This course is designed to provide students with a detailed
understanding of the economic issues of the health care industry. Students will acquire knowledge of the
private and public institutions, which influence the level of productivity in
this industry. Economic tools will be
used systematically to shed light upon the relationship between technology and
our well-being. The latter is dependent
upon our physical and economic status as well our satisfaction with our ethical
stature. Students will more greatly
appreciate the relationship between economics, moral values and the natural
sciences.
Students will be exposed
to a critical analytical form of examination, distinguishing carefully between
factual positive economic analysis and normative economics analysis based upon
value judgment. In the process, students
will refine their critical thinking skills and their ability to deal with
complex issues.
The course
studies and characteristics of America’s health care industry by focusing on
the market structure, conduct and performance characteristics of the
sub-sectors that compose this industry.
Private insurance, pharmaceuticals, physician service, hospital service
and medical education markets are evaluated.
Within each of these sub-sectors, output and pricing decisions are analyzed along with the
positive economic implications for efficiency as well as the normative ethical
implications. Additionally, malpractice,
risk, and the role of competition and government regulation as a tool to remedy
inefficiencies and inequities in these markets are studied.
Alternative
health care systems are also studied, including the Canadian, German, British
and Japanese health care systems.
Students will
consider the relationship between individual decision-making and our natural
environment, studying genetic and environmental factors affecting health risks
and their impact on the demand for health care.
The effects of scientific and technological advancements upon available
treatments and the resulting effects upon our well-being as well as our health
care costs are studied. Cost benefit
analysis is utilized to evaluate alternative health programs and treatments.
Students will
explore the issues of equity, justice and the role of the public sector in
regulating the health care industry and redistributing income for the purpose
of subsidizing health care. Alternative
theories of distributive justice will be investigated. Financing of our medical care programs will
be evaluated in light of these theories.
REQUIRED TEXT:
Rexford E. Santerre and Stephen P. Neun, Health
Economics, 3rd
edition, 2004 (with INFO TRAC.)
OFFICE: 641 Butte Hall. Phone: 898-5759
OFFICE HOURS:
Tues. &
Thurs. 1 – 2 P and 3:15 – 4:45P
*I will also be
available by appointment
Page 2.
GRADING:
Grades will be
determined by the following point system.
Quizzes (2 30 minute Essay quizzes) 14%
In-Class Exams (2 75 minute Essay Exams 46%
Final Essay Exam (during finals
week) 24%
Term Paper Project (9 double-spaced
pages) 16%
100%
The grades will be
assigned on the basis of the following scale:
90% or better A
80%-89.9% B
70%-79.9% C
60%-69.9% D
less than 60% F
The top two points
and the bottom two points in each range will earn a plus and minus
respectively, with
the exception that grades of A+, D-, F+ are not possible.
TERM PAPER PROJECT:
Each student will
choose a term paper topic, which must be approved by the instructor. The term papers must be a minimum of 9
double-space, typed pages. Students
MUST use a least two sources by economists as part of their main sources
for this paper. Sources may include
journals and books, government statistics and original research generated by
surveys, interviews, etc. Your
subscription to Info Trac will be helpful for use on
your term paper. Appropriate and
complete citations are essential.
Students are to submit a topic proposal to me no later than March 1,
2005. Students will lose 2 points from
their term paper grades for each day that they go beyond the deadline for
submission of the topic. I will return
the proposals with comments and suggestions.
The final paper will be due May 3, 2005. Suggestions for paper topics will be
discussed in class. Content and the
quality of writing will determine the grade.
Make sure your paper is carefully edited and well-organized.
OUTLINE OF TOPICS AND
READINGS:
1.
Introduction
a. Theorizing and Formulation
of Hypothesis
b.
Hypothesis
Testing
Statistical Trends in Medical
Expenditures
Economic Theory. The Basis of Empirically Verifiable
Hypotheses
a.
Basic
Choices Marginal Benefit Curves and Production Functions b..
Quantity and Quality Trade-Offs and the Production Possibility Curve –
Equity and Efficiency.
REQUIRED READINGS:
Santerre and Neun (hereafter referred to as Text) Chapter 1
2.
Health and
Medical Care
Determining Production Efficiency Using a Health Production Function
Evidence on the production of health in the U.S.
Major cause of death in the U.S>
Drug use & impact on number of low birth weight newborns in New
York City
REQUIRED READING
Text Chapter 2.
3.
Cost and
Benefit Analysis
“Mother, how much is the health
of your child worth?”
Costs and benefits of medical technologies
Cost effectiveness analysis: Autologous Blood
Donations-Are they cost effective?
Monetary value of improvements
in health from 1970-1990. Was it worth it?
REQUIRED READING:
Text Chapter 3.
4.
Health Care
Systems and Institutions
Role and financing methods
of third-party payers
Risk management, reimbursement and
consumer cost sharing
Differences between
for-profit and not-for-profit providers
The U.S., British, Canadian,
German & Japanese Health Care Systems
REQUIRED READING:
Text Chapter 4.
5.
The Demand
for Medical Services
Alternative
Models of Demand for Medical Care
Hypothesis Testing
Economic Results
REQUIRED READING:
Text Chapter 5.
6.
Demand for
Medical Insurance
A Simple Model
of the Demand for Health Insurance
Moral
hazard and adverse selection
Elasticity and the demand for
traditional and western medicine in Taiwan
Empirical estimation
An international look at
income and health care spending
Health care spending in the
U.S.
Out of pocket expenditures
in 2000
REQUIRED READING:
Text
Chapter 6.
7.
Medical
Care, Production and Costs
Short-run production and cost
of the representative firm
Estimating Short-Run Cost
functions for Hospital
Long-run production costs
REQUIRED READING:
Text Chapter 7.
8. Structure, conduct, performance and market
analysis
A model of supply and demand
Explaining rising health care
costs
Monopoly model of market
behavior and performance
CON laws as an entry barrier
into the dialysis industry
The effect of increased
competition on dental prices in New Zealand
Price war in the blood
banking idiustry
REQUIRED READING:
Text Chapter 8.
9. The Political Economy of Health Care
Market
Failure and Government Intervention
Alcohol commercial bans and alcohol
abuse: an international perspective
Cost of waiting for hospital
services in Canada
The regulated market for human
organs
Public Interest Theory and special Interest Theory of Government
Intervention
Distributive
Justice
The
Rationale for Redistribution
Rawls’ Theory of
Justice
Nozick’s Theory of Justice
Effects of Redistributive action on
efficiency in exchange
Cash vs. In-Kind Transfers
Medicare and Medicaid as Redistributive
Programs
REQUIRED READINGS:
Text Chapter 9.
RECOMMENDED READINGS:
Feldstein, Paul J.,
“An Economic Version of the Interest Group Theory of Government,” in The
Politics of Health Legislation: An Economic Perspective,
Ann Arbor, Michigan,
1988.
10. Government Provision of Health Insurance
Why does the government
product health insurance?
Medicaid and Medicare
Programs-Past and Present
REQUIRED READINGS
Text Chapter 10
11. Private Health Insurance
An historical perspective of the
private health insurance industry
Structure, conduct and
performance
Empirical Observations on the
Benefit Premium Ratio, Community Rating
HMO’s, PPO’s
and cost sharing
Why pays for employer-mandated
health insurance?
News of adverse selection and
cherry-picking behavior in Australia
REQUIRED READINGS:
Text Chapter 11
12. The Physician Service Market
An
overview: an historical perspective
Conduct, structure and
performance
The geographical
distribution of physicians
Medical malpractice and
defensive medicine
REQUIRED READING:
Text
Chapter 12.
13. The Hospital Services Market
Structure, conduct and performance
Benefits and costs of hospital
mergers
Drive-through deliveries
Relative performance of hospitals
in the U.S. and Canada
REQUIRED READING:
Text
Chapter 13.
14. The Pharmaceutical Industry
Structure, conduct and performance
Orphan drugs
Can physician drug recommendations
be bought?
REQUIRED READING:
Text
Chapter 14.
15. The Long Term Care Health
Industry
Structure, conduct
and performance
REQUIRED READING
Text Chapter 15.
16.
An Overview
of the Health Care Reform
Performance of the U.S. health
care system:
A summary and international
comparison
Disagreement concerning how
health care reform should be designed
Cost
Saving and Redistibutive Aspects of Health Care
Reform Proposals
Medical
Savings Accounts
Individual Mandates
Managed Competition
National Health Insurance
The Clinton health care
plan
REQUIRED READING:
Text Chapter 16.
RECOMMENDATION READINGS:
Victor Fuchs, “From Bismark to Woodcock:
The “Irrational Pursuit of National Health Insurance, “Journal of Law
and Economics, Aug. 1976
Elizabeth McCaughey,
“No Exit: What the Clinton Will Do for You,” New Republic, 1994.
HR 3600, The Health Security Act. This 1364 page document is made available to students and is summarized by the instructor for the students.
Michael Tanner, “
Laboratory Failure Sates are No Model for Health Care Reform” Policy Analysis,
Sept. 1993.,
READING ASSIGNMENTS:
At the beginning of
each class the reading assignments for the next class will be announced.
SPECIAL NEEDS:
Handicapped students
are urged to contact the instructor to jointly determine how their special
needs may be best and most easily accommodated.
ABSENCES:
In most
circumstances, an absence from an exam without my PRIOR approval will result in
a grade of zero for that exam. Please note that approval to miss an exam
will be granted only when the student submits documented proof that it was
physically impossible to be present during the exam.
Regarding term papers, ten points will be subtracted from the grade for
each day it is late.
I do not take
attendance. However, it is highly
unlikely that a student will pass the class unless the student attends class
regularly. NOTE: ONCE A CLASS HAS BEGUN, STUDENTS MAY NOT
LEAVE UNTIL THE CLASS IS DISMISSED OR THE INSTRUCTOR HAS GIVEN PERMISSION TO
LEAVE EARLY.
DROPS:
The deadline for
dropping this course with out approval is Friday of the second week of classes.
Please note, I will
not give approval to drop this class for the reason that a student is not
performing well.
**I reserve the right
to alter this syllabus.