The Economics of Health and Medical Care

This newly updated and expanded edition strikes the necessary balance of population-based health economics and the more traditional. market-oriented approach to health care economics.

Introduction

1

(1)

Three Major Tasks of Economics

2

(1)

Tools Used In Economic Analysis

3

(7)

Outline of Contents

10

(2)

How To Use This Book

12

(3)

PART I---DESCRIPTIVE ECONOMICS

15

(38)

Output of the Health Care Sector

17

(18)

Introduction

17

(1)

Medical Care

18

(3)

Risk Shifting and Health Insurance

21

(2)

Health Status

23

(7)

Consumption and Investment Output

30

(5)

Economic Dimensions of the Health Care System

35

(18)

Introduction

35

(1)

Economic Units and Economic Flows

36

(8)

Cost of Activities

44

(9)

PART II---EXPLANATORY ECONOMICS

53

(214)

Demand for Medical Care: A Simple Model

55

(25)

The Concept of Demand

55

(1)

Individual Demand: The Price-Quantity Relation

56

(4)

Deriving the Demand Relationship

60

(4)

Market Demand

64

(1)

Measuring Quantity Responsiveness To Price Changes

64

(5)

Insurance, Out-of-Pocket Price, and Quantity Demanded

69

(4)

Elasticity of Demand Estimates

73

(7)

Additional Topics in the Demand for Health and Medical Care

80

(16)

Introduction

80

(1)

Implications of Health Care for Life and Health

81

(1)

External and Social Demand for Medical Care

82

(1)

Influence of Quality on the Demand for Medical Care

83

(1)

Time and Money Costs

84

(1)

The Demand for Health

85

(1)

Agency Theory and Supplier-Induced Demand

86

(10)

Health Care Production and Costs

96

(30)

Introduction

96

(1)

Production: The Input-Output Relation

97

(6)

Short-Run Cost-Output Relations

103

(5)

Cost Curve Position

108

(2)

Economies of Scope

110

(2)

Long-Run Cost Curves

112

(1)

Empirical Estimation of Cost Curves

113

(13)

Behavior of Supply

126

(21)

Introduction

126

(1)

A Model of Supply Behavior: An Individual For-Profit Company

127

(7)

Market Supply

134

(1)

Supply Behavior of Nonprofit Agencies: The Output Maximization Hypothesis

135

(3)

Supply Decisions Involving Quality

138

(2)

Supply Behavior of Nonprofit Agencies: The Administrator as Agent Model

140

(7)

Provider Payment

147

(27)

Introduction

147

(1)

Principal-Agent Relationships Among Payers and Providers

148

(1)

Physician Reimbursement

148

(5)

Hospital Reimbursement

153

(4)

Diagnosis-Related Groups

157

(3)

Long-Term Care Facility Reimbursement

160

(1)

Health Maintenance Organizations

161

(2)

Provider Supply under Managed Care

163

(11)

Competitive Markets

174

(28)

Introduction

174

(1)

The Competitive Model: Assumptions

175

(1)

The Competitive Model: Predictions

176

(9)

Evidence for and against the Competitive Model

185

(3)

Competitive Bidding

188

(2)

Supplier-Induced Demand

190

(12)

Market Power in Health Care

202

(26)

Introduction

202

(1)

Monopolistic Markets

203

(7)

Monopsony--Buyers' Market Power

210

(2)

Market Structure and Its Determinants

212

(5)

Nonprice Competition and Market Power

217

(11)

Health Insurance

228

(20)

Introduction

228

(1)

Demand for Health Insurance

229

(10)

Supply of Health Insurance

239

(3)

Adverse Selection in Health Insurance Markets

242

(6)

The Labor Market

248

(19)

Introduction

248

(1)

Demand for Labor

249

(3)

Labor Supply

252

(4)

The Competitive Labor Market

256

(3)

Market Power in Labor Markets

259

(8)

PART III---EVALUATIVE ECONOMICS

267

(128)

Value Judgments and Economic Evaluation

269

(22)

Introduction

269

(1)

Values and Standards in Economic Evaluation

270

(1)

Efficient Output Levels

271

(9)

Optimal Health Insurance

280

(1)

Extra-Welfarism

281

(2)

Concepts of Equity

283

(2)

Goals of Health Policy

285

(6)

Financing Health Care

291

(16)

Introduction

291

(1)

Financing Means and Burdens in the United States

292

(1)

Economic Analysis of Alternative Payment Sources

293

(8)

The Incidence of Alternative Types of Health Care Financing

301

(3)

The Administrative Cost of Alternative Types of Health Care Financing

304

(3)

Public Health Insurance

307

(23)

Introduction

307

(1)

Public Health Insurance

307

(6)

Uncovered Care

313

(1)

Some Trends in Public Health Insurance

314

(3)

Goals of Medicare

317

(1)

Policy Alternatives for Medicare

318

(4)

Policy Alternatives for Medicaid

322

(8)

Reform of the Health Care Market

330

(20)

Introduction

330

(1)

Insurance Market Reform

331

(7)

Managed Care

338

(6)

Information and Consumer Choice

344

(6)

Regulation and Antitrust Policy in Health Care

350

(24)

Ronald P. Wilder

Introduction

350

(2)

Regulation of Health Care

352

(5)

Antitrust Policy

357

(17)

Economic Evaluation of Health Services

374

(21)

Introduction

374

(1)

The Purposes of Economic Evaluation

375

(1)

Selecting the Right Type of Analysis

375

(1)

Guidelines for Conducting a Cost-Effectiveness Analysis

376

(10)

Cost-Benefit Analysis

386

(9)

Appendix A---Glossary of Health Economics Terms

395

(20)

Appendix B---Answers to Odd-Numbered Questions

415

(10)

Index

425

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The Economics of Health and Medical Care

Summary

Table of Contents

Supplemental Materials