Econ 156: Health Economics (Also Pub Policy 156) Course Syllabus Duke University Spring 2010 Prof: Tracy Falba Office: Social Sciences, Rm 208 Email: tracy.falba@duke.edu Phone: 919-660-1806 Meeting Time: T TH 1:15-2:30 Meeting Place: Soc Sci 113 Office Hours: Mon 1-2pm or by appt. (occasionally I will have online chat office hours through Bb) You can also feel free to stop by during my ADUS office hours which are Tues 3:30-5 and Wed 1-2:30. Blackboard website: please email me if you need to obtain access Summary This course is an introduction to the economics of health and health care. It explores the health care sector and healthy policy issues from an economic perspective. We will cover issues including the value of health, the demand for health care, health insurance markets, managed care, medical technology, government insurance programs, health care reform, the pharmaceutical industry, and the economics of bad habits. The health care sector represents over 16% of U.S. GDP. A number of interesting policy debates focus on how to improve access to care, evaluate medical technologies, promote healthier behavior, regulate hospitals and physicians, and control increasing costs. Certainly the current health care reform legislation is the most dramatic undertaking in health policy in decades and makes all of what we will discuss in this course even more relevant. By the end of this course it is my hope that you will have a better understanding of the issues in this vast and growing field. Course requirements and Grading: You are required to come to class having done the assigned reading and ready to participate. There will be 3 problem sets distributed throughout the term. There will also be 2 midterms and a final. The grade breakdown is as follows: Class participation & Quizzes: 15% Problem Sets: 15% (5% each) Midterms 40% (20% each) Final 30% No late assignments will be accepted. Students are allowed to work together on problem sets, although all write-ups must be done individually. A make-up exam will only be scheduled with a Dean s excuse. Please review the university honor code for other policies. http://www.integrity.duke.edu/ugrad/student.html Quiz Policy There will be 5 quizzes throughout the semester. These will be short, but will be unannounced. They will primarily cover material from the readings. These quizzes will make up 2/3 of your participation grade. You will be able to drop 1 quiz without question. That means I will take an average of your highest 4 quiz scores. If you miss a quiz with an unexcused absence, that will be your lowest score. I will allow make-up quizzes for a second absence only if the previous missed quiz was an excused absence (and the current missed quiz is also excused). For any absence from class you should notify me
beforehand or it will be considered unexcused. If you are unable to attend class due to illness, make sure to send a notification of short term illness (before the class period). Course textbooks and Readings: 1. Folland, Goodman and Stano The Economics of Health and Health Care (6 th edition) 1 2. Incentives and Choice in Health Care, Sloan and Kasper, eds. Please note these are not available at the bookstore, but both titles are available with numerous online book retailers. In addition to the textbook reading I have included a number of seminal or pertinent articles noted below by topic. These are available on BlackBoard under the course readings folder of course documents. I also encourage you to use a Microeconomics text to review basic concepts as needed. Other handouts or news articles may be assigned or passed out throughout the semester. Course Outline I. Introduction Jan 14, 19 Course Overview & Introduction to Health Economics FGS, Chapter 1 Fuchs, V. R. (1996). "Economics, Values, and Health Care Reform." American Economic Review 86(1): 1-24. *available on Blackboard Optional: Aaron, H. (2008) To Find the Answer, One Must Know the Question: Health Economics and Public Policy, in Incentives and Choice in Health Care, Sloan and Kasper, eds., p21-50. Jan 19, 21 The Health Economy: Keeping Track of it All! Hartman, M., et al. (2009) National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998, Health Affairs, 28(1): 246-261. **Please Review on Own Tools for Health Economists FGS, Chapters 2 & 3 Jan 26, 28 Economic Evaluation Applied to Health Care FGS Chapter 4 II. Production of Health / Production of Medical Care Jan 28, Feb 2 Production of Health FGS, Chapter 5 Smith, J. P. (1999). "Healthy bodies and thick wallets: The dual relation between health and economic status." Journal of Economic Perspectives 13(2): 145-166. 1 I am also fine with you using the 5 th edition if you are able to locate one.
Thomas, D., U. E. Frankenberg, et al. (2006). "Causal effect of health on labor market outcomes: Experimental evidence." Working Paper. Feb 4, 9 Evaluating Medical Technologies FGS, Chapter 6 Cutler, D. M. and M. McClellan (2001). "Is technological change in medicine worth it?" Health Affairs 20(5): 11-29. McClellan, M., B. J. McNeil, et al. (1994). "Does more intensive treatment of acute myocardial infarction in the elderly reduce mortality? Analysis using instrumental variables." Journal of the American Medical Association 272(11): 859-866. Feb *11, 16 Demand for Health and Demand for Health Capital * 1 st PS due Feb 11 FGS, Chapter 7 Grossman, M. (1972). "On the Concept of Health Capital and the Demand for Health." The Journal of Political Economy 80(2): 223-255. Gilleskie, D. (2008) Health Capital: Theory and Empirical Evidence, in Incentives and Choice in Health Care, Sloan and Kasper, eds., p.51-84. **1 st Midterm: Feb 18th Feb 23, 25, Mar 2, 4, 16 III. Health Insurance and the Demand for Medical Care A. Expected Utility Maximization Choices Under Uncertainty FGS, Chapter 8 Arrow, K. J. (1963). "Uncertainty and the Welfare Economics of Medical Care." The American Economic Review 53(5): 941-973. B. Demand for Health Insurance & Moral Hazard FGS, Chapters 8 & 9 Manning, W. G., J. P. Newhouse, et al. (1987). "Health insurance and the demand for medical care: evidence from a randomized experiment." American Economic Review 77(3): 251-277. C. Adverse Selection & Supply of Insurance
FGS, Chapter 11 Akerlof, G. A. (1970). "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism." Quarterly Journal of Economics 84(3): 488-500. Pauly, M. V. (2008). Adverse Selection and Moral Hazard: Implications for Health Insurance Markets. Incentives and Choices in Health and Health Care, Sloan and Kasper, eds., p. 103-130. D. Health Insurance and the Labor Market Gruber, J. (1994). "The incidence of mandated maternity benefits." American Economic Review 84(3): 622-641. E. Public Provision of Health Insurance: Medicare & Medicaid FGS, Chapter 21 F. Problems of Uninsurance Schoen, C. and C. DesRoches (2000). "Uninsured and unstably insured: The importance of continuous insurance coverage." Health Services Research 35(1 II): 187-206. Miller, W., E. R. Vigdor, et al. (2004). "Covering the uninsured: What is it worth?" Health Affairs 23(SUPPL.). Mar 9 & Mar 11 No class Spring Break **2 nd problem set, Due Mar 18 IV. Agency Problems Mar 18* Asymmetric Information FGS, Chapter 10 Mar 23 Supplier Induced Demand and Small-Area Variation FGS p. 316- p. 325 Gruber, J. and M. Owings (1996). "Physician financial incentives and cesarean section delivery." RAND Journal of Economics 27(1): 99-123. Yip, W. C. (1998). "Physician response to Medicare fee reductions: Changes in the volume of coronary artery bypass graft (CABG)surgeries in the Medicare and private sectors." Journal of Health Economics 17(6): 675-699. Mar 25 Managed Care
FGS, Chapter 12 Mar 30 Theory of Nonprofits FGS, Chapter 13 Kessler, D. P. and M. B. McClellan (2002). "The effects of hospital ownership on medical productivity." RAND Journal of Economics 33(3): 488-506. Frank, R. G. and D. S. Salkever (1994). "Nonprofit organizations in the health sector." The journal of economic perspectives : a journal of the American Economic Association 8(4): 129-144. **2 nd Midterm: April 1st V. Important Sectors in Health Care Apr 6 Physicians & Health Care Labor Markets FGS, Chapters 15 & 16 Bhattacharya, J. (2005). "Specialty selection and lifetime returns to specialization within medicine." Journal of Human Resources 40(1): 115-143. Nicholson, S. (2008) Medical career choices and rates of return, in Incentives and Choice in Health Care, Sloan and Kasper, eds., p. 195-226. Apr 8 Hospitals FGS, Chapter 14 Apr 13 Pharmaceuticals FGS, Chapter 17 Sloan, F. A. and C.-R. Hsieh (2008). Effects of Incentives on Pharmaceutical Innovation, in Incentives and Choice in Health Care, Sloan and Kasper, eds., p.227-262 Apr 15 Other (long-term care, home care, nursing) FGS, Chapter 14 Norton, E. C. (2000). Long-term care. Handbook of Health Economics. J. C. a. J. P. N. Anthony, Elsevier. Volume 1, Part 2: 955-994. *3 rd PS Due April 22 VI. Special Topics
Apr 20, 22* Externalities & Health Behaviors FGS, Chapter 23 Sturm, R. (2002). "The effects of obesity, smoking, and drinking on medical problems and costs." Health Affairs 21(2): 245-253. Cawley, J. (2008). Reefer Madness, Frank the Tank or Pretty Woman: To What Extent Do Addictive Behaviors Respond to Incentives? Incentives and Choices in Health and Health Care. F. A. Sloan and H. Kasper. Apr 22, 27 Government Intervention, Regulation & Reform FGS, Chapters 18, 19, & 20 Anderson, G. F., U. E. Reinhardt, et al. (2003). "It's the prices, stupid: Why the United States is so different from other countries." Health Affairs 22(3): 89-105. Tues, May 4 Final Exam 9am - noon Summary of Important Dates: Feb 11 First Problem Set Feb 18 First Midterm Exam March 18 Second Problem Set April 1 Second Midterm Exam April 22 Third Problem Set May 4 Final Exam (9am-noon)