646 Health Economics I: An
Overview
Fall, 2004
Prof. Debra Sabatini Dwyer
M,W
SBS N603
Office hours Wednesday,
Office: SBS S-625, Phone: 2-7532, Email: Debra.Dwyer@sunysb.edu
Web Page: http://ms.cc.sunysb.edu/~dsdwyer
Purpose
This is an overview of health economics. We will learn about the health care sector and how to apply the tools of economics to analyze the structure and performance of this sector. We will use the tools of welfare economics to examine market failures and interventions. Behavior of each of the agents in the market will be analyzed broadly: consumers, suppliers, and insurers, with issues of efficiency and equity in mind. The features of the market for health services are described with emphasis placed on the characteristics which make this market different from the markets for other goods and services. The areas in which market failure occurs are covered and the history and rationale for heavy government intervention in the market is described. The effects of government intervention are analyzed.
Reading Material
Required Text: Health Economics, by Zweifel and Breyer, 1997, Oxford University Press – in bookstore (? – since we weren’t sure we were offering this, I never ordered it. Perhaps there are some from last time).
A reading list is attached. We will develop the ability to critically analyze articles from the leading academic journals on topics related to health economics. It is important that you do the readings before you come to class.
Methods of Evaluation
1. Seminar Project: This is worth 5% of your grade. TBA.
2. "Paper Discussions and Referee Reports" - Perhaps the most important skill for you to learn in graduate school is how to read a research paper critically. You cannot learn to make your own contributions until you are able to recognize that of others. We will do two exercises to refine these skills:
- discuss one working paper in health economics as if it were a conference discussion – the discussion will be no longer than 20 minutes. 15%
- write a referee report for a journal – 20%
I will provide a list of papers for you to choose from. You must let me know which you choose. You are allowed to choose papers not included on the list but they are subject to my approval. You are allowed to use the same paper for both assignments.
3. Problem Sets – I will give a few as practices for the exam. They will not be worth anything. It is in your best interest to take them seriously.
4. Paper proposal – You will turn in the proposal to me by the end of the semester. I will ask for an outline along the way. There is no paper in the end, but you do have to be thinking about a 2nd year paper. Writing a proposal is a learning process as well. This is worth 25% of your grade.
5. Final Exam - worth 35% of your grade – possibly take-home.
Course Outline and Reading List – I will not cover all papers but the list is pretty thorough. I will emphasize papers with an asterisk. Course text is required reading. I have an extra copy of the handbook of health economics and there should be a copy in the library. You can check it out to make copies through me.
I.
Overview
of Health Sector
First two classes: US Health System and briefly international health systems.
Highly Recommended Movie: John Q – see how we ration health care in this country
A. What is Health Economics?
- Zweifel and Breyer, Chapter 1 and 5.1 and 5.2
- Culyer, AJ., and J.P. Newhouse, "The State and Scope of Health Economics", Handbook of Health Economics, Volume 1A, Eds. Culyer and Newhouse, Elsevier, 2000, pp.1-7.
- Fuchs, Victor, "The Future of Health Economics", Journal of Health Economics, 19 (2000) 141-157.
B.
Normative
Health Economics - Efficiency and Equity
- Arrow, Kenneth J., "Uncertainty and the Welfare Economics of Medical Care", American Economic Review, V.LIII, #5, Dec., 1963, pp. 941 - 959.*
- Pauly, Mark, “The Economics of Moral Hazard: Comment”, American Economic Review, 58, 531-536.*
- Hurley, Jeremiah, "An Overview of the Normative Economics of the Health Sector" Handbook of Health Economics, Volume 1A, Elsevier, 2000, pp. 55 - 118.
-
Wagstaff, A., Van Doorslaer, EV, "Equity in Health Care Finance and
Delivery", Handbook of Health Economics, Volume 1B, 2000,
- Pauly, M. 1968. “The Economics of Moral Hazard: Comment” American Economic Review, 58, 531-536.
C.
Health
Econometrics and Methods
- Zweifel and Breyer, Chapter 2.*
-
Jones, AM, "Health Econometrics", Handbook
of Health Economics, Volume 1A,
- Newhouse, JP, "Health Economics and Econometrics", American Economic Review, 77: 269-274.
II.
The
Demand for Health and Health Services - the Consumer
A.
Demand for
Health and the Demand for Medical Services
- Grossman, M., “On the Concept of Health Capital and the Demand for Health”, Journal of Political Economy, 82, 233-255.*
-
Grossman, M., The
Demand for Health: A Theoretical and
Empirical Investigation.
- Grossman, M., "The Human Capital Model", Handbook of Health Economics, CH.7, Elsevier, pp. 347 - 408.
-
Manning, W.G., J.P. Newhouse
et al., "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment", The
American Economic Review 77,
- Eckstein, Z. and K. Wolpin, 1989, “The Specification and estimation of Dynamic Stochastic Discrete Choice Models – A Survey”. Journal of Human Resources 24(4): 562-98.
B.
Moral Hazard
- Zweifel, P, and WG Manning, "Moral Hazard and Consumer Incentives in Health Care", Handbook of Health Economics, Volume 1A, 2000, Elsevier, pp. 409 - 459.
- Pauly, Mark V. "The Economics of Moral Hazard: Comment", American Economic Review, 58 (June, 1968), 531-537.*
- Arrow, KJ, "The Economics of Moral Hazard: Further Comment, " American Economic Review, 58 (June, 1968), 537-539.*
III.
Health
Production
- Pollak, R. and M. Wachter, 1975. “The Relevance of the Production Function and Its Implications for the Allocation of Time, “Journal of Political Economy, 83(2), 255-77.
- Rosenzweig, M. and T.P. Schultz, “Estimating a Household Production Function: Heterogeneity, the Demand for Health Inputs, and Their Effects on Birth Weight. “ Journal of Political Economy, 91, 723-46.
IV.
Health
Insurance - intermediary agent
- Rothschild, M. and F. Stiglitz, 1976, “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information”, Quarterly Journal of Economics 90:4, 630-699.
- Buchmueller, T. and J. DiNardo, 2002, “Did Community Rating Induce an Adverse Selection Death Spiral?”, American Economic Review, 92(1): 280-94.
-
Ehrlich,
- Gertler, P. and J. Gruber, 2002, “Insuring Consumption Against Illness”, American Economic Review, 92(1): March, 2002, pp. 51-70.
- Pauly, Mark V., "Insurance Reimbursement", in Handbook of Health Economics, Ibid., Ch. 10: 538-558.
- Cutler, DM, RJ Zeckhauser, "The Anatomy of Health Insurance", in Handbook of Health Economics, Ibid., Ch. 11: 564-629.
-
V.
The Physican- supply
- Newhouse, JP. "The Economics of Group Practice", Journal of Human Resources. 8(1) (Winter, 1973), 37-56.
- Scott, Anthony, "The Economics of General Practice", Handbook of Health Economics, Volume 1B, Eds. Culyer and Newhouse, Ch. 22: 1176-1194.
- McGuire, TG., "Physician Agency", Handbook of Health Economics, Volume 1A, Eds. AJ Culyer and JP Newhouse, 2000, Ch. 9, 461-535.
VI.
The
Hospital - supply
- Newhouse, JP, "Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital", American Economic Review, March, 1970, 67-74.
- Sloan, Frank, "Not-For-Profit Ownership and Hospital Behavior", Handbook of Health Economics, Volume 1B, eds. Culyer and Newhouse, Ch. 21: 1142-1170.
VII.
The
Market for Health Services - Competition, Efficiency, Market Failures
- Dranove D., and MA Satterthwaite, "The Industrial Organization of Health Care Markets", in the Handbook of Health Economics, Volume 1B, eds. Culyer and Newhouse, Ch. 20: 1094-1135.
- Baker, LC, and K Corts, "HMO Penetration and the Cost of Health Care: Market Discipline or Market Segmentation?" American Economic Review, Papers and Proceedings, May, 1996, pp. 389-394.
- Phelps, Charles, "Information Diffusion and Best Practice Adoption", in the Handbook of Health Economics, eds. Culyer and Newhouse, Ch. 5: 224-261.
VIII.
Equity
-
Wagstaff, A., Van Doorslaer, E., "Equity in Health Care Finance and
Delivery", Handbook of Health Economics,
TBA
IX.
Government
Intervention
- Pauly, Mark V., "Financing Health Care, " Quarterly Review of Economics and Business, 30,4, Winter, 1990, 63-80.
- Pauly, Mark V., "Efficiency, Incentives, and Reimbursement for Health Care, " Inquiry, March, 1970, 114-130.