Health Economics

by Phelps, Charles E.

• ISBN13: 9780321594570
• ISBN10: 0321594576
• Edition: 4th
• Format: Paperback
• Copyright: 2009-02-10
• Publisher: Prentice Hall

Summary

Health Economics combines current economic theory, recent research, and health policy issues into an accessible overview of the field. Recent research illustrates core economic concepts, which are then used to focus on key policy areas, such as the structure and effects of Medicare reform, insurance plan design, and emerging medical technologies.

Author Biography

Charles E. Phelps went to the University of Rochester in 1984 as professor and director of the Public Policy Analysis Program, a graduate program offered by the Department of Political Science, in conjunction with the Department of Economics. In 1989 he became chair of the Department of Community and Preventive Medicine in the School of Medicine and Dentistry. He became Provost in July 1, 1994, and served until July 31, 2007. As Provost, he was responsible for overseeing the academic activity of the University, including teaching, research, and supporting services (e.g., libraries, information technology, and technology transfer) in each of the University's six schools. He currently holds the titles of University Professor and Provost Emeritus.

Phelps has achieved national and international recognition for his scholarly research. In 1991 he was elected to the Institute of Medicine of the National Academy of Sciences and to the National Bureau for Economic Research. He served for six years on the Report Review Committee of the National Academies.

Phelps is currently a Fellow at the Center for Advanced Studies in the Behavioral Sciences at Stanford University (academic year 2008–2009).

Provost Emeritus Phelps participated from 1997 to 2007 in the Association of American Universities’ Committee on Digital Technology and Intellectual Property Rights, and was an active participant in the AAU's work in areas involving related topics. He testified before Congress in June 1998 on issues pertaining to the implementation of the World Intellectual Property Organization (WIPO) treaty and has spoken on related matters in conferences on these issues sponsored by, among others, the Department of Commerce. In July 2005, he testified on Patent Reform for the Senate Judiciary Committee's Subcommittee on Intellectual Property.

Provost Emeritus Phelps earned his bachelor’s degree from Pomona College in Claremont, California. He then earned both an MBA in hospital administration and PhD in economics from the University of Chicago. Before beginning his career at the University of Rochester, Phelps worked at the RAND Corporation from 1971 to 1984.

Phelps served from 1998–2006 on the Board of Trustees for the Council on Library and Information Resources (CLIR) in Washington, DC, the last two years as Chair. He currently serves on the Board of Trustees of the Center for Research Libraries in Chicago, and on the Board of Directors of VirtualScopics, Inc., a diagnostic-imaging technology company located in Rochester, New York. He also serves as an advisor to CVT, a pharmaceutical company in Palo Alto, California.

Table of Contents

Preface	p. xiii
Why Health Economics?	p. 1
Important (If Not Unique) Aspects of Health Care Economics	p. 2
How Markets Interrelate in Medical Care and Health Insurance	p. 9
Afterthought	p. 30
Summary	p. 30
Related Chapters in Handbook of Health Economics	p. 31
Problems	p. 31
Utility and Health	p. 32
How to Think About Health and Health Care (or...How Health Economics?)	p. 33
The Production of Health	p. 36
Health Through the Lifecycle	p. 38
A Model of Consumption and Health	p. 40
Summary	p. 53
Related Chapter in Handbook of Health Economics	p. 54
Problems	p. 54
Appendix to Chapter 2: A Formal Model of Utility Maximization	p. 55
The Transformation of Medical Care to Health	p. 56
The Productivity of Medical Care	p. 56
Confusion About the Production Function: A Policy Dilemma	p. 73
Physician-Specific Variations (Medical Practice Styles)	p. 80
Extensive and Intensive Margin Differences: Are They Similar?	p. 85
Summary	p. 86
Related Chapters in Handbook of Health Economics	p. 87
Problems	p. 87
Appendix to Chapter 3: Marginal, Average, and Total Productivity	p. 88
The Demand for Medical Care: Conceptual Framework	p. 91
Indifference Curves for Health and Other Goods	p. 92
From Indifference Curves to Demand Curves	p. 98
How Demand Curves Depend on Illness Events	p. 100
Demand Curves for Many Medical Services	p. 101
The Demand Curve for a Society: Adding Up Individual Demands	p. 102
Use of the Demand Curve to Measure Value of Care	p. 103
How Insurance Affects a Demand Curve for Medical Care	p. 105
Time Costs and Travel Costs	p. 116
The Role of Quality in the Demand for Care	p. 118
Revisited: The Price Index for Health Care	p. 121
Summary	p. 122
Related Chapters in Handbook of Health Economics	p. 123
Problems	p. 123
Appendix to Chapter 4: Demand Curves and Demand Elasticities	p. 124
Empirical Studies of Medical Care Demand and Applications	p. 126
Studies of Demand Curves	p. 127
Effects of Age and Gender on Demand	p. 138
The Effects of Illness on Demand	p. 139
Lifestyle and its Effects on Demand	p. 139
The Demand for "Illness"	p. 142
The Demand for Quality: Choice of Provider Specialization	p. 145
Other Studies of Demand for Medical Care	p. 146
Applications and Extensions of Demand Theory	p. 150
Decision Theory: Deriving the "Right" Demand Curve for Medical Care	p. 155
Cost-Effectiveness Ratios and Demand Curves	p. 156
Why Variations in Medical Practice?	p. 157
Summary	p. 158
Related Chapters in Handbook of Health Economics	p. 159
Problems	p. 159
Appendix to Chapter 5: An Example of Medical Decision Theory	p. 160
The Physician and the Physician Firm	p. 165
The "Firm"-Inputs, Output, and Cost	p. 166
The Physician as Entrepreneur	p. 167
The Physician-Firm and its Production Function	p. 168
The Physician as Diagnostician	p. 169
Nonphysician Primary-Care Providers	p. 176
The Size of the Firm-Group Practice of Medicine	p. 180
The Physician as Labor	p. 185
The Aggregate Supply Curve: Entry and Exit	p. 191
The Open Economy: U.S.- and Internationally Trained Physicians	p. 191
Summary	p. 193
Related Chapters in Handbook of Health Economics	p. 193
Problems	p. 193
Appendix to Chapter 6: Cost Passthrough	p. 194
Physicians in the Marketplace	p. 197
Physician Location Decisions	p. 198
Consumer Search and Market Equilibrium	p. 204
Actual Search by Patients	p. 216
Advertising and the Costs of Information	p. 219
The Role of Licensure	p. 221
Estimates of the Demand Curve Facing Physician-Firms	p. 223
Induced Demand	p. 225
The Role of Payment Schemes	p. 233
Summary	p. 235
Related Chapters in Handbook of Health Economics	p. 236
Problems	p. 236
The Hospital as a Supplier of Medical Care	p. 238
The Hospital Organization	p. 239
Who Is the Residual Claimant?	p. 244
Where Does the Utility Function Come From? A Political Theory Model	p. 249
Hospital Costs	p. 254
Long-Run Versus Short-Run Costs	p. 258
The Hospital's "Cost Curve"	p. 259
Another Complication: Outpatient Surgery	p. 262
The Demand Curve Facing a Single Hospital	p. 264
The Utility-Maximizing Hospital Manager Revisited	p. 266
Summary	p. 266
Related Chapters in Handbook of Health Economics	p. 267
Problems	p. 267
Hospitals in the Marketplace	p. 269
Hospitals and the Market for Medical Staff	p. 270
Hospitals and Patients	p. 272
A Model of Equilibrium Quality and Price	p. 274
Insurance and Competition in the Hospital's Decision	p. 278
Interaction of Doctors and Hospitals: "Goodies" for the Doctor	p. 281
Interaction of Doctors and Hospitals: Patients for the Hospital	p. 282
Competition-"Old Style" Versus "New Style"	p. 283
Entry and Exit: The Pivotal Role of For-Profit Hospitals	p. 286
The Hospital in Labor Markets	p. 286
Nursing "Shortages"	p. 292
Summary	p. 294
Related Chapters in Handbook of Health Economics	p. 295
Problems	p. 296
Appendix to Chapter 9: The Hospital's Quality and Quantity Decision	p. 296
The Demand for Health Insurance	p. 300
The Demand for Health Insurance	p. 301
Reasons People Want Insurance	p. 302
Choice of the Insurance Policy	p. 308
Insurance Market Stability: The Question Of Self-Selection	p. 318
Income Tax Subsidization of Health Insurance	p. 326
Empirical Estimates of Demand for Insurance	p. 333
The Overall Effect of the Tax Subsidy on the Health Sector	p. 335
"Optimal" Insurance	p. 335
Other Models of Demand for Insurance	p. 336
Summary	p. 337
Related Chapters in Handbook of Health Economics	p. 338
Problems	p. 338
Appendixes to Chapter 10
A Detailed Calculation of Welfare Loss	p. 341
The Calculus of the Risk/Moral Hazard Trade-off	p. 342
The Statistics of an Insurance Pool	p. 344
Health Insurance Supply and Managed Care	p. 345
The Supply of Insurance	p. 345
Managed Care: A Response to the Incentives of Traditional Insurance	p. 350
Why Managed Care?	p. 352
Types of Interventions	p. 357
Consumer Side	p. 357
Which Interventions Work Best for Managed Care?	p. 368
Long-Run Issues	p. 370
Summary	p. 374
Related Chapters in Handbook of Health Economics	p. 374
Problems	p. 374
Government Provision of Health Insurance	p. 376
The Medicare Program	p. 378
Medicare HMOs (Medicare Advantage)	p. 381
Operational Changes in Medicare	p. 390
The Medicaid Program	p. 411
Summary	p. 416
Related Chapters in Handbook of Health Economics	p. 418
Problems	p. 418
Medical Malpractice	p. 420
Background of the Legal System in the United States	p. 421
The Economic Logic of Negligence Law	p. 427
Judicial Error, Defensive Medicine, and "Tough Guys"	p. 430
Medical Malpractice Insurance	p. 433
Evidence on Actual Deterrence	p. 434
Malpractice Awards: "Lightning" or a "Broom Sweeping Clean"?	p. 445
Tort Reform	p. 446
Tort Reform Writ Large	p. 450
HMO Liability: A New Domain for Malpractice Law	p. 450
Summary	p. 452
Related Chapter in Handbook of Health Economics	p. 452
Problems	p. 452
Externalities in Health and Medical Care	p. 453
Externalities, Property Rights, and the Control of Externalities	p. 454
Externalities of Contagion	p. 456
Solutions to the Externality Problems	p. 464
International Issues-Expanding the Scope of the Externality	p. 467
Externalities from Tobacco	p. 469
Information as an Externality	p. 472
Research as an Externality	p. 475
Reasons for So Little Research on Medical Effectiveness	p. 476
Transfusion-Induced AIDS and Hepatitis	p. 478
Summary	p. 480
Related Chapters in Handbook of Health Economics	p. 480
Problems	p. 480
Appendix to Chapter 14: Value of Life	p. 481
Managing the Market: Regulation and Technical Change in Health Care	p. 484
A Taxonomy of Regulation	p. 485
Licensure	p. 486
"Certificate of Need" (CON) Laws	p. 493
Drugs and Devices: The New Wave of Medical Care	p. 507
Summary	p. 526
Related Chapters in Handbook of Health Economics	p. 527
Problems	p. 527
Universal Insurance Issues and International Comparisons of Health Care Systems	p. 529
General Considerations for a National Health Policy	p. 531
Review of Health Policy and Systems in Selected Countries	p. 541
Snapshots of Four Countries	p. 542
Aggregate International Comparisons	p. 552
Increase in Costs and Health Outcomes	p. 562
A Final Conundrum	p. 566
Summary	p. 566
Related Chapters in Handbook of Health Economics	p. 567
Problems	p. 567
Author's Postscript	p. 569
Appendix: Introduction to Basic Economics Concepts	p. 571
The Concept of Utility and Demand Curves	p. 571
The Demand Curve by a Society: Adding Up Individual Demands	p. 576
Using Demand Curves to Measure Value	p. 577
The Problem of Supply of Goods	p. 579
Market Equilibrium	p. 585
Monopoly Pricing	p. 588
Monopolistic Competition	p. 591
Bibliography	p. 595
Acknowledgments	p. 623
Index	p. 625
Table of Contents provided by Ingram. All Rights Reserved.