StudyCorgi Health & Medicine

Health Insurance: Prisoner’s Dilemma

Total Administrative Costs and Cost of Medical Care per Prisoner

According to the following list of overheard items (Table 1), the administrative costs for the Department of Prison Health are $4,420,300.

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Table 1. Total Administrative Costs.

Administrative Items Administrative Costs in Dollars ($)
Correctional staff positions 620,300
Correctional office equipment 50,000
Travel and training of staff 10,000
Miscellaneous/Auditing 25,000
Contractual services 150,000
Operational costs of department 15,000
Non-operational costs of department 2,800,000
Training/consultant costs of department 750,000
Total Administrative Costs $4,420,300

Table 2 shows that the total medical costs of the overall population in the state correction system are $40,838,831 with an average value of $3141.53.

Table 2. Medical Costs the Overall Population.

Medical Care Items Medical care Costs in Dollars ($)
Negotiated contract 38,039,831
Additional medical costs 2,800,000
Total Medical Costs 40,839,831
Cost per each prisoner or detainee 40,839,831/13000 = 3141.53

Further analysis indicates that 60% (7800) of the state prisoners are in prison because they serve more than a year. With an average medical care cost of $3141.53, the population of 7800 consumes healthcare services worth $24,503,898.6. The addition of immunization and monitoring costs increases the average medical care from $3141.53 to $3300.5.

Table 3. Medical Costs per Prisoner.

Medical Care Items for Prisoners Medical Costs
60% of 13000 = 7800 prisoners @3141.53 24503898.6
Immunization services 1,150,000
Monitoring costs for prisoners 90,000
Total Medical Costs 25743898.6
Medical Costs Per Prisoner 3300.5

Healthcare Costs and Expected Distribution

The examination of gender shows that male prisoners comprise the majority (80%), while female prisoners constitute the minority (20%) of the prison population. In this view, the cost of female healthcare services, such as gynecology, menopausal syndrome, and hormone therapies, would decrease. Additionally, demographics depict that the majority of prisoners are young adults because their mean age is 32 years and 88% of them have less than 55 years (Paterson, 2014).

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The expected cost distribution is that the population would have reduced medical, specialty consultation, nursing, and inpatient services as the young population is less prone to chronic diseases, which demand different healthcare services. The prison population would require increased costs for mental health services and substance abuse treatment because 45% and 20% of prisoners have abuse problems and active dependency, respectively.

Since a considerable proportion of prisoners have HIV (20%) and TB (7%), it means that there is an increased demand for medical care and the cost of pharmacy services. According to Mudzengi et al. (2017), people with HIV, TB, and both diseases incur $40, $68, and $74 per month, respectively, due to frequent hospital visits and constant use of medications. Moreover, given that functionally illiterate prisoners comprise 40% of the prison population, it implies that they have low health literacy, which diminishes the efficacy of healthcare services provided. Consequently, the medical services of the prison population would increase.

Strategies to Decrease Healthcare Costs

The first strategy to decrease the amount of loss is to review the negotiated contract held by the managed-care organization. The scrutiny of the annual expenditures on health services shows that some benefits provided by the negotiated contract are superfluous. From the list of services in the negotiated contract, specialty services, dental services, and utilization of review services are not in high demand in the prison population. The elimination of these services in the contract would reduce the cost of healthcare services in prison by about $5,000.

The removal of unnecessary healthcare costs related to the negotiated contract and preventive interventions is the second strategy. In addition to costing the prison $38,039,831, the managed-care organization takes $2,800,000 for other related costs. The prison also incurs $1,150,000 to immunize prisoners. These costs are unnecessary because they ought to be part of the benefits accrued from the negotiated contract. Furthermore, monitoring costs adding up to $90,000 should be included in the administrative costs. So, the removal of these unnecessary costs would enable the prison to save over $3 million.

The third strategy is to decrease healthcare costs of prison by reducing the administrative costs of essential items. The analysis of overhead items shows that health department incurs extra costs on dispensable items regarding non-operational and training tasks. The overhead costs of non-operational tasks and training services are $2,800,000 and $750,000, correspondingly. The subtraction of these overhead costs would save the prison about $3.5 million. Overall, these three strategies would reduce health costs by over 25%.

Strategies to Decrease the Probability of Financial Loss

The first strategy to decrease the risk of financial loss is to educate prisoners to improve their health literacy level. The analysis of the demographics of the prison population revealed that 40% of prisoners are functionally illiterate. It implies that a significant proportion of prisoners are susceptible to chronic conditions, poor health outcomes, and frequent hospitalization, which contribute to increased healthcare costs. According to Palumbo (2017), low health illiteracy increases healthcare costs because it exacerbates health conditions and reduces the effectiveness of preventive interventions among populations. In this case, functional illiteracy limits the ability of inmates to obtain information and understand their health conditions for them to make informed decisions about appropriate medical care.

The second strategy is the performance of routine monitoring of prisoners with HIV and TB to improve their adherence to medications. The case study shows that 20% and 7% of prisoners have HIV and TB, in that order. Given that HIV and TB are infectious and chronic conditions, which require strict adherence to medications, routine monitoring is critical. Poor adherence to medications increases medical costs because it contributes to poor health outcomes of HIV management and the recurrence of TB (Naidoo et al., 2018). Hence, routine monitoring of patients would ensure that they adhere to prescribed medications, improve their health conditions, and decrease medical costs.

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Prevention of drug abuse is the third strategy that would help the prison department to reduce costs associated with drug addiction. In the case study, a significant proportion of prisoners’ abuse drugs (45%) and struggle with addiction issues (20%). Prevention of drug abuse would enhance rehabilitation of 20% and save 45% from entering into the addiction phase. Therefore, prevention of drug abuse in prison would considerably decrease healthcare costs.

Potential Effects of Universal Health Insurance

One potential effect of adopting universal health insurance is decreased administrative costs. Paterson (2014) argues that the administrative costs of universal health insurance are considerably lower than those of private or private-public insurance companies. Essentially, universal health insurance eliminates administrative costs, which form a significant proportion of healthcare costs, from prison. Another potential effect of universal health insurance is decreased healthcare costs due to risk pooling and the provision of quality and adequate medical care. Hence, by becoming part of the universal health insurance, the prison would no longer have to negotiate for specific healthcare items at increased cost and limited choices.


Mudzengi, D., Sweeney, S., Hippner, P., Kufa, T., Fielding, K., Grant, A. D., … Vassall, A. (2017). The patient costs of care for those with TB and HIV: A cross-sectional study from South Africa. Health Policy and Planning, 32(4), 48-56.

Naidoo, K., Dookie, N., Naidoo, K., Yende-Zuma, N., Chimukangara, B., Bhushan, A., … Padayatchi, N. (2018). Recurrent tuberculosis among HIV-coinfected patients: A case series from KwaZulu-Natal. Infection and Drug Resistance, 11, 1413-1421. Web.

Palumbo, R. (2017). Examining the impacts of health literacy on healthcare costs: An evidence synthesis. Health Service Management Research, 30(4), 197-212. Web.

Paterson, M. A. (2014). Healthcare finance and financial management: Essentials for advanced practice nurses and interdisciplinary care teams (4th ed.). Lancaster, PA: DEStech Publications.

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StudyCorgi. "Health Insurance: Prisoner’s Dilemma." December 26, 2020.


StudyCorgi. 2020. "Health Insurance: Prisoner’s Dilemma." December 26, 2020.


StudyCorgi. (2020) 'Health Insurance: Prisoner’s Dilemma'. 26 December.

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