HEALTH. CHARLES E. PHELPS University of Rochester PEARSON

Transcription

1 FIFTH EDITION HEALTH ECONOMICS CHARLES E. PHELPS University of Rochester PEARSON Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

2 CONTENTS Preface xiii CHAPTER I Why Health Economics? I Important (If Not Unique) Aspects of Health Care Economics 2 How Markets Interrelate in Medical Care and Health Insurance 8 Afterthought " "" 27 Summary 27 Related Chapters in Handbook of Health Economics 27 Problems 28 CHAPTER 2 ^ Utility and Health 29 How to Think About Health and Health Care (or... How Health Economics?) 30 The Production of Health 32 Health Through the Lifecycle 3.4 A Model of Consumption and Health 36 Summary 47 Related Chapter in Handbook of Health Economics 47 Problems 48 Appendix to Chapter 2: A Formal Model of Utility Maximization 48 CHAPTER 3 The Transformation of Medical Care to Health 50 The Productivity of Medical Care. 50 Confusion About the Production Function: A Policy Dilemma 67 Physician-Specific Variations (Medical Practice Styles) 74 Extensive and Intensive Margin Differences: Are They Similar? 78 Summary 79 Related Chapters in Handbook of Health Economics 80 Problems > 80 Appendix to Chapter 3: Marginal, Average, and Total Productivity 81 CHAPTER 4 The Demand for Medical Care: Conceptual Framework 84 Indifference Curves for Health and Other Goods 85 From Indifference Curves to Demand Curves 90 How Demand Curves Depend on Illness Events 92 Demand Curves for Many Medical Services 92 The Demand Curve for a Society: Adding Up Individual Demands 93 Use of the Demand Curve to Measure Value of Care 94 VII

3 viii Contents How Insurance Affects a Demand Curve for Medical Care 96 Time Costs and Travel Costs 106 The Role of Quality in the Demand for Care 107 Revisited: The Price Index for Health Care 110 Summary 111 Related Chapters in Handbook of Health Economics 111 Problems 111 Appendix to Chapter 4: Demand Curves and Demand Elasticities 112 CHAPTER 5 Empirical Studies of Medical Care Demand and Applications 114 Studies of Demand Curves 115 Effects of Age and Gender on Demand 124 The Effects of Illness on Demand 125 Lifestyle and Its Effects on Demand 126 The Demand for "Illness" 128 The Demand for Quality: Choice of Provider Specialization 130 Other Studies of Demand for Medical Care 132 Applications and Extensions of Demand Theory. 136 Decision Theory: Deriving the "Right" Demand Curve for Medical Care 140 Cost-Effectiveness Ratios and Demand Curves 140 Why Variations in Medical Practice? 141 Summary 142 Related Chapters in Handbook of Health Economics 143 Problems 143 Appendix to Chapter 5: An Example of Medical Decision Theory 143 CHAPTER 6 The Physician and the Physician-Firm 148 The "Firm" Inputs, Output, and Cost 149 The Physician as Entrepreneur 150 The Physician-Firm and Its Production Function 150 The Physician as Diagnostician 151 Nonphysician Primary-Care Providers, 156 The Size of the Firm Group Practice of Medicine 160 Practice Ownership Patterns 163 The Physician as Labor 165 The Aggregate Supply Curve: Entry and Exit 170 The Open Economy: U.S.- and Internationally Trained Physicians 170 Summary 173 Related Chapters in Handbook of Health Economics 173 Problems 173 Appendix to Chapter 6: Cost Passthrough -~._ 174

4 Contents ix CHAPTER 7 Physicians in the Marketplace 177 Physician Location Decisions 178 Consumer Search and Market Equilibrium 184 The Consequences of Incomplete Search 195 Actual Search by Patients 196 Advertising and the Costs of Information 196 The Role of Licensure 199 Estimates of the Demand Curve Facing Physician-Firms 200 Induced Demand 202 The Role of Payment Schemes '" -- '. 208 Summary J 210 Related Chapters in Handbook of Health Economics 211 Problems 211 CHAPTER 8 s The Hospital as a Supplier of Medical Care 213 The Hospital Organization 213 Who Is the Residual Claimant? 218 Where Does the Utility Function Come From? A Political Theory Model 222 Hospital Costs 226 Long-Run Versus Short-Run Costs 229 The Hospital's "Cost Curve" 230 Another Complication: Outpatient Surgery 233 The Demand Curve Facing a Single Hospital 234 The Utility-Maximizing Hospital Manager Revisited 235 Summary 236 Related Chapters in Handbook of Health Economics 237 Problems 237 CHAPTER 9 Hospitals in the Marketplace 238 Hospitals and the Market for Medical Staff 239 Hospitals and Patients 240 A Model of Equilibrium Quality and Price 243 Insurance and Competition in the Hospital's Decision 246 Interaction of Doctors and Hospitals: "Goodies" for the Doctor 248 Interaction of Doctors and Hospitals: Patients for the Hospital 249 Competition "Old Style" Versus "New Style" ' 250 Entry and Exit: The Pivotal Role of For-Profit Hospitals 252 The Hospital in Labor Markets 255 Nursing "Shortages" 257 Summary 260 Related Chapters in Handbook of Health Economics 261 Problems 261 Appendix to Chapter 9: The Hospital's Quality and Quantity Decision 262

5 x Contents CHAPTER 10 The Demand for Health Insurance 265 The Demand for Health Insurance 266 Reasons People Want Insurance 267 Choice of the Insurance Policy 272 The Patient Protection and Affordable Care Act: Prelude 280 Insurance Market Stability: The Question of Self-Selection 280 Income Tax Subsidization of Health Insurance 288 Empirical Estimates of Demand for Insurance 293 The Overall Effect of the Tax Subsidy on the Health Sector 295 "Optimal" Insurance " - ' 295 Other Models of Demand for Insurance 296 Summary 297 Related Chapters in Handbook of Health Economics 298 Problems 298 Appendixes to Chapter 10: 300 Appendix A: A Detailed Calculation of Welfare Loss 300 Appendix B: The Calculus of the Risk/Moral Hazard Trade-off 301 Appendix C: The Statistics of an Insurance Pool 302 CHAPTER 11 Health Insurance Supply and Managed Care 304 The Supply of Insurance 304 Insurance Exchanges in the PPACA 308 Managed Care: A Response to the Incentives of Traditional Insurance 309 Why Managed Care? 309 Market Share Trends 312 Types of Interventions 315 Which Interventions Work Best for Managed Care? 325 Long-Run Issues 326 Summary 330 Related Chapters in Handbook of Health Economics 331 Problems 331 CHAPTER 12 Government Provision of Health Insurance 332 The Medicare Program 334 Medicare Advantage. 337 Operational Changes in Medicare The Medicaid Program 365 Summary 369 Related Chapters in Handbook of Health Economics 370 Problems 371 CHAPTER 13 Medical Malpractice. 372 Background of the Legal System in the United States 373 The Economic Logic of Negligence Law 378

6 Contents xi Judicial Error, Defensive Medicine, and "Tough Guys" 381 Medical Malpractice Insurance 383 Evidence on Actual Deterrence 384 Malpractice Awards: "Lightning" or a "Broom Sweeping Clean"? 393 Tort Reform 395 Tort Reform Writ Large 398 HMO Liability: A New Domain for Malpractice Law 399 Summary Related Chapter in Handbook of Health Economics 401 Problems *.. _- 401 CHAPTER 14 Externalities in Health and Medical Care 402 Externalities, Property Rights, and the Control of Externalities 403 Externalities of Contagion 404 Solutions to the Externality Problems 411 International Issues Expanding the Scope of the Externality 413 Externalities from Tobacco. 415 Information as an Externality 418 Research as an Externality 420 Reasons for Such Little Research on Medical Effectiveness 421 Transfusion-Induced AIDS and Hepatitis 422 Summary 424 Related Chaptersln Handbook of Health Economics 424 Problems 425 Appendix to Chapter 14: Value of Life 425 CHAPTER 15 Managing the Market: Regulation, Quality Certification, and Technical Change 427 A Taxonomy of Regulation ' 428 Licensure \ 429 Measuring Quality 435 Paying for Outcomes: Accountable Care Organizations in PPACA 437 "Certificate of Need" (CON) Laws 438 Price Controls, 443 Drugs and Devices: The New Wave of Medical Care 450 Summary 466 Related Chapters in Handbook of Health Economics 467 Problems 467 CHAPTER 16 Universal Insurance Issues and International Comparisons of Health Care Systems s 468 Aggregate International Comparisons 470 Increase in Costs and Health Outcomes 475 The Patient Protection and Affordable Care Act of

7 xii Contents General Considerations for a National Health Policy 483 A Final Conundrum 494 Summary 494 Related Chapters in Handbook of Health Economics 495 Problems 495 Author's Postscript 497 Bibliography 499 Credits ' 523 Index 525