Trinity College

The aim of this course is to apply economic theory to the study of health and healthcare. We will use the tools of economic analysis that you have developed during the course of your economics major to understand more fully the decisions of consumers and industry actors in the healthcare sector. The course readings will combine the classic writings of health economists with a focus on current issues in health economics.

Our investigation will begin with an examination of individual decisions to invest in health capital and the implications of this classic model for rational addiction and risky behavior. We will then tackle information issues in the health care market: asymmetric information (adverse selection & moral hazard) and imperfect agency. Third, we will examine technical assessment and its use in medical care rationing. The remainder of the course will be devoted to the study of issues in the news today: epidemics and their macroeconomic implications, health care reform, and the role of government in health care. We will end with topics selected by the participants.

Required Texts: The following texts are available at the bookstore (both should be paperback).

Dranove, David. 2000. The Economic Evolution of American Health Care. Princeton University Press.

Ubel, Peter A. 2001. Pricing Life: Why It’s Time for Health Care Rationing. MIT Press.

All other readings will be available on a Blackboard page for this course (also available in a packet from Erika for $37)

Recommended Text: Folland, Sherman, Allen C Goodman & Miron Stano. 2001. The Economics of Health & Healthcare, 3^rd edition. This book is currently used in Economics 217. If you have taken that course it isn’t necessary to buy this book.

Grading

Class Attendance and Discussion: 35%

Attendance and participation in class discussion are essential for the success of a seminar course. Students must come to class prepared, having read the material and outlined the key conclusions, arguments and evidence presented in each reading. There will be no excused absences. Each missed class will lower your grade.

Seminar Leadership 10%

Each student will be asked to lead the seminar at least once. Your job will be to lead the group through a discussion (not a lecture) of the assigned readings and make sure that the key points are understood by all. You are expected to facilitate discussion, but not to be the final authority on the issue. This works best if you come prepared with discussion questions over the material.

Short Essays* 15%

At the end of each of the first three units, each student will prepare a short essay (5-8) pages integrating the economic theory & applications we have examined. The essay will be due the following class period.

Research Project* 40%

This fall we will be working with the Connecticut Agency for Human Services (CAHS) and Trinity Center for Neighborhoods(TCN) to research issues of importance to Hartford & Connecticut Health policy. These groups will provide us with a list of research questions and some ideas on where to begin. We will spend the semester investigating the issues and give a public presentation at the end of the course.

· Representatives from each organization and from the library will visit class to discuss research topics.

o September 13: Jim Horan & Amy Sampson from CAHS

o TBA: Alta Lash of TCN

o TBA: Research Librarians (meet in library)

· Papers should be substantial (30+) pages.

· You may choose to work in pairs to complete your project.

· For the purpose of this course, you are serving as an analyst not an advocate. You will be graded on the soundness of your economic application, not the answer it generates.

· Where appropriate, students may continue the research project into the spring semester, either as an advocate working with TCN or to do a more complete economic analysis as an independent project for economics credit.

Group formation & general topic selection October 4

Brief description of topic & bibliography October 18

Draft for professor November 22

Draft for distribution to the class November 29

presentations December 6

Final draft incorporating class comments December 15

*These portions of the course are subject to a “Fatal Errors Policy” (see below).

Course Policies:

· A grade of incomplete will be given only in the case of a confirmed medical excuse & in accordance with College regulations.

· No late papers will be accepted. Any papers turned in after the specified time period will get an F.

· Students are expected to be familiar with the rules and regulations of The College in the Handbook. Any student who commits academic dishonesty by violating the prohibitions listed in the Handbook will have earned a failing grade for this course & may be subject to further sanctions as determined by the Academic Affairs Committee.

· Class discussion is essential for a successful seminar. There will be no excused absences. Each missed class will lower your grade.

· Cell phone interruptions will not be tolerated. If your cell phone rings during class you will be asked to leave & will be counted absent for the day.

· We will take a short break halfway through the seminar. Individual breaks are prohibited, except for emergencies. If you leave during discussion, you will be counted absent for the day.

· Fatal Error Policy: Papers with more than three fatal errors marked by the instructor on any page or more than 10 (30 for your research project) for the entire document will be returned to the student ungraded. The paper may be resubmitted for grading no later than the next class period. Resubmitted papers will be penalized one full letter grade. Papers that are returned twice for excessive fatal errors cannot receive a grade higher than an F. Fatal errors include:

o Each different word misspelled;

o Sentence fragments;

o Run-on sentences and comma splices;

o Mistakes in capitalization;

o Serious errors in punctuation that would inhibit understanding;

o Errors in verb tense or subject and verb agreement;

o Lack of conformity with assignment format;

o Other serious grammatical errors; and

o Improper citation.

Rationale: This policy is instituted in the belief that as graduates of Trinity College you must be able to communicate effectively. The fatal error policy is part of the process of developing appropriate written communications skills. As seniors, you should have mastered the mechanics of writing. This policy allows us to focus on content, presentation and building an argument rather than careless writing errors. Please note that the Writing Center is available for help and you are encouraged to form writing groups to proof read each other’s papers.

Course Outline:

September 6: Introduction to the Course & Micro review

Folland et al. Chapters 1-3

Topic 1: Consumer Decisions in Health

September 13: Production of Health – Human Capital & Rational Addiction Models

Jim Horan & Amy Sampson from Connecticut Agency for Human services will visit class to discuss research topics.

Wagstaff, Adam. 1986. “The Demand for Health: Theory and Applications.” Journal of Epidemiology & Community Health, 40(1):1-11.

Goodman, Allen C., Miron Stano & John M. Tilford. 1999. “Household Production of Health Investment: Analysis and Applications.” Southern Economic Journal, 65(4):791-806.

Suggested Reading:

Folland et al. Chapter 6

September 20: Application: Smoking & Policy

Stevenson, Richard. 1994. “Harm Reduction, Rational Addiction, and the Optimal Prescribing of Illegal Drugs.” Contemporary Economic Policy, 12: 101-108.

Gruber, Jonathan, and Jonathan Zimman. 2000. “Youth Smoking in the United States: Evidence and Implications.” Chapter 2 in Jonathan Gruber (ed), Risky Behavior among Youths.

Gruber, Jonathan, and Sendhil Mullainathan. 2002. “Do Cigarette Taxes Make Smokers Happier?” NBER Working Paper #8872.

Adler, Nancy E. and Katherine Newman. 2002. “Socioeconomic Disparities in Health: Pathways and Policy. Health Affairs, 21(2): 60-76.

Gruber, Jonathan. 2002. “The Economics of Tobacco Regulation.” Health Affairs, 21(2): 146-162.

Suggested Reading:

Folland et al. Chapter 25

September 27: Focus on Paper topics

This day is reserved for paper topic issues. The date may change or the time may be split between more than one day.

Topic 2: The Healthcare Industry

October 4 : Information Issues

Arrow, Kenneth. 1963. “Uncertainty and the Welfare Economics of Medical Care.” American Economic Review, 25: 242-262.

Dranove, David. The Economic Evolution of American Health Care. Chapter 1.

Pauly, 1968, “The Economics of Moral Hazard: comment.” American Economic Review, 58: 531-7.

Akerlof, George A. 1970. “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.” Quarterly Journal of Economics, 84: 488-500.

Thom, David H., Mark A Hall, and L. Gregory Pawlson. 2004. “Measuring Patients’ Trust in Physicians When Assessing Quality of Care.” Health Affairs, 23(4): 124-132.

Suggested Readings:

Folland et al Chapters 9 & 10 & pp.296-99

Also see special issue of Journal of Health Politics, Policy and Law devoted to the Arrow paper (October 2001). This journal is available through Project Muse on TOR.

October 11 : No Class - Trinity Days

October 18: Managed Care

Dranove, David. The Economic Evolution of American Health Care.

Kolata, Gina. 2002. “More May Not Mean Better In Health Care, Studies Find.” New York Times, 7/21: 1.

Suggested Readings:

Folland et al. Chapter 11 & 12.

October 25: Quality

Institute of Medicine, 2001. To Err is Human: Building A Safer Health System, Chapters 2 & 3.

Institute of Medicine, 2001. Crossing the Quality Chasm: A New Health System for the Twenty-First Century. Chapters 1 & 2.

Newhouse, Joseph P. 2002. “Why is there a Quality Chasm?” Health Affairs, 21(4):13-25.

Sage, William M. 2004. “The Forgotten Third: Liability Insurance and the Medical Malpractice Crisis.” Health Affairs, 23(4):10-21.

Liebman, Carol B. and Chris Stern Hyman. 2004. “A Mediation Skills Model to Manage Disclosure of Errors and Adverse Events to Patients.” Health Affairs, 23(4):22-32.

Studdert, David M, Y. Tony Yang & Michelle M Mello. 2004. “Are Damages Caps Regressive? A Study of Malpractice Jury Verdicts in California.” Health Affairs, 23(4):54-67.

Davies, Huw T O, A Eugene Washington, and Andrew B Bindman. 2002. “Health Care Report Cards: Implications for Vulnerable Patient Groups and the Organizations Providing Them Care.” Journal of Health Politics, Policy and Law, 27(3):379-399.

Suggested Reading:

Institute of Medicine, 2001. To Err is Human: Building A Safer Health System.

Institute of Medicine, 2001. Crossing the Quality Chasm: A New Health System for the Twenty-First Century.

Wachter, Robert M, and Kaveh G Shojania. 2004. Internal Bleeding: The Truth Behind America’s Terrifying Epidemic of Medical Mistakes.

Lapetina, Elizabeth M. and Elizabeth M. Armstrong. 2002. “Preventing Errors in the Outpatient Setting.” Health Affairs, 21(4):26-39.

Chassin, Mark R. 2002. “Achieving and Sustaining Improved Quality: Lessons from New York State and Cardiac Surgery.” Health Affairs, 21(4):40-51.

Miller, Robert H., and Harold S Luft. 2002. “HMO Plan Performance Update: An Analysis of the Literature, 1997-2001.” Health Affairs, 21(4):63-86.

Topic 3: Technical assessment & Rationing

November 1: Technology assessment

Technical assessment

Nord, Erik, 1999. Cost-Value Analysis in Health Care: Making Sense out of QALYs. Chapters 2 & 3.

Drummond, et al. 1997. “Cost-Effectiveness Analysis.” Chapter 5 in Methods for the Economic Evaluation of Health Care Programmes.

Weinstein, Milton, C. 1995, “From Cost-Effectiveness Ratios to Resource Allocation: Where to Draw the Line?” Chapter 5 in Frank A Sloan (ed) Valuing Health Care: Costs, Benefits, and Effectiveness of Pharmaceuticals and Other Medical Technologies.

Phelps, Charles E. and Stephen T Parente. 1990. “Priority Setting in Medical Technology and Medical Practice Assessment.” Medical Care, 28(8): 703-723.

Suggested Readings:

Folland et al. Chapter 4.

November 8: Rationing

Ubel, Peter A. 2000. Pricing Life. Why it’s Time for Health Care Rationing. MIT Press. Especially chapters 1-5 & 11.

Example: Oregon

Leichter, Howard M, 1999. “Oregon’s Bold Experiment: Whatever Happened to Rationing?” Journal of Health Politics, Policy & Law, 24(1): 147-160.

Jacobs, Lawrence, Theodore Marmor, & Jonathan Oberlander, 1999. “The Oregon Health Plan and the Political Paradox of Rationing: What Advocates and Critics have Claimed and What Oregon Did.” Journal of Health Politics, Policy & Law, 24(1): 161-80.

Mitchell, Janet B. and Fred Bentley. 2000. “Impact of Oregon’s Priority List on Medicaid Beneficiaries.” Medical Care Research and Review, 57(2):216-234.

Mitchell, Janet B, Susan G Haber, Galina Khatutsky, and Suzanne Donoghue. 2002. “Children in the Oregon Health Plan: How Have They Fared?” Medical Care Research and Review, 59(2):166-183.

Suggested Reading:

Vladeck, Bruce C. 2000. “Commentary.” Medical Care Research and Review, 57(2):235-242.

Hornbrook, Mark C. 2000. “Commentary.” Medical Care Research and Review, 57(2): 243-251.

Folland et al. Chapter 19.

Topic 4: Current Topics in Health Economics

November 15: Epidemics: The World AIDS Crisis

Philipson, Thomas, 1999. “Economic Epidemiology & Infectious Disease” NBER Working Paper #7037.

Gow, Jeff. 2002. “The HIV/AIDS Epidemic in Africa: Implications for US Policy.” Health Affairs, 21(3):57-69.

Mullan, Fitzhugh. 2002. “Purple is the Color of the Future.” Health Affairs, 21(3):215-220.

McGeary, Johanna. 2001. “Death Stalks a Continent.” Time. Feb 12: 36-45

Rubin, Kyna. 2002. “The Butterfly and the Sword: AIDS in China.” Health Affairs, 21(3): 220-227.

BusinessWeek: Drug Costs

McGeary, Johanna. 2001. “Paying for AIDS Cocktails. Who Should Pick up the Tab for the Third World?” Time. Feb 12: 54.

Gaffeo, Edoardo. 2003. “The Economics of HIV/AIDS: A Survey” Development Policy Review, 21(1):27-49.

Suggested Readings:

Folland et al, Chapter 26.

November 22: The Government Role in Healthcare

Cutler, David M. 2002. “Healthcare and the Public Sector.” NBER Working Paper #8802.

Reinhardt, Uwe E. 2001. “Can Efficiency in Health Care be Left to the Market?” Journal of Health Policy Politics & the Law, 26(5)

Vogel, Ronald J. 1999. Medicare: Issues in Political Economy, Chapters 1 & 5.

Suggested Readings:

Hoffman, Earl Dirk, Barbara S Klees & Catherine A Curtis, 2000. “Overview of the Medicare and Medicaid Programs.” Health Care Financing Review, 22(1): 175-193.

Folland et al. Chapters 20 & 21.

November 29: Health Care Reform

Journal of Health Policy, Politics & Law. April 2003. Who Shall Lead? http://muse.jhu.edu/journals/journal_of_health_politics_policy_and_law/toc/jhp28.2.html

Toner, Robin. 2002. “Decade After Health Care Crisis, Soaring Costs Bring New Strains.” New York Times, August 11, page 1.

Suggested readings:

Journal of Health Politics, Policy and Law issue on MSAs: December 2001. 26(4)

Folland et al, Chapter 24.

December 6 Student presentations