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Health Economics

By Frank A. Sloan and Chee-Ruey Hsieh

Overview

This book introduces students to the growing research field of health economics. Rather than offer details about health systems around the world without providing a theoretical context, Health Economics combines economic concepts with empirical evidence to enhance readers’ economic understanding of how health care institutions and markets function. It views the subject in both microeconomic and macroeconomic terms, moving from the individual and firm level to the market level to a macroeconomic view of the role of health and health care within the economy as a whole.

The book includes discussion of recent empirical evidence on the U.S. health system and can be used for an undergraduate course on U.S. health economics. It also contains sufficient material for an undergraduate or masters course on global health economics, or for a course on health economics aimed at health professionals. It includes a chapter on nurses as well as a chapter on the economics of hospitals and pharmaceuticals, which can be used in master’s courses for students in these fields. It supplements its analysis with readings (both classic and current), extensive references, links to Web sites on policy developments and public programs, review and discussion questions, and exercises.

A Student Solutions Manual provides answers to the odd-numbered exercises. Separately, downloadable supplementary material for instructors includes answers to all exercises and slides that can be used for class presentation.

About the Authors

Frank Sloan is J. Alexander McMahon Professor of Health Policy and Management and Professor of Economics at Duke University. A leader in the field of health economics for more than thirty years, he is coauthor of The Price of Smoking (2004) and Medical Malpractice (2008) and coeditor of Incentives and Choices in Health Care (2008), all published by the MIT Press.

Chee-Ruey Hsieh is a Research Fellow at the Institute of Economics, Academica Sinica, Taiwan, and the coeditor of three previous books on the economics of health care.

Health Economics
Health Economics
By Frank A. Sloan and Chee-Ruey Hsieh
The MIT Press
Cambridge, Massachusetts • London, England
©
2012
Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.
MIT Press books may be purchased at special quantity discounts for business or sales promotional use. For information, please email special_sales@mitpress.mit.edu or write to Special Sales Department, The MIT Press, 55 Hayward Street, Cambridge, MA 02142.
This book was set in Melior and MetaPlus by Toppan Best-set Premedia Limited. Printed and bound in the United States of America.
Library of Congress Cataloging-in-Publication Data
Sloan, Frank A.
Health economics / Frank A. Sloan and Chee-Ruey Hsieh.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-262-01676-6 (hardcover : alk. paper)
1. Medical economics. I. Hsieh, Chee-Ruey. II. Title.
RA410.S55 2012
338.4′73621—dc23
2011032823
10 9 8 7 6 5 4 3 2 1
Brief Table of Contents
Preface
Acknowledgments
Chapter 1 Introduction and Overview
Part I Demand for Health, Health Care, and Insurance
Chapter 2 Health and Health Behaviors
Chapter 3 Demand for Health Care Services
Chapter 4 Demand for Private Health Insurance
Part II Supply of Health Care Services and Insurance
Chapter 5 The Market for Physicians’ Services
Chapter 6 Hospitals
Chapter 7 Quality of Care and Medical Malpractice
Chapter 8 Nurses in Hospital and Long-Term Care Service
Chapter 9 Pharmaceutical Manufacturers
Chapter 10 The Supply of Private Health Insurance
Part III Market Structure in the Health Care Sector
Chapter 11 Private Financing of Health Care Services
Chapter 12 Government Financing and Private Supply
Chapter 13 Public Supply and Financing
Part IV Performance of the Health Care Sector: Positive and Normative Aspects
Chapter 14 Cost and Cost-Effectiveness Analysis
Chapter 15 Measuring Benefits and Cost-Benefit Analysis
Chapter 16 The Contribution of Personal Health Services to Longevity, Population Health, and Economic Growth
Chapter 17 Frontiers of Health Economics
Index
Contents
Preface
Acknowledgments
Chapter 1 Introduction and Overview
1.1 Health Economics as a Field of Inquiry
The Importance of Health Economics
The Growth of Health Economics
1.2 Factors Accounting for the Growth of Health Economics
Improvements in Health and Longevity
Expansion of Health Sectors
1.3 Important Institutional Features of Health Care
Health Insurance
Externalities and Government Intervention in Health Care Services Provision
Asymmetric Information between Consumers and Suppliers of Health Care and the Institutional Responses
1.4 Government Intervention in Health Care Markets
Government’s Roles in Achieving an Equitable Distribution of Resources
The Equity-Efficiency Quandary and Government’s Role
Government’s Role in Correcting Market Failures
1.5 The Book’s Four Parts: A Road Map
Structure of the Book
Part I Demand for Health, Health Care Services, and Insurance
Part II Supply of Health Care Services and Insurance
Part III Market Structure in the Health Care Sector
Part IV Performance of the Health Care Sector: Positive and Normative Aspects
1.6 Conclusion
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Part I Demand for Health, Health Care, and Insurance
Chapter 2 Health and Health Behaviors
2.1 Rationality and Other Economic Assumptions
2.2 Health Production Functions
The Concept
Health Stocks and Flows
2.3 The Demand for Health: Health as a Capital Stock
Evolution of a Person’s Health over Time
Demand for Health and for Medical Care
Predictions of the Grossman Model
A Reduction in the Price of Medical Care
An Increase in the Individual’s Wage Rate
An Increase in the Individual’s Age
An Increase in the Individual’s Educational Attainment
2.4 Measuring Health Capital
Mortality
Quality-of-Life Rating Scales
Quality of Life Derived from Trade-off Questions
2.5 Adding Uncertainty: Decision Trees, Backward Induction, and Decision Making under Uncertainty
A Realistic Application: A Pediatrician’s Decision about Ordering a Throat Culture
Errors in Diagnostic Tests
2.6 Consumer Choices about Health Behaviors: A General Framework
Unhealthy Behaviors
The Concept of Present Value
Fundamental Underlying Assumptions
Assumptions: Rational, Forward-Looking, and Time Consistency Described
Ex Ante Expectations and Decisions, Ex Post Realizations, and Revising Expectations from Learning
Is the Economic Framework of Health Behavior Decision Making Plausible?
Economic Evidence on Health Behaviors and Public Policy Implications
2.7 Frontier Issues: The Behavioral Economics Critique—Theory and Evidence
2.8 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
2A Application to Decision to Start and Stop Smoking
References
Chapter 3 Demand for Health Care Services
3.1 Basic Economic Concepts of Demand
3.2 Demand in the Context of Health Insurance Coverage
3.3 The Concept of Time Price
3.4 Empirical Studies of Demand
Data Used in Demand Studies
Observational Data
Randomized Controlled Trials
Natural Experiments
The RAND Health Insurance Experiment
The Research Issues
HIE Study Design
HIE Results
Effects of Deductibles
Cost Sharing: Greater Effect on Demand for Low-Income Than High- Income Families?
Income Effects on Demand for Care
Effects of Capitation on Use of Services
Other Empirical Evidence on the Effect of Price on the Quantity Demanded
Empirical Evidence on the Effects of Health Insurance on Demand in a Low- Income Country
3.5 Welfare Analysis
3.6 Other Determinants of Demand for Personal Health Care Services
3.7 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 4 Demand for Private Health Insurance
4.1 Relationships among Health, Health Insurance, and the Use of Personal Health Care Services
4.2 Insurance Concepts and Terminology
First-Party and Third-Party Insurance
Pecuniary and Nonpecuniary Loss
The Price of Insurance
4.3 Diminishing Marginal Utility of Wealth and the Demand for Insurance
Utility of Wealth
Expected Utility
4.4 Model of Demand for Insurance
The Basic Model
Effects of Shifts in the Utility Function, Changes in Θ, and in Changes in
L
Shifts in the Utility Function
Change in Probability of Incurring a Loss (Becoming Sick)
Change in the Magnitude of the Loss Conditional on a Loss (Becoming Sick)
The Risk-Lover Case
Implications of Theory: Determinants of Demand for Insurance
The Premium of a Health Insurance Policy
4.5 Empirical Issues
Why Do the Probability and Magnitude of the Loss Vary?
Why Income Affects Demand for Insurance
4.6 Health Insurance and Welfare: The Deadweight Loss of Excess Insurance Revisited
4.7 Role of Tax Subsidies in Demand for Health Insurance
4.8 Adverse Selection
How Adverse Selection May Arise in Health Insurance Markets
Adverse Selection and Unraveling in Insurance Markets
Adverse Selection and Unraveling: The Case of Harvard University
Empirical Evidence on Adverse Selection in Private Health Insurance Markets
4.9 “Risk Adjustment” and Adverse and Preferred Risk Selection
4.10 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Part II Supply of Health Care Services and Insurance
Chapter 5 The Market for Physicians’ Services
5.1 Medical School Capacity and Concepts of Physician Shortage and Surplus
5.2 Physician Supply in the Long Run
Choice of Medicine as a Career
Physician Choice of Specialty
Concept of Present Value
Concept of Internal rate of Return
Physician Geographic Location Decisions
The Economics of Physician Group Practice
Economies of Scale and Scope
Referrals
Coverage of Patients
Reduction in Earnings Fluctuations
Empirical Evidence
5.3 Physicians’ Short-Run Decisions
Overview
Reconciling Stylized Facts of the Physicians’ Services Market with Standard Economic Models
Why the Demand Curve Facing the Individual Physician May Be Downward Sloping
Why Are Physicians’ Fees Often Higher in Markets with More Physicians?
Practice Input Price Differences
The Pauly-Satterthwaite Model
The Quality-Amenities Model
Summing Up
Reconciling Stylized Facts of the Physicians’ Services Market with Standard Economic Models: Fees Set Administratively
Quantity Increases with Administered Price Decreases
Backward-Bending Supply Curve of Physicians
Other Empirical Evidence on the Effects of Administered Price Reductions on Volume of Physician Services
Summing Up
Reconciling Stylized Facts of the Physicians’ Services Market: Other Models
Target Income and Supplier-Induced Demand
Empirical Findings on TI and PID
Public Policy Implications If PID Is Supported by Empirical Evidence
5.4 Price Discrimination
Background
Theory
Empirical Evidence
5.5 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 6 Hospitals
6.1 Context
6.2 Alternative Models of Hospital Behavior
The Profit-Maximizing Hospital: The Base Case
A Model of a Private Not-for-Profit Hospital
The Model’s Basics
Effects of Exogenous Changes in Wage Rates, Population Size, Fraction of Persons with Health Insurance Coverage, and Subsidies of Hospitals
The Pauly-Redisch Model of the Not-for-Profit Hospital as a Physicians’ Cooperative
Physician-Hospital Organizations
Summing Up
6.3 Hospital Ownership and Performance
Why Are For-Profit Hospitals a Minority?
Fiduciary Relationships and Complex Output
Noncontractible Quality
Public Goods
Implicit Subsidies
Explicit Subsidies
Cartels
Low Profits
Empirical Evidence on Hospital Ownership and Performance
Allegations against For-Profit Hospitals
Empirical Analysis of the Effects of Ownership on Hospital Performance
Reviews of the Literature on the Effects of Ownership on Hospital Performance
6.4 Regulation of Hospitals
Context
Retrospective Cost Reimbursement
Regulatory Responses
Entry Regulation
Price-Revenue Regulation and Prospective Payment
6.5 An Alternative to Regulating Hospitals: Increasing Competition among Hospitals
Description
Empirical Evidence on the Effects of Competition under the New Regime
Empirical Evidence on the Effects of Increased Competition on Hospital Quality
6.6 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 7 Quality of Care and Medical Malpractice
7.1 Markets and Market Failure
7.2 Characteristics of Health Care Quality
How Economists View Quality
How the Quality of Personal Health Care Services Is Measured
7.3 Adverse Events and Negligent Injuries
The Issues
How the Estimates of Adverse Outcomes Were Generated
The Quality of the Estimates
Do Observed Rates of Medical Errors and Adverse Outcomes Represent a Market Failure Justifying Government or Other Intervention?
7.4 Supply-Side Quality-of-Care Safeguards and Government Oversight and Regulation
Overview
Professional Norms
Peer Review
Licensure
Certification
7.5 Mandatory Error Reporting
Description
Implications
7.6 Tort Law as a Mechanism for Improving Patient Safety and Health Care Quality
Why Other Quality Assurance Mechanisms May Fail
The ABCs of Tort Law
Tort Law Defined
The Socially Optimal Injury Rate
The Negligence Rule: Only One of Several Alternative Liability Rules
Contracts versus Torts
When the Negligence Rule Leads Private Parties to Select a Socially Optimal Precaution Level
Tort Liability under Attack
7.7 Medical Malpractice
Overview
Medical Care Market
Legal Market
7.8 Does the Threat of Medical Malpractice Suits Deter Iatrogenic Injuries?
7.9 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 8 Nurses in Hospital and Long-Term Care Service
8.1 Labor Markets for Nurses Worldwide
8.2 Supply of Nurses: Too Many or Too Few?
Economic Concepts of Surplus and Shortage
Role of Public Regulation
Role of Monopsony Power
8.3 Empirical Estimates of Nurses’ Response to a Wage Change
8.4 Nonwage Determinants of the Nurse Labor Supply
8.5 Nurses in the Production of Hospital Services
Do Higher Nurse-to-Patient Ratios Improve the Quality of Hospital Care?
Public Policy Responses
8.6 Nurses in the Production of Nursing Home Services
Overview
Effects of Economic Factors on Nurse Staffing and Mix
Effects of Nurse Staffing Levels and Mix on Patient Outcomes
Implications for Public Policy
8.7 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 9 Pharmaceutical manufacturers
9.1 Companies’ Decisions about Investments in R&D
Basic Facts of the Pharmaceutical R&D Process
The Optimal Investment Decision from a Pharmaceutical Company’s Vantage Point
Incentives for Pharmaceutical Innovation
Pull Incentives
Push Incentives
Combination of Pull and Push Incentives
Disincentives for Pharmaceutical Innovation
9.2 Pricing of New Drugs
Rationale for Patents and Public Policy Trade-offs
Pricing New Drugs: Empirical Evidence
9.3 Entry of Generic Drugs and Its Consequences
Competition between Generic and Brand-Name Drugs
Factors Affecting Generic Competition
Consequences of Generic Competition
9.4 Advertising
Companies’ Incentives to Allocate Funds to Marketing
Composition of Pharmaceutical Company Marketing
Detailing and Its Effects
Direct-to-Consumer Advertising and Its Effects
9.5 International Pricing
Cross-National Price Differentials
The Consequences of Differential Pricing
Ramsey Optimal Pricing
Empirical Evidence on Ramsey Pricing of Pharmaceuticals
9.6 Developing New Drugs: Rare Diseases and Diseases Prevalent in Low- Income Countries
Rewards as a Substitute for Patents: Overview
Specific Proposals
Advance Purchase Commitments
Optional Rewards Based on Therapeutic Effect
Priority Review Voucher
9.7 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 10 The Supply of Private Health Insurance
10.1 The ABCs of the Business of Insurance
Functions of Insurers
Risk Bearing
Marketing and Underwriting
Claims Processing
Loss Prevention
Measuring the Financial Strength of Insurers: An Insurer’s Income Statement and Balance Sheet
Income Statement
Balance Sheet
Insurerers’ Cash Flow, Income from Investments, and Premium Setting
Timing of Insurers’ Revenue and Expenses
Investment Income
Higher Investment Income Leads to Lower Premiums on the Underwriting Side of an Insurer’s Business
Reinsurance
Underwriting Cycles
10.2 Are Insurers’ Premiums and Returns Excessive?
10.3 Private versus Public Provision of Health Insurance Coverage
The Case for and against Relying on Private Health Insurance for Provision of Coverage to a Population
10.4 Employer-Based Private Health Insurance Coverage
Advantages of Employer-Based Coverage
Who Really Pays for Employer-Based Health Insurance Coverage?
10.5 Government Regulation of Private Health Insurance
Rationale for Government Regulation
Insurance Mandates: A Form of Private Regulation of Private Health Insurance
Community Rating
Managed Care Defined
The Effect of Managed Care on Market Structure and Providers’ and Patients’ Incentives
Managed Care and Health System Performance
Overview
Effects of Managed Care on Spending on Personal Health Care
Effects of Managed Care on Diffusion of Technology
The Backlash against Managed Care
Private Health Insurance and Universal Health Insurance Coverage
10.6 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Reading
Supplemental Readings
References
Part III Market Structure in the Health Care Sector
Chapter 11 Private Financing of Health Care Services
11.1 Rationale for Health Systems Analysis
11.2 Classification of Health Care Systems
11.3 Cash Systems
Overview
The Indian Health Care System
The Chinese Health Care System
11.4 The Private System: The US Experience
Base Case: Private Provision and No Insurance Coverage
Evolution of Private Health Insurance in the 1930s and 1940s
11.5 The Managed Competition Model
11.6 Comparisons between Single- and Multiple-Payer Systems
Cost Shifting
Patient Selection
Spillover Effects
11.7 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Readings
Supplemental Readings
References
Chapter 12 Government Financing and Private Supply
12.1 The Role of Government as a Payer: Rationale for the Public Provision of Health Insurance
Universal Coverage, Social Insurance, and Means-Tested Insurance
Arguments of Advocates for the Public Provision of Health Insurance
Choices in the Design of Public Payment Systems
12.2 Evolution and Structure of the Payment System: German Statutory Health Insurance
12.3 Evolution and Structure of the Payment System: The US Medicare Program
Background
Hospital Payment under Medicare: The Medicare Prospective Payment System
Physician Payment under Medicare: Fixed Fees Based on a Resource- Based Relative Value Scale
Effects of Medicare
Technological Change
Population Subgroups
Population Health
12.4 Evolution of Payment Systems: The US Medicaid Program
Background
Choice of Medicaid Benefits versus Self-Insurance versus Private Insurance
Empirical Evidence on Medicaid Fee Schedule
Medicaid and Nursing Home Care
12.5 Evolution of Payment Systems: Canada’s Medicare
Background
Effects of the Canadian Medicare Program
Patient Waiting Time to Receipt of Care
Use of Costly Procedures
Disparities in Health and in the Use of Services
12.6 Evolution of Payment Systems in Asian Countries on the Pacific Rim
Background
Japan
South Korea
Taiwan
Effects of Universal Health Insurance
12.7 The Public Health Insurance Program in Rural China
Background
Effects of the NCMS
12.8 Discussion and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 13 Public Supply and Financing
13.1 The Rationale for Public Provision of Health Care
The Role of Transaction Costs
Noncontractible Outcomes Revisited
Redistributive Concerns
13.2 Public Provision in High-Income Countries in Practice
The United Kingdom's National Health Service
Overview
Rationing by Queues Rather Than by Prices
Non-price Rationing: Pros and Cons
Empirical Evidence on the Costs of Waiting Lists
The NHS Internal Market
Australia
Overview
Empirical Evidence
13.3 Public Provision of Personal Health Care Services in Other Countries
High-Income Countries
Middle- and Low-Income Countries
Dominance of Public Ownership Form
Evidence on Quality of Care
Public Policy Options for Improving Quality of Care
Empirical Evidence on Effects of Interventions to Improve Quality of Care
13.4 Evaluation and Comparison of Health Care Systems
Comparisons Based on Intermediate Performance Measures
Access
Cost
Quality
Comparisons Based on Two Performance Goals
Efficiency
Equity
13.5 Summary
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Part IV Performance of the Health Care Sector: Positive and Normative Aspects
Chapter 14 Cost and Cost-Effectiveness Analysis
14.1 Overview of Cost-Effectiveness and Cost-Benefit Analysis
14.2 Cost-Effectiveness Analysis: Measuring Cost
Overview
Concept of Opportunity Cost
Direct and Indirect Costs
Other Cost Concepts
Transfer Costs
Future Costs
Sunk versus Incremental Costs
Joint Costs/Joint Production
Cost from Alternative Perspectives
14.3 Cost-Effectiveness Analysis: Measuring Effectiveness
Effectiveness versus Efficacy
Endpoints
Evaluating the Marginal Effect of Specific Technologies
Goal of Evaluation
Transition Probabilities
Markov Chains
Obtaining Transition Probabilities from Observational Data
Discounting
Rationale for Discounting
Determining the Appropriate Discount Rate: Financial versus Health Discount Rates
Computing a Cost-Effectiveness Ratio
14.4 Applications of Cost-Effectiveness Analysis
Disease Prevention
The Experience of a US State, Oregon
Cost-Effectiveness of Thrombolytic Therapy for Acute Myocardial Infarction
Cost-Effectiveness of HIV Treatment in Low-Income Settings
Cost-Effectiveness of Screening for Cervical Cancer in Low-Income Settings
14.5 Use of Economic Evaluation in Practice: Conclusions and Implications
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 15 Measuring Benefits and Cost-Benefit Analysis
15.1 Measuring Benefits in Cost-Benefit Analysis: A Review
15.2 The Revealed Preference Approach
Objective
Underlying Assumptions
Evidence from Labor Markets
Value of a Statistical Life
An Application of the Revealed Preference Approach: Cigarette Smokers as Job Risk Takers
15.3 The Stated Preference Approach
Contingent Valuation
Stated Choice or Attribute-Based Methods
Contingent Behavior or Contingent Activity Questions
Assessing the Validity of Stated Preference Measures
Stated Preference Method Application 1
Stated Preference Method Application 2
Theory: Risk-Dollar Trade-offs
Theory: Risk-Risk Trade-offs
Surveys of WTP to Avoid Intangible Loss of Multiple Sclerosis
Results
Implications
Stated Preference Application 3: Benefits and Costs of Cholera Vaccination
Background and Study Rationale
Program Benefit and Cost
Measuring Private Benefit to the Vaccinated
Use of Stated Preference Method to Measure Vaccine Demand
Measuring Private Benefit to the Unvaccinated
Measuring Savings in Public Health Expenditures Attributable to the Vaccine Program
Some Key Findings
15.4 Use of Cost-Benefit and Cost-Effectiveness Analysis in Public Decision Making
15.5 Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 16 The Contribution of Personal Health Services to Longevity, Population Health, and Economic Growth
16.1 The Link between Health and Economic Sectors
Overview
The Relationship between Improved Health and Longevity and Economic Growth
16.2 Effects of Health Care Financing on National Economies
Savings Behavior
Labor Market Outcomes
Welfare Loss of Taxation
16.3 Secular Trends in Determinants of Health Inputs and Outputs
Secular Trends in Expenditures on Personal Health Care Services
Determinants of Personal Health Care Expenditures
Secular Trends in Health Outcomes
Determinants of Mortality
16.4 Contributions of Personal Health Care Services to Improved Population Health
Conceptual Framework
Empirical Evidence from Cross-Sectional Studies
Overview of Analytic Approaches
The Disease Approach
The Proxy Variable Approach
The Accounting Method
16.5 Contribution of Improved Health to Economic Growth
Direct Effect on Productivity
Indirect Effects Operating through Fertility, Education, and Saving
Other Indirect Effects
Contested Issues
16.6 The Health Sector as a Job Machine
16.7 Economic Growth and Disease Patterns
16.8 Summary and Conclusions
Key Concepts
Review and Discussion Questions
Exercises
Online Supplemental Material
Supplemental Readings
References
Chapter 17 Frontiers of Health Economics
17.1 Rational versus Irrational Decision Making in Health Care
17.2 Information, Asymmetric Information, and Its Effects
How People Obtain Information
17.3 Industrial Organization of the Health Care Sector
Principal-Agent Issues: Physicians
Pay for Performance
Competition among Hospitals
17.4 Competition versus Public Regulation versus Public Ownership in Health Care
17.5 Clinical Decision Making
17.6 Final Word
Key Concepts
Review and Discussion Questions
Supplemental Readings
References
Index

Endorsements

"Health Economics is Sloan and Hsieh's magnum opus, in which they share with readers their exceptionally broad and rich understanding of all aspects of the field. There are very few people who could have written this book, and among them very few who would have been willing to expend the time and effort to synthesize decades of research and make it all clear and accessible. This textbook is a gift to the next generation of health economists."
John Cawley, Professor of Policy Analysis and Management, Professor of Economics, and Co-Director of the Institute on Health Economics, Health Behaviors and Disparities, Cornell University

"Sloan and Hsieh fluidly integrate the basic insights from economics into the study of health care and health care financing, while incorporating new developments in medical decision-making analysis and behavioral economics. Many students in the U.S. come to health economics with an interest in global health issues, and they will see here international application of the main principles. An excellent first textbook in health economics."
Thomas McGuire, Department of Health Care Policy, Harvard Medical School

"This comprehensive book covers virtually every aspect of health economics. The book can be used in a highly successful manner in courses for undergraduate economics majors and minors, as well in those for undergraduates and graduate students with little background in the discipline. Moreover, given its wide-ranging discussions of practically all of the recent literature, it is a key supplementary text for graduate courses in health economics. Bravo for this tour de force of the field!"
Michael Grossman, Distinguished Professor of Economics, City University of New York Graduate Center; Health Economics Program Director, National Bureau of Economic Research

"Health Economics is likely to be the new standard. The exposition is accessible and engaging. The economic content is deep as well as broad, and will serve the needs of both advanced students and economics novices."
John A. Romley, Price School of Public Policy, University of Southern California; Economist, Leonard D. Schaeffer Center for Health Policy and Economics; Managing Editor, Forum for Health Economics & Policy

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