate that policy makers could benefit from the use of systems dynamics even if they don’t have access to sophisticated modeling software such as iThink by using simpler, more ubiquitous software packages such as excel to model the impact of policy decisions. Currently, policies are created through debates among legislators wherein “one side” may win the debate with some input from the “other side”. Though this way could prove useful in creating policy, it has limits because the policies tend not to take into consideration the full range of data that would be used to create a systems dynamics model. Legislators also don’t conduct the vigorous quantitative analysis that is required for using modeling software packages. Lastly, policies that legislators create are static, set in stone at date of approval and implantation. It then takes an “act of congress” to change the laws, which11only happens when the system is so out of balance, sufficient political will arises to give legislators the will to make the changes.Systems dynamics resolves many of these issues by providing the platform to test assumptions, analyze data and examine second and third order effects that implementation of a new policy may cause. This will allow policy makers to create policy that is dynamic enough to adjust to changes in reality without waiting for the belief of the population to catchup with reality before political will is sufficient to make any changes. Waiting on population beliefs to catchup with reality can cause a 20 to 30-year delay in the policy fix. Such delays result in a “bull whip” effect propagating throughout the social system.Sophisticated modeling software could cost upwards of $2,500 per license have steep learning curve that require mathematical prowess. The combination of these barriers, deter systems dynamics use by policy legislators and analyst who typically are not trained in these areas and find it hard to justify the investment to budget constrained governmental organizations. Many of these software packages came out of the need for more sophistication in modeling when the spreadsheets and personal computers were not powerful enough to support modeling as indicated in the publication “Using system dynamics to help develop and implement policies and programs in health care in England” However, at the writing of this Praxis, one could argue that spreadsheet sophistication and personal computing power have come a long way where systems dynamists can now encourage policy analyst to use spreadsheets to model their policy as oppose to only relying on iThink. In this Praxis, I used two software packages, Stella iThink and Microsoft Excel to model well-being of geriatric patient’s overtime based on out of pocket expenses and debt levels show that the:12a. Impact of out of pocket expenses on Medicare recipient wellbeing:i. Null hypothesis: Increase in out of pocket healthcare costs do not have an impact of Medicare patient wellbeing.ii. Alternative Hypotheses: Increase in out of pocket healthcare costs do have an impact of Medicare patient wellbeing.b. Impact of Affordable Care Act implantation on Medicare out of pocket expenses:i. Null hypothesis: Affordable Care Act (ACA) implantation did not increase Medicare out of pocket healthcare costs. ii. Alternative Hypotheses: Affordable Care Act (ACA) implantation did increase Medicare out of pocket healthcare costs. My models (iThink and Excel) both show that increase in out of pocket expense have a substantial impact on the wellbeing of Medicare patients as demonstrated in Figure 28 (iThink) and Figure 38 (Excel). Using a debt level as a proxy for the extra cost of out of pocket expense because Medicare recipients, on a fixed income, must pick up additional spending using debt. Both models show that as debt increases the wellbeing of the recipient decreases therefore we reject the null hypothesis (ai). This indicates that higher out of pocket costs accelerates the reduction of overall health and increases the cost of “policy fixes” for governments in the long run. We also showed through a simple excel analysis that the cost increases within the Medicare Out of Pocket expenses remained the same the 5 year pre and post the implementation of the ACA as indicated in figure 42 therefore we accept the null hypothesis (bi).

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