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The Economics of Health and Health Care,9780131000674
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The Economics of Health and Health Care

by ; ;
Edition:
4th
ISBN13:

9780131000674

ISBN10:
0131000675
Format:
Hardcover
Pub. Date:
1/1/2004
Publisher(s):
Prentice Hall

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Summary

For courses in Health Economics, Public Health, and Health Care Policy. This clear, step-by-step best-selling introduction to the economics of health and health care thoroughly develops and explains economic ideas and models to reflect the full spectrum of the most current health economics literature. It uses core economic themes as basic as supply and demand, as venerable as technology or labor issues, and as modern as the economics of information.

Table of Contents

Preface xxiii
PART I: BASIC ECONOMICS TOOLS
1(72)
Introduction
1(19)
The Relevance of Health Economics
1(7)
The Size and Scope of the Health Economy
1(6)
The Economic Side to Other Health Issues
7(1)
Economic Methods and Examples of Analysis
8(2)
Features of Economic Analysis
8(1)
Examples of Health Economics Analysis
9(1)
Does Economics Apply to Health and Health Care?
10(1)
An Example: Does Price Matter?
10(1)
Is Health Care Different?
11(4)
Presence and Extent of Uncertainty
12(1)
Prominence of Insurance
12(1)
Problems of Information
13(1)
Large Role of Nonprofit Firms
13(1)
Restrictions on Competition
14(1)
Role of Equity and Need
14(1)
Government Subsidies and Public Provision
14(1)
New Challenges to Health Economists -- Managed Care and Health Care Costs
15(2)
Conclusions
17(1)
Summary
18(1)
Discussion Questions
18(1)
Exercises
19(1)
Microeconomic Tools for Health Economics
20(33)
Scarcity and the Production Possibilities Frontier
21(3)
Practice with Supply and Demand
24(4)
The Demand Curve and Demand Shifters
24(1)
The Supply Curve and Supply Shifters
25(1)
Equilibrium
26(1)
Comparative Statics
26(2)
Functions and Curves
28(2)
Linear Functions
28(1)
Demand Functions
28(1)
Derived Demand
29(1)
Consumer Theory: Ideas Behind the Demand Curve
30(4)
Utility
30(1)
Indifference Curves
31(1)
Budget Constraints
32(1)
Consumer Equilibrium
33(1)
Individual and Market Demands
34(1)
Elasticities
35(2)
Production and Market Supply
37(6)
The Production Function
38(1)
Production Functions
39(1)
Isocost Curves
40(1)
Cost Minimization or Output Maximization
41(1)
Marginal and Average Cost Curves
42(1)
The Firm Supply Curve Under Perfect Competition
43(3)
Monopoly and Other Market Structures
46(1)
Welfare Losses
47(1)
Conclusions
48(1)
Summary
49(1)
Discussion Questions
50(1)
Exercises
50(2)
Appendix: Discounting
52(1)
Statistical Tools for Health Economics
53(20)
Hypothesis Testing
54(1)
Difference of Means
54(5)
The Variance of a Distribution
55(1)
Standard Error of the Mean
56(2)
Hypotheses and Inferences
58(1)
Regression Analysis
59(4)
Ordinary Least Squares (OLS) Regressions
60(1)
A Demand Regression
61(1)
Estimating Elasticities
62(1)
Multiple Regression Analysis
63(4)
Interpreting Regression Coefficients
64(1)
Dummy Variables
65(2)
The Identification Problem
67(1)
Statistical Inference in the Sciences and Social Sciences
68(1)
Conclusions
68(1)
Summary
69(1)
Discussion Questions
69(1)
Exercises
70(3)
PART II: SUPPLY AND DEMAND
73(114)
The Production of Health
73(23)
The Production Function of Health
73(3)
The Historical Role of Medicine and Health Care
76(7)
The Rising Population and the Role of Medicine
76(2)
What Caused the Mortality Rate Declines?
78(1)
On the Role of Public Health and Nutrition
78(3)
What Lessons Are Learned from the Medical Historian?
81(1)
What Does Health Care Contribute in Total?
82(1)
The Production Function of Health in the Modern Day
83(8)
Preliminary Issues
83(1)
The Contribution of Health Care to Population Health: The Modern Era
84(2)
Morbidity Studies
86(1)
How Does Health Care Affect Other Measures of Health?
87(1)
On the Importance of Lifestyle and Environment
88(1)
Cigarettes and Health
89(1)
Maternal Behavior and Newborn Health
90(1)
Environmental Pollution
90(1)
Income and Health
91(1)
The Role of Schooling
91(2)
Two Different Theories About the Role of Schooling
91(1)
Empirical Studies on the Role of Schooling in Health
92(1)
Conclusions
93(1)
Summary
94(1)
Discussion Questions
94(1)
Exercises
95(1)
The Production, Cost, and Technology of Health Care
96(29)
Production and the Possibilities for Substitution
97(4)
Substitution
97(1)
What Degree of Substitution Is Possible?
98(1)
Elasticity of Substitution
99(1)
Estimates for Hospital Care
100(1)
Costs in Theory and Practice
101(9)
Deriving the Cost Function
101(2)
Cost Minimization
103(1)
Economies of Scale and Scope
104(1)
Why Would Economies of Scale and Scope Be Important?
105(1)
Empirical Cost Function Studies
106(1)
Differences Among Hospital Cost Studies
107(1)
Difficulties Faced by All Hospital Cost Studies
107(2)
The Evidence on Hospital Economies of Scale and Scope
109(1)
A Balance Between Structural and the Behavioral Studies
109(1)
Does Long Run Versus Short Run Matter?
109(1)
Summarizing These Cost Studies
110(1)
Technical and Allocative Inefficiency
110(5)
Technical Inefficiency
110(1)
Allocative Inefficiency
111(2)
Data Envelopment Analysis
113(1)
The Stochastic Frontier Method
114(1)
Stochastic Frontier Studies
114(1)
Technological Changes and Costs
115(3)
Technological Change: Cost Increasing or Decreasing?
115(1)
Health Care Price Increases When Technological Change Occurs
116(2)
The Diffusion of New Health Care Technologies
118(4)
Who Adopts and Why?
118(2)
Other Factors That May Affect Adoption Rates
120(1)
Diffusion of Technology and Managed Care
121(1)
Conclusions
122(1)
Summary
122(1)
Discussion Questions
122(2)
Exercises
124(1)
Demand for Health Capital
125(16)
The Demand for Health
125(2)
The Consumer as Health Producer
125(1)
Time Spent Producing Health
126(1)
Labor--Leisure Trade-Offs
127(2)
Trading Leisure for Wages
127(1)
Preferences Between Leisure and Income
128(1)
The Investment/Consumption Aspects of Health
129(2)
Production of Healthy Days
129(1)
Production of Health and Home Goods
130(1)
Investment over Time
131(1)
The Demand for Health Capital
131(2)
Marginal Efficiency of Investment (MEI) and Rate of Return
131(1)
The Decreasing MEI
132(1)
Changes in Equilibrium: Age, Wage, Education, and Uncertainty
133(2)
Age
133(1)
Wage Rate
134(1)
Education
134(1)
Uncertainty
135(1)
Empirical Analyses Using Grossman's Model
135(3)
Conclusions
138(1)
Summary
138(1)
Discussion Questions
139(1)
Exercises
139(2)
Demand and Supply of Health Insurance
141(22)
What Is Insurance?
141(1)
Insurance Versus Social Insurance
142(1)
Insurance Terminology
142(1)
Risk and Insurance
143(3)
Expected Value
143(1)
Marginal Utility of Wealth and Risk Aversion
144(1)
Purchasing Insurance
145(1)
The Demand for Insurance
146(3)
How Much Insurance?
146(1)
Changes in Premiums
147(1)
Changes in Expected Loss
148(1)
Changes in Wealth
149(1)
The Supply of Insurance
149(2)
Competition and Normal Profits
149(2)
The Case of Moral Hazard
151(4)
Demand for Care and Moral Hazard
151(3)
Effects of Coinsurance and Deductibles
154(1)
Health Insurance and the Efficient Allocation of Resources
155(5)
The Impact of Coinsurance
155(3)
The Demand for Insurance and the Price of Care
158(1)
The Welfare Loss of Excess Health Insurance
159(1)
Conclusions
160(1)
Summary
160(1)
Discussion Questions
161(1)
Exercises
161(2)
Consumer Choice and Demand
163(24)
Applying the Standard Budget Constraint Model
163(6)
The Consumer's Equilibrium
164(2)
Demand Shifters
166(2)
Health Status and Demand
168(1)
Two Additional Demand Shifters -- Time and Coinsurance
169(4)
The Role of Time
169(2)
The Role of Coinsurance
171(2)
Issues in Measuring Health Care Demand
173(2)
Individual and Market Demand Functions
173(1)
Measurement and Definitions
174(1)
Differences in the Study Populations
174(1)
Data Sources
174(1)
Experimental and Nonexperimental Data
174(1)
Empirical Measurements of Demand Elasticities
175(6)
Price Elasticities
175(2)
Individual Income Elasticities
177(1)
Income Elasticities Across Countries
178(1)
Insurance Elasticities
179(2)
Impacts of Insurance on Aggregate Expenditures
181(1)
Other Variables Affecting Demand
181(2)
Ethnicity and Gender
181(1)
Urban Versus Rural
182(1)
Education
182(1)
Age, Health Status, and Uncertainty
182(1)
Conclusions
183(1)
Summary
183(1)
Discussion Questions
184(1)
Exercises
185(2)
PART III: INFORMATION AND INSURANCE MARKETS
187(94)
Asymmetric Information and Agency
187(15)
Overview of Information Issues
187(1)
Asymmetric Information
188(4)
On the Extent of Information Problems in the Health Sector
189(1)
Asymmetric Information in the Used-Car Market: The Lemons Principle
190(2)
Application of the Lemons Principle: Health Insurance
192(3)
Inefficiencies of Adverse Selection
193(1)
Experience Rating and Adverse Selection
194(1)
The Agency Relationship
195(1)
Agency and Health Care
195(1)
Consumer Information, Prices, and Quality
196(3)
Consumer Information and Prices
196(1)
Consumer Information and Quality
197(1)
Other Quality Indicators
198(1)
Conclusions
199(1)
Summary
200(1)
Discussion Questions
200(1)
Exercises
201(1)
Imperfect Information: Supplier-Induced Demand and Small Area Variations
202(23)
Supplier-Induced Demand (SID)
202(3)
A Common Representation of SID
203(2)
The Benchmark Models of SID
205(5)
The Target Income Model
205(3)
A Profit-Maximizing Model
208(1)
A Synthesis of the Two Models
209(1)
What Do the Data Tell Us About Supplier-Induced Demand?
210(5)
Availability Effects
211(1)
The Identification Problem: An Algebraic Example
211(2)
Physician Fees, Fee Tests, and Fee Controls
213(1)
Empirical Evidence of Income Effects
214(1)
Information and SID
214(1)
SID and Social Welfare
214(1)
Small Area Variations (SAV)
215(2)
Measuring the Variations: The CV and the SCV
216(1)
Contributions to These Variations
217(1)
The Physician Practice Style Hypothesis
217(2)
Modeling Practice Style
217(2)
Checking the Practice Style Hypothesis Against the Data
219(3)
Education, Feedback, and Surveillance
219(1)
Comparing Utilization Rates in Homogeneous Areas
219(1)
Multiple Regression Approaches
219(1)
SAV and the Social Cost of Inappropriate Utilization
220(2)
Summary
222(1)
Discussion Questions
223(1)
Exercises
224(1)
The Organization of Health Insurance Markets
225(26)
Loading Costs and the Behavior of Insurance Firms
225(1)
Impacts of Loading Costs
226(2)
Insurance for Heart Attacks and Hangnails
227(1)
Loading Costs and the Uninsured
227(1)
Employer Provision of Health Insurance: Who Pays?
228(6)
Spousal Coverage: Who Pays?
230(1)
How the Tax System Influences Health Insurance Demand
231(2)
Who Pays -- Empirical Tests
233(1)
Other Impacts of Employer Provision of Health Insurance
233(1)
Employer-Based Health Insurance and Labor Supply
234(2)
Health Insurance and Retirement
234(1)
Health Insurance and Mobility
234(2)
The Market for Insurance
236(3)
The Market for Private Insurance
236(1)
Insurance Practices
237(1)
The Past 15 Years
238(1)
The Uninsured -- An Analytical Framework
239(5)
The Working Uninsured
241(2)
The Impacts of Mandated Coverage
243(1)
Insurance, Technological Change, and Higher Costs
244(2)
The Cost-Increasing Bias Hypothesis
244(1)
The Goddeeris Model
245(1)
Insurance, Technological Change, and Inflation: The Evidence
246(1)
Does Induced Technological Change Make the Patient Better Off?
247(1)
Conclusions
247(1)
Summary
248(1)
Discussion Questions
248(1)
Exercises
249(2)
Managed Care
251(30)
What Is the Organizational Structure?
252(2)
What Are the Economic Characteristics?
254(1)
The Emergence of Managed Care Plans
255(4)
Employer-Sponsored Managed Care
255(2)
Medicaid Managed Care Plans
257(1)
Managed Care Contracts with Physicians
257(1)
Managed Care Contracts with Hospitals
258(1)
Development and Growth of Managed Care -- Why Did It Take So Long?
259(3)
The Economics of Price Discrimination
260(2)
Barriers to Managed Care by Organized Medicine
262(1)
Federal Policy and the Growth of Managed Care
262(1)
Modeling Managed Care
262(6)
Modeling Individual HMOs
263(1)
How Much Care?
264(1)
What Types of Care?
265(1)
Framework for Prediction
265(1)
Where Managed Care Differs from FFS -- Dumping, Creaming, and Skimping
266(1)
Equilibrium and Adverse Selection in a Market with HMOs
266(2)
How Does Managed Care Differ? -- Empirical Results
268(4)
Methodological Issues -- Selection Bias and Quality of Care
268(1)
Comparative Utilization and Costs
269(1)
The Rand Study -- A Randomized Experiment
270(1)
The Most Recent Evidence
271(1)
Growth in Spending
272(1)
Competitive Effects
273(4)
Theoretical Issues
273(1)
Managed Care Competition in Hospital Markets
274(1)
Managed Care Competition in Insurance Markets
275(1)
Managed Care and Technological Change
276(1)
Conclusions
277(1)
Summary
278(1)
Discussion Questions
279(1)
Exercises
280(1)
PART IV: KEY PLAYERS IN THE HEALTH CARE SECTOR
281(96)
Nonprofit Firms
281(24)
An Introduction to Nonprofits
281(1)
Why Nonprofits Exist and Why They Are Prevalent in Health Care
282(7)
Nonprofits as Providers of Unmet Demands for Public Goods
282(4)
Nonprofits as a Response to Contract Failure
286(1)
Applications of Contract Failure to Nursing Home Care
286(1)
The Role of Physicians in the Hospital Industry
287(1)
Financial Matters and the Nonprofit
288(1)
Summary of the Reasons for the Prevalence of Nonprofits
288(1)
Models of Nonprofit Hospital Behavior
289(6)
The Quality-Quantity Nonprofit Theory
289(3)
The Hospital as a Physicians' Cooperative
292(1)
A Comparison of the Quantity-Quality and the Physicians' Cooperative Theories
293(2)
The Evidence: Do Nonprofit Hospitals Differ from For-Profit Hospitals?
295(4)
The Harris Model
296(1)
Summary of Models of Hospital Behavior
297(1)
What Causes Conversion of Nonprofits into For-Profits?
298(1)
The Relative Efficiency of Nonprofits Versus For-Profits
299(3)
Property Rights Theory and Its Application to Nonprofits
299(2)
Are Nonprofit Health Care Firms Less Efficient? -- Hospital and Nursing Home Studies
301(1)
Conclusions
302(1)
Summary
303(1)
Discussion Questions
304(1)
Exercises
304(1)
Hospitals and Long-Term Care
305(18)
Background and Overview of Hospitals
305(4)
History
306(1)
Organization
307(1)
Regulation and Accreditation
308(1)
Hospital Utilization and Costs
309(5)
Competition and Costs
310(1)
Hospital Cost Shifting
311(2)
Closures, Mergers, and Restructuring in the Hospital Industry
313(1)
Nursing Homes
314(5)
Background and Costs
314(1)
Quality of Care
315(1)
Excess Demand
316(2)
Financing Long-Term Care
318(1)
Hospice and Home Health
319(1)
Conclusions
320(1)
Summary
321(1)
Discussion Questions
322(1)
Exercises
322(1)
Health Care Labor Markets and Professional Training
323(28)
The Demand for and Supply of Health Care Labor
323(5)
Production Functions and Isoquants
324(1)
Marginal Productivity of Labor
325(1)
Factor Substitution and Labor Demand
326(1)
The Supply of Labor
327(1)
Factor Productivity and Substitution Among Factors
328(2)
Measurement of Physician Productivity
329(1)
The Efficient Utilization of Physician Assistants -- Substitution Among Inputs
329(1)
Health Manpower Availability and the Meaning of Shortages
330(6)
Availability of Physicians
330(2)
Economic Definitions of Shortages of Health Professionals
332(2)
The Role of Monopsony Power -- Shortages of Registered Nurses
334(2)
Medical Education Issues and the Question of Control
336(5)
Sources of Medical School Revenues
337(1)
Capital Market Imperfections Justify Subsidies
337(1)
Teaching Hospitals, Medical Schools, and Joint Production
337(1)
Foreign Medical School Graduates (FMGs)
338(1)
The Control of Medical Education
339(1)
Control over Entry
340(1)
Another View -- The Donor Preference Hypothesis
341(1)
Licensure and Monopoly Rents
341(4)
Public Interest or Self-Interest
342(1)
Licensure and Quality
343(2)
Physician Pricing, Transfer Pricing, and Price Discrimination
345(3)
Managed Care and the Physician
347(1)
Conclusions
348(1)
Summary
348(1)
Discussion Questions
349(1)
Exercises
350(1)
The Pharmaceutical Industry
351(26)
Structure and Regulation
353(4)
Competition
354(1)
Barriers to Entry
355(1)
Regulation
356(1)
The Production of Health and Substitutability
357(4)
Least-Cost Production
358(1)
Insurance and Substitutability
359(1)
Technological Change
360(1)
Drug Pricing and Profits
361(5)
Monopoly Pricing
362(1)
Price Discrimination
363(2)
Behavior Other Than Profit-Maximizing Behavior
365(1)
Monopsony Pricing and Price Controls
365(1)
Competition and Generic Entry
365(1)
R&D and Innovation
366(4)
Investment Decisions
367(1)
R&D Spending
368(1)
Firm Size and Innovation
368(1)
Mergers and Acquisitions
369(1)
Cost Containment
370(2)
Copayments
370(1)
Generic Substitutes
371(1)
Drug Formularies
371(1)
Conclusions
372(1)
Summary
373(1)
Discussion Questions
374(1)
Exercises
374(3)
PART V: SOCIAL INSURANCE
377(140)
Equity, Efficiency, and Need
377(24)
Efficiency and Competitive Markets
378(5)
The Concept of Pareto Efficiency (Optimality)
378(2)
The Idea of Trading Along the Budget Line
380(1)
The Competitive Equilibrium
380(1)
The First Fundamental Theorem of Welfare Economics
381(1)
Redistribution of the Endowment
381(1)
Price Discrimination
382(1)
Okun's Leaky Bucket
383(1)
Deviations from the Competitive Model in the Health Care Sector
383(2)
The Assumptions Under Perfect Competition
383(2)
Promoting Competition in the Health Care Sector
385(1)
The Theorem of the Second Best
385(1)
An Economic Efficiency Rationale for Social Programs in Health Care Based on Externalities
386(2)
Need and Need-Based Distributions
388(5)
Health Care Needs and the Social Welfare Function
389(2)
Norman Daniels's Concept of Health Care Need
391(2)
Horizontal Equity and Need
393(2)
How to Compare Horizontal Equity Among Countries
394(1)
The Results
394(1)
Theories of Social Justice
395(3)
Utilitarianism
395(1)
Rawls and Justice as Fairness
396(1)
Nozick and Entitlement Theory
397(1)
Conclusions
398(1)
Summary
398(1)
Discussion Questions
399(1)
Exercises
400(1)
Government Intervention in Health Care Markets
401(24)
Economic Rationale for Government Intervention
401(6)
Monopoly Power
402(1)
Public Goods
403(2)
Externalities
405(1)
Other Rationales for Government Intervention
406(1)
Forms of Government Intervention
407(3)
Commodity Taxes and Subsidies
407(2)
Public Provision
409(1)
Transfer Programs
409(1)
Regulation
409(1)
Government Involvement in Health Care Markets
410(3)
Support of Hospitals
410(1)
The Hill-Burton Act
410(1)
The Veterans Administration and CHAMPUS
411(1)
Food and Drug Administration
411(1)
Mandated Health Insurance Benefits
411(1)
Tax Policy
412(1)
Public Health
412(1)
Other Government Programs
412(1)
Government Failure
413(4)
Who Does the Regulator Represent?
413(3)
Bureaucracy and Efficiency
416(1)
Competitive Strategies
417(5)
Increased Cost Sharing
418(1)
Development of Alternative Delivery Systems
419(1)
Medicare Managed Care
419(1)
Medical Savings Accounts
420(1)
Representation of the Competitive Approach
421(1)
Conclusions
422(1)
Summary
423(1)
Discussion Questions
423(1)
Exercises
424(1)
Government Regulation -- Principal Regulatory Mechanisms
425(29)
Do the Laws of Supply and Demand Apply?
425(1)
Objectives of Regulation
426(2)
Regulatory Policy
427(1)
Regulatory Instruments in Health Care
427(1)
Quality Controls
428(1)
Regulation of the Hospital Sector
428(4)
Rate Regulation, Utilization Review, and Certificate-of-Need
428(1)
Empirical Findings on Regulation
429(3)
Prospective Payment
432(1)
Description of PPS
433(1)
The Theory of Yardstick Competition and DRGs
433(7)
On the Effects of Medicare's Prospective Payment System
437(3)
Prospective Payment -- Recent Evidence
440(1)
Regulation of Physician Payment
441(2)
UCR Reimbursement, Assignment, and Alternative Payment Mechanisms
441(1)
Relative Value Scales
442(1)
Antitrust
443(7)
Enforcement
444(1)
Exemptions
444(2)
Measuring Monopoly Power
446(1)
Antitrust Procedures
447(1)
The Elzinga-Hogarty Criterion
447(3)
Conclusions
450(1)
Summary
450(1)
Discussion Questions
451(1)
Exercises
452(2)
Social Insurance
454(27)
Social Insurance Policies and Social Programs
454(2)
Program Features
455(1)
Historical Roots of Social Insurance
456(3)
European Beginnings
456(1)
Early Experience in the United States
457(1)
The Establishment of Medicare and Medicaid
458(1)
Medicare and Medicaid in the United States
459(6)
Medicare
459(3)
Medicaid Overview
462(3)
The Medicaid--Medicare Relationship
465(1)
Children's Health Insurance Program
465(1)
Public Insurance and Health
465(2)
Take Up and Crowd Out
465(2)
The Effects of Medicare and Medicaid
467(10)
Costs and Inflation
467(7)
Health Status
474(1)
Medicare -- Recent Changes and Future Prospects
475(2)
Criticisms of the American Health Care System
477(1)
Conclusions
478(1)
Summary
479(1)
Discussion Questions
479(1)
Exercises
480(1)
Comparative Health Care Systems and Health System Reform
481(36)
Contemporary Health Care Systems
481(1)
A Typology of Contemporary Health Care Systems
482(1)
National Health Programs: Three Examples
482(11)
The United Kingdom -- The National Health Service
484(3)
Germany
487(4)
South Korea
491(2)
The Canadian Health Care System
493(6)
Background
493(3)
Physician Fees and Quantity
496(1)
Why Are Fees and Hospital Costs Lower in Canada?
496(1)
Administrative Costs
496(2)
A Comparison
498(1)
Different Systems -- The Public's Evaluation
499(2)
Differences in Health Care Spending Across Countries
501(2)
A Simple Model of Health Expenditures Shares
501(1)
Applying the Model
501(1)
Cross-National Comparisons: Private Versus Public Financing Systems
502(1)
National Health Insurance
503(2)
Different Kinds of Possible National Health Insurance (NHI) Plans
503(2)
The Costs of NHI
505(1)
Ensuring Access to Care
505(2)
Individual Versus Employer Mandates
505(2)
Separation of Health Insurance from Employment
507(3)
Single Payer Versus Multiple Insurers
508(1)
Health Care Reform and International Competitiveness
509(1)
Providing Care at Lower Cost
510(2)
Medical Savings Accounts
510(1)
Managed Care and Cost Containment
511(1)
Conclusions
512(1)
Summary
513(1)
Discussion Questions
514(1)
Exercises
515(2)
PART VI: SPECIAL TOPICS
517(44)
The Health Economics of Bads
517(14)
The Health Economics of Bads: An Introduction
518(2)
Models of Addiction
518(2)
Rationales for Public Intervention
520(1)
Other Interventions
521(1)
Advertising Restrictions on Cigarettes and Alcohol
521(4)
Theories of Advertising
522(1)
The Possible Effects of Brand Switching
522(2)
Increased Demand or Brand Switching?
524(1)
Advertising and Alcohol Consumption
525(1)
Excise Taxes and Consumption: Cigarettes and Alcohol
525(3)
The Consumption-Reducing Effects of Excise Taxes in Theory
525(1)
Excise Taxes and Cigarette Consumption in Practice
526(2)
Excise Taxes and Alcohol Consumption
528(1)
Conclusions
528(1)
Summary
529(1)
Discussion Questions
529(1)
Exercises
530(1)
Epidemiology and Economics: AIDS in Africa
531(14)
Concepts from Epidemiology
531(2)
Economic Epidemiology
533(4)
Rational Epidemics
533(1)
The Prevalence Elasticity of Demand for Prevention
534(1)
The Economic Consequences of Epidemics
534(2)
The Difficulty of Eradicating Diseases
536(1)
Information
536(1)
The Role of Government in Battling Epidemics
536(1)
Case Study: AIDS in Africa
537(6)
HIV/AIDS
537(5)
Economic Theory and African Reality
542(1)
Conclusions
543(1)
Summary
543(1)
Discussion Questions
544(1)
Exercises
544(1)
The Tools of Economic Evaluations
545(16)
Cost-Benefit Analysis: Basic Principles
546(8)
Measuring Costs
546(2)
Marginal Analysis in CBA
548(1)
Discounting
548(2)
Risk Adjustment and CBA
550(1)
Distributional Adjustments
550(1)
Inflation
551(1)
Valuing Human Life
551(1)
Cost-Benefit Analyses of Disease-Screening Programs
552(2)
Cost-Effectiveness Analysis
554(2)
Advantages of CEA
554(1)
An Application: The Sixth Stool GUAIAC Test
555(1)
Cost--Utility Analysis, QALYs, and DALYs
556(1)
Conclusions
557(1)
Summary
558(1)
Discussion Questions
559(1)
Exercises
559(2)
Glossary 561(8)
References 569(32)
Name Index 601(6)
Subject Index 607

Excerpts

This is the fourth edition of a book that was conceived in 1990 and first published in 1993. To indicate how much the world of health economics has changed, the first edition made a single reference to "managed care," and that was in the context of monopoly power in the provision of health care. This book was first written to assist health economics instructors in developing a clear, step-by-step understanding of health economics for their students. We also believe that it is important for instructors to demonstrate what health economics researchers are doing in theory and in empirical work. The book synthesizes contemporary developments around a set of basic economic principles, including maximization of consumer utility and economic profit, wishing to make these principles accessible to undergraduate students, as well as to graduate students. Rather than organizing the book around the institutions specific to the health care economy, we have used core economics themes as basic as supply and demand, as venerable as technology or labor issues, and as modern as the economics of information. Moreover, we have sought to improve accessibility to the book for the wide range of health services students and practitioners whose knowledge of economics may be more limited. We have followed the philosophy that students must have a working knowledge of the analytical tools of economics and econometrics to appreciate the field of health economics. Some students may be ready to plunge directly into "The Production of Health" (Chapter 4) upon completion of the introductory Chapter 1. However, Chapter 2 ("Microeconomic Tools") and Chapter 3 ("Statistical Tools") allow the students and their teachers to develop or to review the needed analytical concepts before tackling the core subject matter. In Chapters 2 and 3, students with as little as one semester of microeconomics may review and study how economists analyze problems, using examples that are relevant to health economics. No calculus is needed. Consistent with an emphasis on clarity of exposition, this book makes extensive use of graphs, tables, and charts. Discussion questions and exercises are provided to help students master the basics and to prompt them to think about the issues. Features on up-to-date applications of theory and policy developments are also included, as well as the occasional tidbit containing purely background information. Finally, we caution that some of the chapters, such as those on insurance, although devoid of advanced mathematics, may still require considerable effort. No painless way is available to appreciate the scope of the contributions that scholars have made in recent years. More advanced students of the health care economy who wish to be challenged further can utilize a comprehensive references section, with more than 800 sources, so that their (and our) work can be enriched through referral to the original sources. WHAT'S CHANGED IN THE FOURTH EDITION? It is critical that this textbook contains the most current knowledge and addresses the needs of our readers. As with previous editions, almost every chapter is revised to incorporate significant developments in the field. In response to the instructors and students who use this book, we have made some changes in its organization. Our newly arranged Part IV identifies key players in the health care sector, with special reference to nonprofit firms (Chapter 13), hospitals (Chapter 14), physicians and labor (Chapter 15), and the pharmaceutical industry (Chapter 16). The section on social insurance and governmental actions, Part V has been moved forward to begin with Chapter 17 on equity and need, looking at governmental regulation (Chapters 18 and 19), social insurance (Chapter 20), and finishing with comparative systems and health care reform (Chapter 21). Our new Part VI examines special topics. Chapter 22 continues from the previous edition, lo


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