Economics of Health
Economics 340 $\bullet$ Fall 2008
University of Massachusetts-Amherst
Monday and Wednesday $\bullet$8:00-8:50 AM $\bullet$ 133 ISOM

Michael Ash
Associate Professor of Economics and Public Policy

Date: September 2, 2008

Basic Information

Michael Ash

Department of Economics
814 Thompson
Office hours
Monday 10:30-11:30 AM
Tuesday 9:30-10:30 AM
Wednesday 10:30-11:30 AM
Or by appointment
Email mash@econs.umass.edu
Mailbox 10th Floor, Thompson Hall
Telephone 413-545-6329
Fax 413-545-2921
This syllabus: http://courses.umass.edu/econ340
Hard copy: http://courses.umass.edu/econ340/syllabus.pdf
UMass Spark login: http://spark.oit.umass.edu
Personal web page: http://people.umass.edu/maash
Economics web page:http://www.umass.edu/economics

Objectives, Content, and Methods

The course provides an overview of the economics of health and of health care with special attention to the roles of market failure, equity, and policy. Economics of Health will apply the tools of economics and quantitative analysis to understanding the structure, performance, and problems of health and the health care sector. Students will develop institutional knowledge and analytic tools needed to contribute to public policy debates about health and health care.

Topics include the definition and determinants of health; health, socioeconomics status, and inequality; demand for health care; health care provision; technology and pharmaceuticals; private and public insurance; health and the labor market. Although the focus is on the United States, we will compare health and health care across the developed economies and briefly consider health in less developed countries.

The prerequisite for taking Economics of Health is successful completion of Introductory Microeconomics (Economics 103 at UMass or an equivalent course). Some familiarity with quantitative methods (for example, how to interpret the mean and standard deviation, contingency tables, and scatterplots) will be useful as well.

Requirements and Grading

This course demands a lot of reading and writing, and you must keep up to date with assignments. Please complete readings by the due dates indicated in the schedule so that you can participate in discussion and benefit more from lecture.

You are required to attend and to participate in class discussion. After two unexcused absences, each subsequent unexcused absence will cost three percentage points from the final grade. Valid excuses include medical necessity (with a note from a care provider) or arrangements made in advance with me.

Grading

You will earn a grade based on class presentations, your writing, and a final exam. A breakdown of the grade follows.

Course Component	Points
Participation	5
Quizzes	20
Written Work/Problem Sets	25
Midterm 1	25
Midterm 2	25
Total	100

Grades will be assigned according to the following schedule. Please note that your grade depends on a fixed standard of comprehension and expression and not on comparisons to other students. Therefore, you should feel comfortable discussing and sharing your notes, ideas, and writing with your fellow students.

Cut-Off	Grade
92	A
90	A-
88	B+
80	B
78	B-
76	C+
72	C
70	C-
68	D+
50	D
	F

Readings and Web Resources

The four required books for the course are Uninsured in America by Sered and Fernandopulle, Unequal Health, Our Unsystematic Health Care System both by Budrys, and Healthcare, Guaranteed by Ezekiel Emanuel. You can buy the books at the Amherst Bookstore, 8 Main Street, Amherst. The books are small and relatively cheap. Please buy the books and bring the current readings with you to class for every class meeting.

All other readings for the course will be linked from the course web site or given as handouts in class. You must take responsibility for downloading and reading the material.

I will ask you to examine web pages, for example, to retrieve data on health care expenditure from the Center for Medicare and Medicaid Services or to read an article by the Economic Policy Institute about workers without health insurance. Please let me know as soon as possible if you would like a brief lesson on the use of a web browser for research and retrieval.

Course Themes and Links to Readings

Economics of Health

Problems in Health and Problems in Health Care

Applied Economics and Health Economics

Modelling; policy analysis; welfare analysis; equity and efficiency Measuring Good Health, Bad Health, and Death The importance of data

• Unequal Health, Chapter 1: Introduction
• Unequal Health, Chapter 2: The Tools: Definitions, Measures, and Data Sources

Causes of and changes in Health, Sickness, and Death

• Unequal Health, Chapter 3: The Causes of Death
• Cutler, Deaton, Lleras-Muney, ``The Determinants of Mortality,'' Journal of Economic Perspectives, 20(3), Summer 2006, pp. 97-120.
• Unequal Health, Chapter 4: Age and Sex
• Dorothy P. Rice, ``Health and Long-Term Care for the Aged,'' The American Economic Review , Vol. 79, No. 2, Papers and Proceedings of the Hundred and First Annual Meeting of the American Economic Association. (May, 1989), pp. 343-348.
• Unequal Health, Chapter 5: Race and Poverty
• Health Status, Health Insurance, and Health Services Utilization: 2001, U.S. Census Bureau, February 2006
• Film: The Angry Heart: the impact of racism on heart disease
• Unequal Health, Chapter 6: Lifestyle and Health Behavior
• Ali H. Mokdad, ``Actual Causes of Death in the United States, 2000,'' JAMA, 291(10), March 10, 2004

Medical Care, Genetics, and Other Challenges for Health

How important is medical care?
The implications of genetic screening

• Unequal Health, Chapter 7: Medical Care
• Center for Studying Health System Change, Issue Brief No. 49, ``Triple Jeopardy: Low Income, Chronically Ill and Uninsured in America''.
• Unequal Health, Chapter 8: Genes
• Deborah Stone, ``The Moral Economy of Insurance,'' The American Prospect , Vol 1. No. 1

Social Organization and Health

• Unequal Health, Chapter 9: Stress
• Epstein, Helen, ``Enough to Make You Sick?'' The New York Times Sunday Magazine , Section 6, Page 75, Column 3, October 12, 2003.
• Gump and Matthews, ``Are Vacations Good for Your Health?,'' Psychosomatic Medicine 62:608-612, 2000
• Blanchflower and Oswald, ``Hypertension and Happiness across Nations'' Journal of Health Economics, forthcoming.
• Banks, et al., ``Disease and Disadvantage in the United States and England,'' JAMA 295(17), May 2006
• Unequal Health, Chapter 10: Social Inequality
• Unequal Health, Chapter 11: Population Health
• Unequal Health, Chapter 12: Policy

Health Care

Economic and Sociological Perspectives on Social Institutions

• Unsystematic, Chapter 1: Introduction to the Health Care System as a Social Institution
• Unsystematic, Chapter 2: Two Sociological Perspectives of the Health Care System

• Unsystematic, Chapter 3: What Do We Think of the U.S. Health Care System?

Institutions of Health Care: Hospitals

• Unsystematic, Chapter 4: Hospitals and Other Health Care Organizations
• Joseph P. Newhouse, ``Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital,'' The American Economic Review, Vol. 60, No. 1 (1970), pp. 64-74

• The Not-For-Profit Hospital as a Physicians' Cooperative Mark Pauly, Michael Redisch The American Economic Review, Vol. 63, No. 1 (Mar., 1973), pp. 87-99

Carework: doctors, nurses and other care professions

• Unsystematic, Chapter 5: The Division of Labor in the Health Care Delivery System
• NY Times (18 Feb 2002) ``9 of 10 Nursing Homes Lack Adequate Staff''
• ``Global Poaching,'' Econ-Atrocity Bulletin, Center for Popular Economics
• Film: Hott and Geary, Sentimental Women Need Not Apply , Florentine Films.

• Lovell, Solving the Nursing Shortage through Higher Wages, IWPR 2007
• Ash and Seago, ``The Effect of Registered Nurses' Unions on Heart Attack Mortality,'' Industrial and Labor Relations Review, 2004.
• Unsystematic, Chapter 6: Alternative Medicine
• The Checklist: If something so simple can transform intensive care, what else can it do? Atul Gawande The New Yorker, December 10, 2007

Pharmaceuticals

• How a chemical entity becomes a medicine
• Pharmaceutical profits
• ``The Truth About the Drug Companies,'' (Marcia Angell, New York Review of Books, Volume 51, Number 12, July 15, 2004).
• John Le Carré, ``In Place of Nations,'' Reprinted from The Nation.
• Dean Baker, ``Origins of the Doughnut Hole: Excess Profits on Prescription Drugs'' CEPR Issue Brief, August 2006''
• Joseph E. Stiglitz, ``Prizes, Not Patents,'' Project Syndicate, 2007

Insurance, Crisis, and Reform

Risk and Insurance

• Arrow, Kenneth J., ``Uncertainty and the Welfare Economics of Medical Care,'' The American Economic Review , Vol. 53, No. 5, Dec., 1963 pp. 941-973.
• Unsystematic, Chapter 7: Health Insurance
• Unsystematic, Chapter 8: From HMOs to Managed Care
• Unsystematic, Chapter 9: Health Care Costs and Cost Containment
• Unsystematic, Chapter 10: Health Care System Reform
• Unsystematic, Chapter 11: The Health Care Systems in Other Countries
• Unsystematic, Chapter 12: The End of the Story and Its Implications
• Employment-based health insurance
• David Blumenthal, ``Employer-Sponsored Health Insurance in the United States,'' New England Journal of Medicine, 355.1 2006

Demand for Medical Care or Moral Hazard

Theory and Measurement of Demand for Medical Care

• Manning, Willard G, et al. ``Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment,'' American Economic Review, Vol. 77 (3). pp. 251-77. June 1987.
• Malcolm Gladwell, ``The Moral Hazard Myth,'' The New Yorker, 2005

• Uwe E. Reinhardt, ``Economists in Health Care: Saviors, or Elephants in a Porcelain Shop?'' The American Economic Review , Vol. 79, No. 2, Papers and Proceedings of the Hundred and First Annual Meeting of the American Economic Association. (May, 1989), pp. 337-342.

Adverse Selection: Failure in insurance markets

• George A. Akerlof, ``The Market for `Lemons': Quality Uncertainty and the Market Mechanism,'' The Quarterly Journal of Economics , Vol. 84, No. 3, Aug., 1970, pp. 488-500
• Medicare from 1965 to 2003: Medicare Crisis or Health Care Crisis?

• Medicare & You, 2006, Official Government Handbook

• Keeping Our Promise to America's Seniors: President Bush Signs the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
• Neuman, et al., ``Marketing HMOs To Medicare Beneficiaries,'' Health Affairs, 17(4), 1998
• Uninsured in America, Chapter 1: From Working Class to Working Poor: The Death of Industry in America's Heartland
• Uninsured in America, Chapter 2: Medicaid, Welfare Reform, and Low-Wage Work in the New Economy
• Uninsured in America, Chapter 3: Family Matters: Divorce and Domestic Violence
• Uninsured in America, Chapter 4: Who Cares for the Caregivers? Love as a Portal into the Death Spiral
• Uninsured in America, Chapter 5: The Fox Guarding the Henhouse: Work-Related Injuries and the Vagaries of Workers' Compensation
• Uninsured in America, Chapter 6: Risky Business: The Self-Employed, Small Business Owners, and Other American Entrepreneurs
• Uninsured in America, Chapter 7: Young, Sick, and Part-Time: The Vulnerability of Youth and the New American Job Market
• Uninsured in America, Chapter 8: Mental Health Matters: A Mexican Immigrant Hits the Bureaucratic Wall
• Uninsured in America, Chapter 9: Minority Report: Health Care Stories from Black America
• Uninsured in America, Chapter 10: Descent through the Death Spiral
• Uninsured in America, Chapter 11: Moving Forward

Health Care Finance and the Cost of Health Care

Fee-for-service versus managed care
Medical Savings Accounts

• Nancy De Lew, George Greenberg, and Kraig Kinchen, ``A Layman's Guide to the U.S. Health Care System,'' Health Care Financing Review 1992; 14: 151-169
• Victor R. Fuchs, ``The Health Sector's Share of the Gross National Product,'' Science , Feb. 2, 1990, Volume 247, pp. 534-538.
• ``Health Care and the Budget: Issues and Challenges for Reform,'' CBO Director Peter R. Orszag before the Committee on the Budget United States Senate, June 21, 2007

• The Medical Malpractice Myth (Ezra Klein, Slate 2006)

What is to be done?

• ``The Health Care Crisis and What to Do About It,'' Paul Krugman and Robin Wells, New York Review of Books, Volume 53, Number 5, March 23, 2006

• Deborah Stone ``When Patients Go to Market: The workings of managed competition,'' The American Prospect , Volume 4, Issue 13. March 21, 1993

• Henry J. Aaron, ``Issues Every Plan to Reform Health Care Financing Must Confront,'' pp. 31-43.

• Individual Mandates in Massachusetts

• Healthcare, Guaranteed Ezekiel Emanuel

Schedule

      September 3, 2008 (Wednesday)
            Introduction, Applying Economics to Health
      September 8, 2008 (Monday)
            Determinants of Health, Sickness, and Death
      September 10, 2008 (Wednesday)
            Determinants of Health, Sickness, and Death
      September 12, 2008 (Friday)
            Graded Online Quiz, Unequal Health, Chapters 1-4
      September 15, 2008 (Monday)
            Determinants of Health, Sickness, and Death
            Film:  The Angry Heart: the impact of racism on heart disease
      September 17, 2008 (Wednesday)
            Medical Care, Genetics, and Other Challenges to Health
      September 19, 2008 (Friday)
            Graded Online Quiz, Unequal Health, Chapters 5-8
      September 22, 2008 (Monday)
            Social Organization and Health
            Stress
      September 24, 2008 (Wednesday)
            Social Organization and Health
            Income and Income Inequality
      September 26, 2008 (Friday)
            Graded Online Quiz, Unequal Health, Chapters 9-12
      September 29, 2008 (Monday)
            The Institutions of Health Care
            Economic and Sociological Perspectives
      October 1, 2008 (Wednesday)
            Structural Functionalism and Conflict Theory
            Public Opinion and Health Care 
      October 3, 2008 (Friday)
            Graded Online Quiz, Unsystematic System, Chapters 1-3
      October 6, 2008 (Monday)
            Non-Profit Hospitals: alternative theories
      October 8, 2008 (Wednesday)
            Caring Labor: Work in health care
      October 10, 2008 (Friday)
            Graded Online Quiz, Unsystematic System, Chapters 4-9
      October 13, 2008 (Monday)
            Holiday - Columbus Day
      October 14, 2008 (Tuesday)
            Monday class schedule will be followed
            Film:  Sentimental women need not apply
      October 15, 2008 (Wednesday)
            Pharmaceuticals: theory and practice
      October 17, 2008 (Friday)
            Midterm 1
      October 20, 2008 (Monday)
            U.S. Health Care: Comparative and Institutional Perspectives
      October 22, 2008 (Wednesday)
            U.S. Health Care: Comparative and Institutional Perspectives
      October 24, 2008 (Friday)
            Graded Online Quiz, Unsystematic System, Chapters 10-12
      October 27, 2008 (Monday)
            Mid-Semester Date (Last day to drop with "W")
            Insurance and Non-Insurance: Facts and consequences
      October 29, 2008 (Wednesday)
            Demand for Health Care
      October 31, 2008 (Friday)
            Graded Online Quiz, Uninsured in America, Chapters 1-3
      November 3, 2008 (Monday)
            Insurance Market Failures
      November 5, 2008 (Wednesday)
            Insurance Market Failures
      November 7, 2008
            Graded Online Quiz, Uninsured in America, Chapters 4-6
      November 10, 2008 (Monday)
            Costs of Health Care: Institutions and History
      November 11, 2008
            Counseling period ends
            Holiday - Veterans Day
      November 12, 2008 (Wednesday)
            Tuesday class schedule will be followed
      November 14, 2008 (Friday)
            Graded Online Quiz, Uninsured in America, Chapters 7-9
      November 17, 2008 (Monday)
            Costs of Health Care: Institutions and History
      November 19, 2008 (Wednesday)
            Health Care Crisis and Reform
      November 21, 2008 (Friday)
            Graded Online Quiz, Uninsured in America, Chapters 10-11
      November 24, 2008 (Monday)
            Health Care Crisis and Reform
      November 26, 2008 (Wednesday)
            Thanksgiving recess begins after last class
            Health Care Crisis and Reform
      December 1, 2008 (Monday)
            Classes resume
            Health Care Crisis and Reform
      December 3, 2008 (Wednesday)
            Health Care Crisis and Reform
      December 5, 2008 (Friday)
            Graded Online Quiz, Guaranteed, Foreword and pp. 1-80
      December 8, 2008 (Monday)
            Midterm 2
      December 10, 2008 (Wednesday)

Copyright © 2004-2008 by Michael Ash. All rights reserved.