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STATE UNIVERSITY OF NEW YORK AT BUFFALO

DEPARTMENT OF ECONOMICS

Economics 411/511, FALL 2000

Economics of Health

Instructor: Mitchell Harwitz

Office: 427 Fronczak Hall

Office Hours: T, W, R (Thurs.) 11:00 - 11:55 am, AND BY APPOINTMENT. Appointments can be made by e-mail or by phone.

Class. Tues., Thurs., 2:00 p. m. to 3:20 p.m., in Baldy 108.  Lab Sessions are scheduled in Park 450 on at least the first  seven Thursdays of the course. For schedule details, click Sched41100v2.html. For Lab Session details, click Lab Session Topics 411.

Text: Charles Phelps, Health Economics, 2nd edition, Addison-Wesley, 1997.

The Shape of the Course. I conceive of the course in three parts. The first part deals with major health issues and policies that apply internationally, especially those that show great variation between poor and rich countries. Infant mortality and life expectancy are two such issues. In this part of the course, students will learn to do careful and systematic empirical research. The second part of the course emphasizes the very special features of the economics of medical care in rich countries, and in particular emphasizes the roles of uncertainty and insurance. The third part of the course emphasizes the multi-faceted role of government in the development, delivery, and regulation of medical care.

Grading: the grade in the course will be based on 3 (in-class) quizzes covering mainly materials from economic theory specifically relevant to health care. As usual in my upper-level classes, you will be given a list of questions in advance of the test, and the test questions will be selected from the list. I expect prior preparation of answers to the list of questions, because I shall grade to a very high standard. The quizzes will be worth 60% of the grade. Class participation will be worth 5% of the grade. The rest of the grade will be based on a paper.

If you have questions, click here to e- mail me. Mitchell Harwitz           

 


A List of Issues and Topics on US Health Care, due to David Cutler of Harvard, not to me. It can be found in Public Policy for Health Care, NBER Working Paper 5591.) I have added topic III.

The output of the health system is the health of the population. The primary inputs are: (1) lifestyle choices of individuals; (2) public health, primarily water quality, sanitation, etc., and secondarily immunization status; (3) medical care, which is what most people think of when they think of health care. In this course, our questions relate to the roles of market organization and public policy in the determination of each of the input levels and their consequences. Thus we shall consider:

I. Externalities and Individual Lifestyle Choices.

II. The Organization of Medical Care Markets. The medical care delivery system should deliver the right amount of care to those who need it, and the cost of financing the care should be allocated fairly. (Notice that both of the words "should" and "fairly" require ethical and policy judgments.)

Recall that most medical expenditure is covered by either private or public medical insurance if one includes co-payments by the insured. Such insurance accounts for more than 95% of all medical spending. The rest is spending on the uninsured.

 

Many economists critical of the current system assume the following stylized facts:

Fact 1. The growth of medical spending is the result of technological advances and the diffusion of existing technologies to new patients.

Fact 2. Technology that has widely diffused is overused (the marginal value of treatment is low).

Fact 3. The burden of financing medical care is not shared widely enough. We shall assess these assertions and their consequences.

III. Responses of the Market Organization of Medical Care to Fact 1 and Fact 2.

IV. The Consequences of Insurance on the Labor Market ("job lock") and other possible inefficiencies).