HCM 320 Module 5 Externalities Short Paper Example

Your Shot Protects My Child: Vaccination as an Externality at Valley Community Health Center

[Student Name]

Southern New Hampshire University

HCM 320: Healthcare Economics

Module Five Short Paper

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Your Shot Protects My Child: Vaccination as an Externality at Valley Community Health Center

At one of Valley Community Health Center's five sites, only 88% of two-year-olds have received their first dose of the measles, mumps and rubella vaccine, down from 94% four years ago. The vaccine is free to eligible children, so price is not the barrier. Economics offers a way to understand why rates slip even when vaccines cost nothing, and why society often steps in with rules and incentives.

What an Externality Is

An externality occurs when a choice by one person affects others who are not part of the decision. A negative externality, such as pollution, imposes costs on others. A positive externality creates benefits for others. When people decide based only on their own costs and benefits, activities with positive externalities are underused, because individuals do not count the benefits they create for everyone else.

Vaccination as a Positive Externality

A vaccinated child is protected from disease, which is the private benefit. That child is also less likely to catch and spread the disease, protecting infants too young to be vaccinated, people whose immune systems are weak and the small share of vaccinated people in whom the vaccine did not work. That protection of others is the external benefit. The total social benefit of a vaccination is larger than the private benefit, so the number of vaccinations people choose on their own falls short of the number that would be best for society.

Herd Immunity

Fine et al. (2011) explained herd immunity as the indirect protection unvaccinated people receive when enough of a population is immune that the disease cannot spread easily. The threshold depends on how contagious a disease is, measured by the basic reproduction number, the average number of people one case infects in a fully susceptible population. The threshold is approximately one minus one divided by that number. They cautioned that real populations are not evenly mixed, so pockets of low coverage can allow outbreaks even when overall coverage looks adequate.

Calculating the Threshold for Measles

Measles is among the most contagious diseases, with a basic reproduction number commonly estimated between 12 and 18. With a value of 12, the threshold is one minus one twelfth, about 92%. With 18, it is one minus one eighteenth, about 94%. Because the vaccine is not perfect, coverage needs to be somewhat higher still. Valley's 88% site sits well below this range.

Table 1. Herd Immunity Thresholds and Local Coverage

Note. Composite coverage data; thresholds are approximate.

The Free Rider Problem

Herd immunity creates a free rider problem. When most children are vaccinated, an individual parent may reason that their child is already protected by others and that skipping the vaccine avoids even a small risk of side effects or a clinic visit. If many parents reason this way, coverage falls below the threshold and protection collapses for everyone. The more successful vaccination has been, the more tempting free riding becomes.

What Happens When Coverage Falls

Omer et al. (2009) reviewed evidence on vaccine refusal in the United States and found that children with nonmedical exemptions from school vaccination requirements had a much higher risk of diseases such as measles and pertussis, that exemptions clustered geographically and that such clusters increased disease risk for vaccinated children in the same communities. Their findings show that low coverage in one neighborhood affects everyone who lives there.

When Mandates Make Economic Sense

Brito et al. (1991) analyzed vaccination with a formal economic model and showed that, because of the external benefit, individual choices lead to less vaccination than is socially optimal. They examined when compulsory vaccination or subsidies could improve overall welfare, noting that the answer depends on vaccine risks, disease prevalence and the costs people bear. Their work gives a rigorous basis for the common public health practice of combining free vaccines with school entry requirements.

Why Site A Fell Behind

Interviews with site A staff and a review of missed appointments suggest several causes beyond free riding: misinformation circulating on social media in the neighborhood, difficulty getting time off work for well-child visits and staff turnover that disrupted reminder calls. Price is not the barrier, but time and trust are. Several parents said they had never been asked directly whether they had questions about vaccines.

Policy Tools

Economics suggests tools that bring private choices closer to the social optimum. Subsidies make vaccines free, which Valley already does through the federal Vaccines for Children program. Requirements, such as school and child care entry rules, make vaccination the default. Reducing nonmonetary costs, through evening clinics, vaccination at any visit and standing orders that let nurses vaccinate without a separate physician order, lowers the time cost. Reminders and trusted messengers address information and trust.

Recommendations for Site A

Valley should check vaccination status at every visit for children under six, allow nurses to vaccinate under standing orders, add Saturday well-child hours at site A and train two staff members in motivational conversations with hesitant parents. Coverage should be reported monthly by site so that pockets of low coverage are visible.

Equity and Community

Low coverage harms the most vulnerable first: infants, immunocompromised children and families who cannot easily avoid exposure. Addressing site A's gap protects the whole neighborhood, including families who have done everything right. Protecting them is the external benefit made visible.

Conclusion

Vaccination is a classic positive externality: its benefits spill over to others, so individual choices lead to too little of it. Herd immunity thresholds show how much coverage a community needs, and free riding explains why coverage can erode. Free vaccines, sensible requirements, lower time costs and trusted communication bring private choices back toward what the community needs. Site A's coverage will be reviewed again in six months to see whether these steps have closed the gap.

References

Brito, D. L., Sheshinski, E., & Intriligator, M. D. (1991). Externalities and compulsory vaccinations. Journal of Public Economics, 45(1), 69-90. https://doi.org/10.1016/0047-2727(91)90048-7

Fine, P., Eames, K., & Heymann, D. L. (2011). "Herd immunity": A rough guide. Clinical Infectious Diseases, 52(7), 911-916. https://doi.org/10.1093/cid/cir007

Omer, S. B., Salmon, D. A., Orenstein, W. A., deHart, M. P., & Halsey, N. (2009). Vaccine refusal, mandatory immunization, and the risks of vaccine-preventable diseases. New England Journal of Medicine, 360(19), 1981-1988. https://doi.org/10.1056/NEJMsa0806477