IKE 511E - Health Economics

Course Objectives

To learn to approach the market for health care from an economic perspective, supply and demand.
To understand the markets for physician, hospital, health insurance and pharmaceutical markets.

Course Description

The first part of the course introduces the economic perspective on health and health care markets with an emphasis on major health statistics and the remarkable prevalence of uncertainty, asymmetric information, and externalities. Next, health care production functions are examined and the concepts of extensive and intensive margins and medical practice variation are introduced along with corresponding data and empirical findings from the health economics literature. Then, the Grossman health care demand model is introduced, followed by the empirical findings in the literature, including main results of the Rand Health Insurance Experiment. The course continues with the supply of medical care, analyzing physicians and hospitals both as inputs in health care production and in the marketplace. Next, the demand for health insurance, including the phenomenon of adverse selection, is analyzed, and the concept of moral hazard in health insurance is introduced. The supply for health insurance is then examined with an emphasis on managed care. The course next introduces the basics of pharmacoeconomic analysis and briefly discusses medical malpractice issues, and it ends with a comparative analysis of health care systems across various countries and a discussion of global health issues in the light of externalities.