Health Economics (Econ-UB 140) Professor Michael Dickstein Office: KMC 7-78 Office Hours: Mondays, 1:30pm-3pm Email: michael.dickstein@nyu.edu
Syllabus Spring 2022 Course description:
In this course, we will apply the tools of economic analysis to study how medical care is produced and financed, in both the private and public sectors. Our emphasis will be on the United States, with a brief treatment of health systems in other developed and developing countries.
The course includes three modules. In the first module, we will use economics to evaluate why the health care market is different from conventional markets. We will examine
consumer demand for health and health care, discuss why health insurance exists, and learn how economists and insurers evaluate the costs and benefits of new medical technologies. In the second module, we will apply these economic tools to analyze key health care market players, including insurers, hospitals, physician organizations, pharmaceutical manufacturers, and government agencies. We will identify the important challenges each player faces
through discussion of case studies and empirical research in health economics. Finally, in the third module, we will discuss contemporary issues in health care policy, including U.S. health care reform.
This is an economics course. The approach taken and the literature reviewed will be primarily by and for economists. This means that charts, graphs, and algebra will be common. Through the example of the health care sector, we will examine many of the important issues in economics more generally, including decision-making under uncertainty, principal-agent theory, moral hazard, and imperfect competition.
Prerequisites
Econ-UB.1 or Econ-UB.2 or equivalent.
Lectures
Monday/Wednesday, 11:00am–12:15pm Location: KMC 5-75
Teaching Fellow
Chiara Gardenghi, cg3454@stern.nyu.edu
Readings: There is one required textbook: Health Economics, by Bhattacharya, Hyde, and Tu, Palgrave Macmillan, 2013. (BHT). There is also a course packet of case studies available
through the NYU bookstore platform. All other required readings will be posted on Brightspace.
Course Site: The course’s website can be found on Brightspace. We will run all communication through this site. There you will be able to find:
1. Lecture notes
2. Assignments and solution keys 3. Sample exams
4. Announcements
Grading: Your grade will be determined by the following:
Assignments 20%
Midterm 30%
Final 30%
Group Presentation 10%
Class Participation 10%
Class attendance and professionalism. You should come to class prepared to discuss assigned topics. Your thoughtful participation makes the course more interesting and productive for everyone, including your instructors.
You can contribute to the course by:
• Listening attentively and answering discussion questions.
• Arriving to class on time and turning off laptops, tablets, and mobile phones during lecture.
• Demonstrating interest in your peers' comments and questions.
• Advancing the discussion by contributing insightful comments and questions.
• Completing pre-class polls on Brightspace
Assignments: Graded work will include four problem sets that will count toward the final grade. Assignments will be submitted online on the due date to Brightspace.
• Students may work in small groups or individually on the problem sets, though each student in a group should turn in their own copy. The material in the problem sets complements the lecture content and is a critical part of the course.
• The problem sets will be graded on 3-point scale. Late problem sets will receive a grade of zero.
Group Presentation: There will be a group presentation assignment in the course. More details of the project focus and format will be provided during the semester. The project will serve as an opportunity to apply the tools from the course to discuss a contemporary issue in health economics and policy.
Examinations: There will be a midterm and a final exam. Both exams will be a mixture of short answer and essay questions. The purpose of the exams is to evaluate your
understanding of the economic theory, empirical evidence and policy application of the topics covered in the course. The first exam will cover material to that point. The second exam will focus primarily on the second half of the course but may draw on concepts from earlier lectures and readings.
No Make-up Exams: If you miss the midterm for a justified reason and provide sufficient evidence, your final exam score will be counted instead of the midterm exam. If you miss the midterm for any other reason you will get a score of 0. If you miss the final exam for a justified reason you will receive an incomplete, which must be removed in the earliest possible semester.
Review Sessions: We will run a review session before both the midterm and the final exam.
The midterm review will be held on Monday, March 7. The final exam review will be held on Monday, May 9.
Your final exam: If you want to examine a copy of your final exam after the course is over you will need to make an appointment with me.
Errors: The teaching fellow and I will make every effort to grade fairly, but some errors in grading may occur. Please check your exams and in case of grading errors, please return your exam to the grader with a written note explaining where the error is. We may keep copies of all, or of a fraction of graded exams, prior to handing them back. The entire exam will be re- graded in the case of a re-grade request. Please keep copies of your exams until the semester is over.
Student Accessibility: If you will require academic accommodation of any kind during this course, you must notify me at the beginning of the course (or as soon as your need arises) and provide a letter from the Moses Center for Student Accessibility
(212-998-4980, mosescsa@nyu.edu) verifying your registration and outlining the accommodations they recommend. For more information, visit the CSA website:
https://www.nyu.edu/students/communities-and-groups/student-accessibility.html Student Wellness: Classes can get stressful. I encourage you to reach out if you need help.
The NYU Wellness Exchange offers mental health support. You can reach them 24/7 at 212 443 9999, or via the “NYU Wellness Exchange” app. There are also drop-in hours and appointments. Find out more at:
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Pronouns & Name Pronunciation
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religiousaccommodations@nyu.edu for assistance.
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have outside of Stern. Please review all class dates at the start of the semester and review all course requirements to identify any foreseeable conflicts with exams, course assignments, projects, or other items required for participation and attendance. If you are aware of a potential conflict, please contact me as soon as possible to discuss any potential conflicts to determine whether/how they can be accommodated.
Inclusion Statement. This course strives to support and cultivate diversity of thought, perspectives, and experiences. The intent is to present materials and activities that will challenge your current perspectives with a goal of understanding how others might see situations differently. By participating in this course, it is the expectation that everyone commits to making this an inclusive learning environment for all.
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List of Topics
Module 1: Economics of Medical Care
1. Introduction, health demand, and health production
a. Are health care markets unique? An economist’s view.
b. Demand for health care c. Human capital and health
d. Technological change and the value of innovation 2. Health insurance
a. Health insurance provision and moral hazard b. Information asymmetries and classification risk Module 2: Health Care Delivery
3. Payers
a. US System: Medicare, Medicaid, Private Insurers b. International Comparison
4. Health Care Supply
a. Physicians and the medical work force b. Hospitals, surgery centers, urgent care c. Pharmaceuticals
Module 3: Topics in Health Care Policy 5. Information and Quality in Health Care
a. Physician report cards and quality scores b. Defensive medicine and malpractice risk c. Price transparency
6. Options for reform and the Affordable Care Act (ACA) a. Provisions of the ACA
b. Early experience of enrollees and insurers in ACA marketplaces
Schedule
(‘*’ denotes required readings; readings should be completed before class) Module 1: Economics of Medical Care
Week 1:
Problem Set 1 (Due Feb 7)
1. Monday Jan 24: Are health care markets unique? An economist’s view.
• *BHT Ch. 1
2. Wednesday Jan 26: Demand for Medical Care
• *BHT Ch. 2
• *Aron-Dine, Aviva, Liran Einav and Amy Finkelstein, “The RAND Health Insurance Experiment, Three Decades Later,” Journal of Economic
Perspectives, 2013. Read only 197 to middle of page 208.
• Garber and Skinner (2008) “Is American Health Care Uniquely Inefficient?”
Journal of Economic Perspectives 22(4): 27-50.
• Rand Experiment Summary:
http://www.rand.org/pubs/research_briefs/RB9174/index1.html Week 2:
3. Monday Jan 31: Human Capital and Health
• *BHT Ch. 3
4. Wednesday Feb 2: Human Capital and Health
• *BHT Ch. 3 (review) Week 3:
Problem Set 2 (Due Feb. 16)
5. Monday Feb 7: Health and Technological Change (I)
• *BHT, Ch. 14
• *Cutler, D. and M. McClellan. “Is Technological Change Worth It?” Health Affairs Sept/Oct. 2001.
• Gawande, Atul. "The Cost Conundrum." The New Yorker. Conde Nast, 1 June 2009. Web. http://www.newyorker.com/magazine/2009/06/01/the-cost- conundrum.
• Problem Set 1 Due
6. Wednesday Feb 9: Health and Technological Change (I)
• *Case: Medicare And Drug Eluding Stents, HBS Case #905M53-PDF-ENG
Week 4:
7. Monday Feb 14: Risk Aversion and the Value of Insurance
• *BHT Ch. 7
8. Wednesday Feb 16: Moral Hazard
• *BHT, Ch. 11
• M. Gladwell, “The Moral Hazard Myth.” The New Yorker, August 29, 2005.
• Finkelstein, Amy et al., “The Oregon Health Insurance Experiment: Evidence from the First Year,” Quarterly Journal of Economics, 2012.
• Taubman, Sarah L., et al. "Medicaid increases emergency-department use:
evidence from Oregon's Health Insurance Experiment." Science 343.6168 (2014): 263-268.
• Problem Set 2 Due Week 5:
Problem Set 3 (Due March 7)
9. Monday Feb 21: No Class, President’s Day
10. Wednesday Feb 23: Adverse Selection - Lemons Problem
• *BHT Chapter 8.1-8.3
• Akerlof (1970) “The Market for "Lemons": Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 84(3): 488-500.
Week 6:
11. Monday Feb 28: Adverse Selection - Rothschild-Stiglitz Model
• *BHT, Ch. 9.
• Rothschild and Stiglitz (1976), “Equilibrium in Competitive Insurance Markets:
An Essay on the Economics of Imperfect Information,” Quarterly Journal of Economics, 90(4): 629-649.
12. Wednesday March 2: Adverse Selection - In Practice
• *BHT, Ch. 10
• Cutler, David M., and Richard J. Zeckhauser. "Adverse Selection in Health Insurance." Forum for Health Economics & Policy. Vol. 1. No. 1. De Gruyter, 1998.
Week 7:
13. Monday March 7: Midterm Review
• Problem Set 3 due
14. Wednesday March 9: Midterm
March 14-March 18 Spring break
Module 2: Health Care Delivery
Week 8:
15. Monday March 21: Health Insurance in the United States
• BHT Ch. 18
16. Wednesday March 23: Health Insurance Abroad: Bismarckian and Beveridgian Systems
• BHT Ch. 16-17 Week 9:
17. Monday March 28: Physicians (I)
• BHT Ch. 5
• *[Focus on introduction only] Doyle, Joseph J., Steven M. Ewer, Todd H.
Wagner, “Returns to Physician Human Capital: Analyzing Patients Randomized to Physician Teams” Journal of Health Economics, 2010.
• *L. Baker, “Acquisition of MRI Equipment by Doctors Drives Up Imaging Use and Spending,” Health Affairs, December 2010 29(1) 2252-2259.
18. Wednesday March 30: Physicians (II)
• Case: “Transforming Care at Unitypoint Health—Fort Dodge”
Week 10:
19. Monday April 4: Hospitals (I)
• *BHT, Ch 6
• *E. Munnich and S. Parente, “Procedures Take Less Time At Ambulatory Surgery Centers, Keeping Costs Down And Ability To Meet Demand Up,” Health Affairs, vol. 33, no. 5, May 2014.
• J. Horwitz “Making Profits And Providing Care: Comparing Nonprofit, For-Profit, And Government Hospitals” Health Affairs, 24, no. 3 (2005): 790-801
• “Examination of Health Care Cost Trends and Cost Drivers,“ Massachusetts Attorney Generals’ Office, March 16, 2010.
20. Wednesday April 6: Hospitals (II)
• *Case: Dartmouth Hitchcock Medical Center: Spine Care Week 11:
21. Monday April 11: Pharmaceuticals
• *“Follow the Pill: Understanding the U.S. Commercial Pharmaceutical Supply Chain” Kaiser Family Foundation.
• J. Rockoff and E. Silverman, “Pharmaceutical Companies Buy Rivals’ Drugs, Then Jack Up the Prices: List prices soar on Valeant’s heart medications and other firm’s drugs, driving up costs,” Wall Street Journal, 4/26/15.
• BHT, Ch. 12
Module 3: Health Care Policy
22. Wednesday April 13: Information and Quality in Health Care (I)
• *Mehrotra, A., Chernew, M. E., & Sinaiko, A. D. (2018). The Promise and Reality of Price Transparency, New England Journal of Medicine, 378(14), 1348-1353.
• *Sinaiko, A. D., Mehrotra, A., & Sood, N. (2016). Cost-sharing obligations, high- deductible health plan growth, and shopping for health care: enrollees with skin in the game. JAMA internal medicine, 176(3), 395-397
• Jena, Anupam B., Seth Seabury, Darius Lakdawalla, and Amitabh Chandra,
“Malpractice Risk According to Physician Specialty,” The New England Journal of Medicine, 2011, 365, 629-36.
• Currie, Janet, and MacLeod, W. Bentley, “First Do No Harm? Tort Reform and Birth Outcomes” in Quarterly Journal of Economics, May 2008, 123(2), 795-830 Week 12:
Problem Set 4 (Due April 27)
23. Monday April 18: Big Questions for Health Care Reform
• BHT, Ch. 15
24. Wednesday April 20: The Affordable Care Act
• *BHT, New ACA Chapter (on Brightspace)
• *L. Levitt et al., “Assessing ACA Marketplace Enrollment,” Kaiser Family Foundation.
• M. Dickstein, SIEPR policy brief on ACA participation
• C. Cox, “Analysis of UnitedHealth Group’s Premiums and Participation in ACA Marketplaces,” Kaiser Family Foundation
Week 13:
25. Monday April 25: How is the ACA working?
• Diamond, Rebecca, Michael J. Dickstein, Tim McQuade, and Petra Persson,
“Insurance without Commitment: Evidence from the ACA Marketplaces”, 2020, Working Paper.
• Dickstein, Michael, Kate Ho, and Nathaniel Mark, “Market Segmentation and Competition in Health Insurance”, 2021, Working Paper.
26. Wednesday April 27: Policy Debate
• *Case: Medicare reform proposal [posted on Brightspace]
Week 14:
27. Monday May 2: Student presentations 28. Wednesday May 4: Student presentations Week 15:
29. Monday May 9: Final Review Lecture
Final Exam: TBA During Exam Week. Location TBA
