Public Affairs 864 – Health Policy and Policy Design
Spring 2016
Professor: Jason Fletcher
e-mail: jason.fletcher@wisc.edu
class website: learnuw@wisc.edu
Meeting Times: Tuesdays, 10-11:55am
Meeting Place: X
Office: 307 Observatory Hill Office Building
Office Hours: X
Prerequisites
There are no formal prerequisites for PA 864, though a course in Microeconomics is
strongly suggested. Students will also benefit from being comfortable with basic
concepts in statistics.
Learning Objectives
Students will further develop
*An appreciation and ability to utilize an economic approach in evaluating health related
policies and decision making processes, in particular applying the concepts of
opportunity cost, efficiency, equity, demand/supply analysis, and cost-benefit analysis
*Conceptual tools to consider the impacts of incentives (financial and non-financial) on
health related decision making by individuals and providers
*An ability to consider intended and unintended consequences of health policies
Textbook
Required:
Feldstein, Paul J. Health Policy Issues: An Economic Perspective, 6th Edition. Health
Administration Press, 2015. (PF)
Supplemental:
The Economics of Health and Health Care, by Folland, Goodman, and Stano (FGS).
Bhattacharya, J., T. Hyde, and P. Tu. 2014. Health Economics, (First Edition), New
York: Palgrave Macmillan. (BHT)
Course Grade:
Class Participation:
Class Presentation:
Weekly Assignments:
Final Paper Project:
20%
20%
20%
40%
Class Presentation and Project: Each student will select a health policy of interest and
will construct a 20 minute presentation that surveys the issue from an economic
perspective, focusing on economic concepts, economic assessments/evaluations of the
policy or related policies, and relevance to the health policy in the state of Wisconsin.
The student will also write a 12-15 page (double spaced) paper that includes (1) a
summary of the presentation (2) an executive summary and policy brief of the issue and
(3) makes sure to also includes non-economic (political, ethical, etc) considerations of the
health policy and (4) outlines specific necessary information/data that would be helpful to
evaluate the usefulness of the policy in Wisconsin. Topic due by Week 9
Examples of interest: Analysis of the use of a city-level soda tax to reduce obesity;
Analysis of reducing the blood alcohol content (BAC) level; Analysis of increasing the
speed limit on Wisconsin Highways; Analysis of policies to alleviate nursing shortages;
Analysis of the use of telemedicine for a specific health service; Analysis of building a
hospital in a rural area of Wisconsin; Analysis of the financial and health impacts of
Medicaid expansions; Analysis of changes in sex education (or other issue related to teen
fertility); A topic on children’s health outcomes.
Course Schedule (Tentative – Subject to change)
Week 1 (January 19)—Introduction and Refresher
Microeconomics Refresher & How Economists Think about Health and Health
Care Concepts: Opportunity Costs, Demand and Supply, Cost-Benefit
· Trends in Health Care Use, Spending and Funding
Reading: PF Chapters 1 & 2 & 21
Portions of Kenneth Arrow’s “Uncertainty and the Welfare Economics of Medical
Care,” American Economic Review 1963; vol. 53, no. 5, selected pages from 941973
Chernew ME, Hirth RA, Cutler DM. Increased Spending On Health Care: LongTerm Implications For The Nation. Health Aff (Millwood) 2009;28(5):1253-5.
Supplemental: FGS Chapters 1 and 2
Weisbrod (1991) “The Health Care Quadrilemma: An Essay on Technological
Change, Insurance, Quality of Care, and Cost Containment” Journal of Economic
Literature 29(2): 523-552
Fuchs (1996) “Economics, Values, and Health Care Reform,” American
Economic Review 86(1):1-24
Blendon, Robert J. and John M. Benson, “Americans’ Views On Health Policy: A
Fifty-Year Historical Perspective,” Health Affairs 20(2): 33-46, March/April 2001
Chernew ME, Baicker K, Hsu J. The Specter of Financial Armageddon — Health
Care and Federal Debt in the United States. NEJM 2010;362(13):1166-8.
Orszag PR, Ellis P. The Challenge of Rising Health Care Costs—A View from
the Congressional Budget Office. New Engl J Med 2007;357(18):1973-5.
Kaiser Family Foundation, “Visualizing Health Policy: Medicare Spending,”
Journal of the American Medical Association 313(1):19.
Assignment Due: None, get caught up on readings
Week 2 (January 26)—Micro to Macro: Health Demand, Health Capital, and Population
Health
Demand for Medical Care
Health Production Functions/Health Capital
Measurement of Health and Disability and the Health Gradient
Reading: BHT Chapter 3 & 4
Supplemental:
Etches V, Frank J, Di Ruggiero E, Manuel D: Measuring population health: a
review of indicators. Annual Review of Public Health 2006; 27:29-55.
Murray CJL, Lopez AD. Measuring the global burden of disease. N Engl J Med
2013; 369(5):448-457.
Mont D (2007) Measuring health and disability. Lancet v369(9573): 1658-63.
http://siteresources.worldbank.org/DISABILITY/Resources/Data/DanLancet.pdf
Smith (1999) “Healthy Bodies and Thick Wallets: The Dual Relationship between
Health and Economic Status,” Journal of Economic Perspectives, 13(2): 145-166.
Case, Lubotsky, and Paxson (2003) "Economic Status and Health in Childhood:
The Origins of the Gradient." American Economic Review 92(5): 1308-1334.
Scott, Janny, “Life at the Top in America Isn’t Just Better, It’s Longer,” New
York Times, May 16, 2005.
Grossman (1972) “On the Concept of Health Capital and the Demand for Health,”
Journal of Political Economy, 80(2): 223-255.
Assignment Due: Summarize (<2 pages) one of the supplemental readings and outline
three questions about the concepts/claims/or relevance to policy, based on the reading
Week 3 (February 2) – The Demand for Health Insurance I
Price Elasticities for Health Care Services
RAND Health Insurance Experiment
Expected Value, Risk Aversion, Adverse Selection, and Moral Hazard
Reading:
PF Chapters 3,5, & 6
Manning et al. (1987) “Health Insurance and the Demand for Medical Care:
Evidence from a Randomized Experiment,” American Economic Review, 77(3):
251-277.
Atul Gawande. June 1, 2009. “The Cost Conundrum,” The New Yorker.
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
Atul Gawande. June 23, 2009. “The Cost Conundrum Redux,” The New Yorker.
http://www.newyorker.com/online/blogs/newsdesk/2009/06/atul-gawande-thecost-conundrum-redux.html
Supplemental:
Gladwell, M. 2005. “The Moral-Hazard Myth,” The New Yorker,
http://www.newyorker.com/archive/2005/08/29/050829fa_fact
Aron-Dine, Aviva, Liran Einav, and Amy Finkelstein. "The RAND Health
Insurance Experiment, Three Decades Later." The Journal of Economic
Perspectives (2013): 197-222.
Bundorf (2002) “Employee Demand for Health Insurance and Employer Health
Plan Choices,” Journal of Health Economics, 21(1):65-88
Week 4 (February 9) – Demand for Health Insurance II and Insurance Markets I
Consumer Risk Preferences
Risk Spreading and the Supply of Health Insurance
Employer Sponsored Health Insurance
Reading
PF Chapters 7, 19, 20
Glied, Sherry, "Health Insurance and Market Failure Since Arrow," Journal of
Health Politics, Policy and Law, 26 (2001): 957-965.
Baicker, Katherine and Amitabh Chandra, “Myths and Misconceptions About
U.S. Health Insurance,” Health Affairs, 27(6): 533-543, October 21, 2008
Supplemental
Einav, Liran and Amy Finkelstein, “Selection in Insurance Markets: Theory and
Empirics in Pictures.” Journal of Economic Perspectives, 25(1): 115-138, Winter
2011. Handel, B. R., and J. T. Kolstad. 2013. “Health Insurance for ‘Humans’:
Information Frictions, Plan Choice, and Consumer Welfare.” NBER Working
Paper No. 19373 (August). Introduction only.
Assignment Due: Go to www.ehealthinsurance.com and simulate buying an insurance
policy for yourself. What differences do you notice if you use your home zip code instead
of your college zip code? What influenced your decision-making the most? What should
influence you, but maybe didn’t? Write a one-page reflection and be prepared to discuss
in class.
Week 5 (February 16) – Insurance Markets II
Forms of Health Insurance Supply
Managed & Accountable Care Organizations
Medicare & Medicaid
Reforms to Expand Insurance Coverage
Reading
PF Chapters 8,9,10
Moon, Marilyn. 2001. "Medicare," The New England Journal of Medicine
344(12): 928–931.
Iglehart (1999) “The American Health Care System: Medicaid,” New England
Journal of Medicine 340(5): 403-8
Iglehart (1999) “The American Health Care System: Medicare,” New England
Journal of Medicine, 340(4): 327-332.
Gawande A. Piecework, Medicine’s Money Problem, The New Yorker; April 4,
2005. Available at:
http://www.newyorker.com/archive/2005/04/04/050404fa_fact
Supplemental
Baicker K, Finkelstein A. The effects of Medicaid coverage—learning from the
Oregon experiment. N Engl J Med 2011;365(8):683-5.
Bitler, Marianne P. and Madeline Zavodny, “Medicaid: A Review of the
Literature,” NBER Working Paper No. 20169, May 2014.
Week 6 (February 23) – Affordable Care Act
Readings
Robert Haveman & Barbara Wolfe, 2010. "US Health Care Reform: A Primer and
an Assessment," CESifo DICE Report, Ifo Institute for Economic Research at the
University of Munich, 8(3), pages 53-60, October
J Oberlander, “Long Time Coming: Why Health Reform Finally Passed,” Health
Affairs, June 2010, 29(6):1112-6.
Blendon RJ, Benson JM, “Public Opinion at the Time of the Vote on Health Care
Reform.” New England Journal of Medicine, April 22, 2010, 362:e55.
The New York Times, “Is the Affordable Care Act Working?”, October 26, 2014.
Stable url: http://nyti.ms/1tubFIj
Cutler, David M. “The Simple Economics of Health Reform,” The Economists’
Voice 7(5): 1-5, 2010.
Supplemental:
Gruber, J. 2011. Health Care Reform: What it is, Why it is Necessary, How it
Works, Chapters 1-6.
Pollak, Harold. 2013. “30 Economists: We Need Individual Mandate.” (July 18).
http://www.healthinsurance.org/blog/2013/07/18/30-economists-we-need-theindividual-mandate/
“Risk Adjustment in Health Insurance,” Health Affairs Health Policy Brief.
(August 30, 2012).
http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_74.pdf.
“Young, Fit, and Uninterested,” The Economist. (January 18, 2014).
http://www.economist.com/news/united-states/21594300-was-supposed-bemonth-uninsured-got-health-insurance-not-enough.
Assignment: New York Times, “Tracking the Affordable Care Act.” Browse:
http://www.nytimes.com/news/affordable-care-act/. Pick an article and
described economic concepts in the article and economic concepts that should be
in the article (1 page response)
Week 7 (March 1) –Hold for Group Discussion about the ACA
Week 8 (March 8) –Alternatives to the US System
Readings
BHT Chapters 15-17
Supplemental
Cutler, D., & D Ly. 2011. “The (Paper)Work of Medicine: Understanding
International Medical Costs,” Journal of Economic Perspectives 25(2, Spring): 3–
25.
Davis, Karen, Kristof Stremikis, David Squires, and Cathy Schoen. 2014.
“Mirror, Mirror on the Wall: How the Performance of the US Health Care System
Compares Internationally.”
http://www.commonwealthfund.org/~/media/files/publications/fundreport/2014/jun/1755_davis_mirror_mirror_2014.pdf
Reinhardt, Uwe, “Health Reform Without a Public Plan: The German Model,”
Economix Blog, April 17, 2009. Available at:
http://economix.blogs.nytimes.com/2009/04/17/health-reform-without-apublicplan-the-german-model
Sanmartin, Claudia et al., “Comparing Health And Health Care Use In Canada
And The United States,” Health Affairs, 2006, 25(4), 1133-1142.
Week 9 (March 15) –How do Physicians Affect Health Care Markets
The Role of Physicians
Physician Agency and Induced Demand
Licensing, Supply and Returns to Education for Physicians
Organization and Competition among Physicians
Projected Shortages in Nursing
Readings:
PF Chapters 4, 11, 12 & 23
Assignment: Presentation Topic Submitted to Instructor
No Class: March 22
Week 10 (March 29)—The Role of Hospitals
Hospital Financing and Organization
Competition and Quality among Hospital Types
Quality Improvement Efforts
Medical Malpractice
Readings:
PF Chapters 14 and 16
Week 11 (April 5)—Regulation and Innovation
Pharmaceuticals
Government Regulation
Patents, Innovation, and Technological Change
Projections for Future of Health Care Industry
Readings
PF Chapters 25, 26, 28
Cutler, D. and M. McClellan, “Is Technological Change In Medicine Worth It?”
Health Affairs, Sept/Oct 2001, pp. 11-29
Week 12 (April 12)—Public Health and Public Goods
Externalities and Public Goods
Alcohol and Cigarette Taxes
Policy Question: Vaccination Exemptions and Sin Taxes
Readings:
BHT Chapter 20
Supplemental
Philipson, (1996) “Private Vaccination and Public Health: An Empirical
Examination for U.S. Measles,” Journal of Human Resources, 31(3): 611-630.
Week 13 (April 19)—Obesity
Obesity and Policy Responses
Policy Question: Soda Taxes and Access Restrictions
Reading
BHT Chapter 22
Fletcher, Frisvold and Tefft, Choices and JPAM papers
Belluck, Pam, “Children's Life Expectancy Being Cut Short by Obesity,” New
York Times, March 17, 2005.
Supplemental
Lakdawalla and Philipson (2002) “The Growth of Obesity and Technological
Change: A Theoretical and Empirical Examination,” NBER Working Paper
#8946
Cutler, Glaeser, and Shapiro (2003) “Why Have Americans Become More
Obese?” NBER Working Paper #9446
Bhattacharya J and Bundorf K. “The Incidence of the Healthcare Costs of
Obesity” NBER Working Paper No. 11303 (2005)
Bhattacharya, Jay and Neeraj Sood “Who Pays for Obesity?” Journal of
Economic Perspectives 25(1): 139-158, Winter 2011.
Week 13 (April 26)—Health Policy for Rural Areas
Shortages, Limited Competition and Economics of Scale
Readings
BHT Chapters 5 and 6
Week 14 (May 6)—Student Presentations
Final Paper Due: May 13 by 5pm, emailed to instructor.