Syllabus for: Health Economics (ECON 4950)
Offered at California State University, Stanislaus by Economics Dept., Spring 1997, for 4 units

Class meets Wednesdays 4:00-7:00 pm in room 27 Drama Building.

Instructor: Elaine Peterson                                    Office hours: M-F 10:00-11:00
Office: 101 B Classroom Building                         ...and by appointment
Office Phone: 667-3327
Home Phone: 529-3804 (Please, no calls after 9:00 pm)

Course Description: Examines the health care industry, production of health, insurance, government programs, supply and demand for physicians, nurses, drugs, and technology, hospitals, legal issues, and international comparisons.

Course Objectives: Help students understand one of the largest and fastest growing sectors of the economy which is likely to affect every person in the US at some time in their lives. Serve potential need of students entering the health care industry including nurses, pharmacy students, and public administrators. Gain a better understanding of the US health Care system, how it works, the underlying incentives, and the ability to draw out the implications of potential changes to the system.

  Major Texts and Resource Materials: Phelps, Charles E., Health Economics, 2nd Edition, Addison-Wesley Educational Publishers Inc., Reading, Mass., 1997

Philipson, Thomas J., and Posner, Richard A., Private Choices and Public Health: The AIDS Epidemic in an Economic Perspective, Harvard University Press, Cambridge MA, 1993

Articles drawn from professional journals such as: Journal of Health Economics, Advances in Health Economics and Health Services Research, Health Care Financing Review, Risk Analysis, and American Journal of Public Health, Inquiry, Health Affairs, American Economic Review

Evaluation: Regular attendance is expected and reading should be done prior to class discussion to enable participation. Students who must miss a class should contact the instructor in advance or as soon as possible and may need to make up work. Attendance will affect the class participation portion of the grade.

The research project should use economics to analyze a topic related to health. You may wish to consider the attached list of a few potential topics. If you are currently working at an institution or firm facing health related decisions you may wish to consider an economic analysis of the tradeoffs involved in those decisions. You may also consider a service learning project, in which case we will need to work out a service learning agreement. Lee Renner in the Liberal Studies Department has a number of contacts with community organizations. Whatever project you choose you are required to meet individually with the professor to work on a research plan for exploring that topic.

Be careful to use your own words. Plagiarism will result in a failing grade.

Short assignments may be announced in class or via email. All students should check their email regularly and will be included on a class discussion list. Any necessary changes to the schedule below will also be announced in class or via email.

Some materials of interest to students are also available on the internet.
The department web site address is:
My web site address is:

Students are encouraged to work together in studying, but not during exams. Cheating will result in a failing grade.

Exams may involve multiple choice questions, short problems, and short essays, but will tend to focus on essays.

Course Outline
Feb. 11, Feb. 18
I. Why is the Health Care industry so different from other industries? An overview of some of the issues, the production of health, uncertainties, externalities, health throughout the life cycle

Baumol, William J. "Do Changes in Health Care Costs Matter?" The New Republic, November 22, 1993, pp. 16-18.
Phelps, Ch.1
Phelps, Ch.15

Feb. 25, Mar. 4, Mar. 11
II. Health insurance and markets for health care Why insurance exists, short run effects of insurance, long run dynamic effects, moral hazards and risk pooling, HMOs, Government Health Insurance, Medicare, Medicaid, Other government provided health programs

Phelps, Ch.2
Phelps, Ch.10
Swartz, K., J. Marcotte and T. McBride, "Personal Characteristics and spells without insurance" Inquiry, 30, 1993, p. 64-76.
Phelps, Ch.11
Phelps, Ch.12
Phelps, Ch.13

Mar. 18 Midterm exam

Mar. 25, April 1
III. The connection from Medical care to health

Extensive versus intensive margins, quantity and quality of life issues, demand for medical care, empirical studies of the demand for medical care, application to demand for physicians, nurses, drugs, technology

Phelps, Ch.3
Phelps, Ch.4
Phelps, Ch.5
Cropper, Maureen "Measuring the Benefits from Reduced Morbidity" American Economic Review, 71, 1981, p. 235-240.

April 8
IV. The supply of physicians April 22
V. Hospitals Hospital organization, incentives and the demands and costs facing hospitals, certificate of need regulations, for profit and nonprofit hospitals, hospitals demand for medical staff and supply of services to patients

Phelps, Ch.8
Phelps, Ch.9

April 29
VI. Legal issues May 6 Student presentations

May 13
VII. International Comparisons of Health Care Systems

FINAL EXAM WEDNESDAY MAY 20 4:00 - 7:00 pm D027
Some Potential Topics for Health Economics Research Paper

1. Critically evaluating an emergency medical system from an economic perspective

See me to discuss the kinds of resources being analyzed in the Policy Centerís current analysis of the Stanislaus county EMS and for references relating to your interests. 2. Clintonís proposed health care reform, implications for equity and efficiency Aaron H.J. Serious and Unstable Condition: Financing Americaís Health Care, Brookings Institution, Washington, D.C., 1991.

Drake,David F., Reforming the health care market: An interpretive economic history, Washington, D.C.: Georgetown University Press, 1994.

Journal of Health Politics, Policy and Law, 18 : 2 and 3 Special issues on US Health Care Reform, 1993.

3. Problems with creating health care policy in Less Developed Countries Bell, David E.; Reich, Michael R., eds., Health, nutrition, and economic crises: Approaches to policy in the third world, Dover, Mass.: Auburn House, 1988

Lee, K. and Mills A., The Economics of Health in Developing Countries, Oxford University Press, Oxford, 1983.

World-Bank, World development report, 1993: Investing in health, Oxford University Press for the World Bank, Oxford; New York; Toronto and Melbourne, 1993.

4. Medicare Reform Swartz, Katherine, "Medicare Reform Should Be More Than Federal Budget Reform--And It Should Be Done Soon", Inquiry; 34(1), Spring 1997, pages 5-7.

Moon,Marilyn, Medicare now and in the future , Washington, D.C.: Urban Institute Press; distributed by University Press of America, Lanham, Md., 1993. [ISBN: 0-87766-591-5, pbk]

5. Medicaid Reform Mobley, Lee Rivers, "Power in the Market for Medi-Cal Services" , Review of Industrial Organization, 10(4), August 1995, pages 487-510.

Bachman, Sara S., Altman, Stuart H., Beatrice, Dennis F., "What Influences a State's Approach to Medicaid Reform?", Inquiry, 25(2), Summer 1988, pages 243-50.

Kern, Rosemary Gibson, "The Unfinished Agenda for Medicaid Reform", in Kern, Rosemary Gibson and Windham, Susan R. Medicaid and other experiments in state health policy. With Paula Griswold, American Enterprise Institute Studies in Health Policy, no. 437, Washington, D.C.: American Enterprise Institute for Public Policy Research, 1986, pages 51-66.

6. Nursing "shortages" Krall, Lisi, Prus, Mark J., "Institutional Changes in Hospital Nursing" , Journal of Economic Issues; 29(1), March 1995, pages 67-82.

Friss, Lois , "The Nursing Shortage: Do We Dislike It Enough to Cure It?",Inquiry, 25(2), Summer 1988, pages 232-42.

McKibbin, Richard C., The nursing shortage and the 1990s: Realities and remedies, Kansas City, Mo.: American Nurses Association, 1990.