Textbook Required: Feldstein, Paul J. Health Policy Issues: An Economic Perspective, 6th Edition. Health Administration Press, 2015.

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1 Public Affairs 864 Health Policy and Policy Design Spring 2016 Professor: Jason Fletcher class website: 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, (PF) The Economics of Health and Health Care, by Folland, Goodman, and Stano (FGS). Bhattacharya, J., T. Hyde, and P. Tu Health Economics, (First Edition), New York: Palgrave Macmillan. (BHT) Course Grade: Class Participation: 20% Class Presentation: 20% Weekly Assignments: 20% Final Paper Project: 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 page (double spaced) paper that includes (1) a

2 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 Chernew ME, Hirth RA, Cutler DM. Increased Spending On Health Care: Long- Term Implications For The Nation. Health Aff (Millwood) 2009;28(5): 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): 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): 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): 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

3 Health Production Functions/Health Capital Measurement of Health and Disability and the Health Gradient Reading: BHT Chapter 3 & 4 Etches V, Frank J, Di Ruggiero E, Manuel D: Measuring population health: a review of indicators. Annual Review of Public Health 2006; 27: Murray CJL, Lopez AD. Measuring the global burden of disease. N Engl J Med 2013; 369(5): Mont D (2007) Measuring health and disability. Lancet v369(9573): Smith (1999) Healthy Bodies and Thick Wallets: The Dual Relationship between Health and Economic Status, Journal of Economic Perspectives, 13(2): Case, Lubotsky, and Paxson (2003) "Economic Status and Health in Childhood: The Origins of the Gradient." American Economic Review 92(5): Scott, Janny, Life at the Top in America Isn t Just Better, It s Longer, New York Times, May 16, Grossman (1972) On the Concept of Health Capital and the Demand for Health, Journal of Political Economy, 80(2): 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): Atul Gawande. June 1, The Cost Conundrum, The New Yorker. Atul Gawande. June 23, The Cost Conundrum Redux, The New Yorker. Gladwell, M The Moral-Hazard Myth, The New Yorker, Aron-Dine, Aviva, Liran Einav, and Amy Finkelstein. "The RAND Health Insurance Experiment, Three Decades Later." The Journal of Economic Perspectives (2013): Bundorf (2002) Employee Demand for Health Insurance and Employer Health Plan Choices, Journal of Health Economics, 21(1):65-88

4 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): Baicker, Katherine and Amitabh Chandra, Myths and Misconceptions About U.S. Health Insurance, Health Affairs, 27(6): , October 21, 2008 Einav, Liran and Amy Finkelstein, Selection in Insurance Markets: Theory and Empirics in Pictures. Journal of Economic Perspectives, 25(1): , Winter Handel, B. R., and J. T. Kolstad Health Insurance for Humans : Information Frictions, Plan Choice, and Consumer Welfare. NBER Working Paper No (August). Introduction only. Assignment Due: Go to 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 "Medicare," The New England Journal of Medicine 344(12): Iglehart (1999) The American Health Care System: Medicaid, New England Journal of Medicine 340(5): Iglehart (1999) The American Health Care System: Medicare, New England Journal of Medicine, 340(4): Gawande A. Piecework, Medicine s Money Problem, The New Yorker; April 4, Available at: Baicker K, Finkelstein A. The effects of Medicaid coverage learning from the Oregon experiment. N Engl J Med 2011;365(8): Bitler, Marianne P. and Madeline Zavodny, Medicaid: A Review of the Literature, NBER Working Paper No , May 2014.

5 Week 6 (February 23) Affordable Care Act Robert Haveman & Barbara Wolfe, "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): 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, Stable url: Cutler, David M. The Simple Economics of Health Reform, The Economists Voice 7(5): 1-5, Gruber, J Health Care Reform: What it is, Why it is Necessary, How it Works, Chapters 1-6. Pollak, Harold Economists: We Need Individual Mandate. (July 18). Risk Adjustment in Health Insurance, Health Affairs Health Policy Brief. (August 30, 2012). Young, Fit, and Uninterested, The Economist. (January 18, 2014). Assignment: New York Times, Tracking the Affordable Care Act. Browse: 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 BHT Chapters Cutler, D., & D Ly The (Paper)Work of Medicine: Understanding International Medical Costs, Journal of Economic Perspectives 25(2, Spring): Davis, Karen, Kristof Stremikis, David Squires, and Cathy Schoen Mirror, Mirror on the Wall: How the Performance of the US Health Care System Compares Internationally.

6 Reinhardt, Uwe, Health Reform Without a Public Plan: The German Model, Economix Blog, April 17, Available at: Sanmartin, Claudia et al., Comparing Health And Health Care Use In Canada And The United States, Health Affairs, 2006, 25(4), 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 : 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 : 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 PF Chapters 25, 26, 28 Cutler, D. and M. McClellan, Is Technological Change In Medicine Worth It? Health Affairs, Sept/Oct 2001, pp Week 12 (April 12) Public Health and Public Goods Externalities and Public Goods Alcohol and Cigarette Taxes Policy Question: Vaccination Exemptions and Sin Taxes

7 : BHT Chapter 20 Philipson, (1996) Private Vaccination and Public Health: An Empirical Examination for U.S. Measles, Journal of Human Resources, 31(3): 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, 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 (2005) Bhattacharya, Jay and Neeraj Sood Who Pays for Obesity? Journal of Economic Perspectives 25(1): , Winter Week 13 (April 26) Health Policy for Rural Areas Shortages, Limited Competition and Economics of Scale BHT Chapters 5 and 6 Week 14 (May 6) Student Presentations Final Paper Due: May 13 by 5pm, ed to instructor.