OVERVIEW
These slides are intended to give you a general outline of
the lectures and help you connect what is covered to the
readings in the text. The syllabus encourages you to
treat the book as a supplement to the lectures, rather
than the other way around. The lectures will be very
organized and structured, and will strongly emphasize
the main points—the “big picture.” The book will
provide much more detail on most of these points, that,
hopefully, will make the lectures come to life.
Most of your test material will, therefore, be covered in
class and in the book. But there are some things that
are purely lecture, and some material just in the book.
You are responsible for all, though you will find that I
try not to ask questions about picky details.
Lecture 1: The Production of Health and Historical
Evidence on Health Production (3 classes)
• Assessing Population Health
• The Production of Health
• Properties of the Production Function
• Role of Health Care in the Production of Health
• Cross-country and Cross-Time Comparisons of Health
** This lecture provides basic theory about health
production that will be used later, and some empirical
evidence about the role of health care in producing
health. The book chapter is a nice discussion of health
and health production over time, which will be
supplemented by Internet presentations.
Lecture 2: Value Creation in Health Care
(2 classes)
• Value Creation: What Markets Are Supposed to
Do
• What is Value Creation?
• Measuring Health Benefits: QALYs and VSL
• Cost-Benefit & Cost-Effectiveness Analyses
** Your book does a nice job on this material.
Be able to do simple cost-benefit or costeffectiveness analyses. (The book examples are
a little ornate.)
Lecture 3: Health Care Demand
• Health Care Demand Derived from the
Production of Health
• Optimal Health Care Demand and Moral
Hazard
• Elasticity of Health Care Demand; the
RAND Study
** The book does not have a chapter on
health care demand, so we will utilize the
“Your Money or Your Life” excerpt as a
nice substitute.
Lecture 4: Health Insurance: Demand
and Supply
• Risk Spreading and Value Creation in
Health Insurance
• Supply and Demand Effects on the Amount
of Insurance and Insurance Premiums
• Adverse Selection
** The book chapters do a nice, thorough job
of this material.
Lecture 5: The Health Insurance Industry
and Managed Care (2 classes)
• Employer Based Insurance and Evolution of
the U.S. Health Insurance Market
• Traditional Indemnity Insurance and Its
Problems
• Managed Care and Its Features
• Evidence on the Effects of Managed Care
** The chapter does a good, thorough job on
the material, supplemented by the
newspaper articles.
UNIT 1 SYNOPSIS
There are five lectures, with three or four topics in each
lecture, listed on the previous slides. In addition to
these topics, each lecture was built around a “set
piece” that organized the main ideas.
• Lecture 1: Health Production Fn. and its properties
• Lecture 2: Gardasil Example
• Lecture 3: Points A, B, and C in Health Production
and HC Demand
• Lecture 4: The Visual Model of Insurance (the pot)
• Lecture 5: Four Features of Traditional Indemnity
Insurance & Four New Features of Managed Care