Health Economics Theories, Insights, and Industry Studies, Revised Edition

, by Santerre, Rexford E.; Neun, Stephen P.

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ISBN: 9780030256295 | 0030256291
Cover: Hardcover
Copyright: 3/10/1999

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Now available in a revised edition, Health Economics, Theories, Insights, and Industry Studies features a lively coverage of economic theory and its application to the many sectors of health care. Its comprehensive and fundamental approach is timely and challenging. Whether students have minimal or extensive backgrounds in economics, Health Economics is a sound choice for instilling the economist's view of the health sector.

PART I Basic Health Care Economic Tools and Institutions

(200)

Introduction

(27)

What Is Health Economics?

(1)

The Four Basic Questions

(5)

Production and Allocative Efficiency and the Production Possibilities Curve

(2)

The Distribution Question

(1)

Implications of the Four Basic Questions

(1)

Economic Models and Analysis

(1)

Economic Models

(1)

We Should Address Some Basic Questions

(4)

Empirical Testing of Health Economic Theories

(1)

Positive and Normative Analysis

(1)

The Net Benefit Calculus

(2)

The Opportunity Cost of 1 Million Medical Dollars

(1)

The Theories X and Y of Health Economics

(2)

Summary

(1)

Review Questions and Problems

(2)

References

(1)

Appendix to Chapter 1

(4)

CEBS Questions

(2)

Health Care Systems and Institutions

(28)

Elements of a Health Care System

(1)

The Role and Financing Methods of Third-Party Payers

(3)

Reimbursement Method of Third-Party Payers

(4)

Physician Utilization Rates in Salary and Fee-Based Reimbursement Systems

(2)

The Production of Medical Services

(1)

Medical Technology in Canada, Germany, and the United States

(2)

Physician Choice and Referral Practices

(1)

The Three National Health Care Systems Summarized

(2)

An Overview of the U.S. Health Care System

(5)

Financing of Health Care in the United States

(3)

Reimbursement for Health Care in the United States

(1)

Production of Health Services and Provider Choice in the United States

(1)

Consumer Satisfaction with the Health Care Systems in 11 Countries

(2)

Summary

(1)

Review Questions and Problems

(1)

References

(1)

CEBS Questions

(2)

Health, Medical Care, and Medical Spending: An Economic Perspective

(26)

What Is Health?

(1)

Why Good Health? Utility Analysis

(2)

What Is Medical Care?

(2)

The Production of Good Health

(5)

Empirical Evidence on the Production of Health in the United States

(1)

The Determinants of Health among Adults

(1)

The Impact of Specific Medical Services on Life Expectancy

(3)

A Look at the Major Causes of Death in the United States in 1996

(4)

The Determinants of Health among Infants

(3)

The Impact of Drug Use on the Number of Newborns with Low Birthweight in New York City

(1)

Health Care Spending in the United States

(4)

Sources and Uses of Medical Funds in the United States in 1993

(2)

Summary

(1)

Review Questions and Problems

(1)

References

(2)

The Demand for Medical Services

(38)

The Demand for Health Care Services and the Law of Demand

(12)

The Utility-Maximizing Rule

(2)

The Law of Demand

(2)

Other Economic Demand-Side Factors

(2)

The Relationship between Health Insurance and the Demand for Medical Services

(5)

Moral Hazard

(1)

Noneconomic Determinants of the Demand for Medical Services

(1)

Out-of-Pocket Health Expenditures in 1996

(4)

The Market Demand for Health Care

100

(1)

The Fuzzy Demand Curve

100

(1)

Chicken Soup or Physician Care for the Common Cold?

101

(2)

Elasticities

103

(1)

Own-Price Elasticity of Demand

103

(1)

Those Pointy-Headed Economists

104

(4)

Other Types of Elasticity

107

(1)

Empirical Estimation

108

(1)

An International Look at the Relationship between Income and Health Care Spending

109

(4)

Own-Price, Income, Cross-Price, and Time Cost Elasticity Estimates

110

(1)

The Impact of Insurance on the Demand for Medical Services

111

(2)

Time is Money: It Was Then and Still Is Now

113

(2)

The Impact of Noneconomic Factors on the Demand for Medical Services

114

(1)

Summary

115

(1)

Review Questions and Problems

115

(2)

References

117

(2)

CEBS Questions

119

(3)

The Demand for Medical Insurance: Traditional and Managed Care Coverage

122

(23)

The Demand for Private Health Insurance

123

(6)

Deriving the Demand for Private Health Insurance

123

(3)

Factors Affecting the Quantity Demanded of Health Insurance

126

(3)

The Demand for Employer Contributions to Health Insurance Premiums

129

(2)

The Health Insurance Product: Traditional versus Managed Care Insurance

131

(6)

Financial Incentives and Management Strategies Facing Consumer/Patients

134

(1)

Financial Incentives and Management Strategies Facing Health Care Providers

134

(3)

MCOs and the Cost and Quality of Medical Care

137

(2)

Satisfaction with Managed Care in Switzerland

139

(1)

The Regulation of MCOs

140

(2)

Summary

142

(1)

Review Questions and Problems

142

(1)

References

143

(2)

Medical Care Production and Costs

145

(32)

The Short-Run Production Function of the Representative Medical Firm

146

(8)

Marginal and Average Products

148

(5)

Elasticity of Input Substitution

153

(1)

A Production Function for Hospital Admissions

154

(1)

Short-Run Cost Theory of the Representative Medical Firm

155

(8)

The Short-Run Cost Curves of the Representative Medical Firm

156

(2)

Short-Run Per-Unit Costs of Production

158

(4)

Factors Affecting the Position of the Short-Run Cost Curves

162

(1)

Estimating a Short-Run Cost Function for Hospital Services

163

(1)

The Cost-Minimizing Input Choice

164

(1)

Long-Run Costs of Production

165

(1)

The Shadow Price of an Admitting Physician

166

(3)

Long-Run Costs Curves

166

(2)

Shifts in the Long-Run Average Cost Curve

168

(1)

Hospitals: Mind Your Business

169

(2)

Long-Run Cost Minimization and the Indivisibility of Fixed Inputs

170

(1)

Neoclassical Cost Theory and the Production of Medical Services

171

(1)

Summary

172

(1)

Review Questions and Problems

173

(1)

References

174

(1)

CEBS Questions

175

(2)

Cost-Benefit Analysis

177

(24)

Cost Identification Analysis

178

(1)

Cost-Benefit Analysis

179

(12)

The Practical Side of Using Cost-Benefit Analysis to Make Health Care Decisions

183

(1)

Discounting

184

(2)

The Value of Life

186

(4)

An Application of Cost-Benefit Analysis---Should College Students Be Vaccinated?

190

(1)

Cost Effectiveness Analysis

191

(1)

``Parents, How Much Is Your Young Child Worth?''

192

(3)

An Application of Cost Effectiveness Analysis: Autologous Blood Donations---Are they Cost Effective?

193

(2)

The Monetary Value of Improvements in Health From 1970 to 1990: Was It Worth the Cost?

195

(1)

A Mile a Day Keeps the Heart Surgeon Away

195

(1)

Summary

196

(1)

Review Questions and Problems

196

(2)

References

198

(3)

PART II Alternative Objectives and Environments Facing Health Care Providers

201

(100)

Profit Maximization in Perfectly Competitive Medical Markets

203

(39)

What Is Perfect Competition?

204

(2)

The Price and Output Behavior of a Competitive Firm in the Short Run

206

(5)

The Profit maximization Assumption

206

(2)

Profit Maximization by a Competitive Firm

208

(2)

Shutdown Point of the Perfectly Competitive Firm

210

(1)

Short-Run Supply Theory

211

(3)

Factors Influencing the Position of the Short-Run Market Supply Curve

212

(1)

Price Elasticity of Supply

213

(1)

Price Elasticity of Supply Estimates for Physician Services in Ontario

214

(2)

Short-Run Equilibrium in a Competitive Market for Medical Services

216

(2)

Surpluses and Shortages

217

(1)

Comparative Static Analysis

218

(2)

Long-Run Entry and Exit in a Perfectly Competitive Market

220

(1)

The Effect of Increased Competition on Dental Prices in New Zealand

221

(2)

Taxes and the Location of For-Profit Hospitals in the United States

223

(1)

Using Supply and Demand to Explain Rising Health Care Costs

224

(1)

A Growing Economy Can Pay Its Health Care Bills

225

(2)

The Competitive Market for Medical Inputs

227

(6)

The Individual Firm's Demand for an Input

227

(2)

The Market Demand and Supply of a Medical Input

229

(2)

Equilibrium in the Market for an Input

231

(1)

Comparative Static Analysis

232

(1)

Economic Incentives and the Supply of Psychiatric Labor Services

233

(1)

The Regulated Market for Human Organs

234

(2)

Summary

236

(1)

Review Questions and Problems

237

(2)

References

239

(1)

CEBS Questions

239

(3)

Profit Maximization in Imperfect Markets

242

(35)

Market Structure and Market Power

243

(2)

The Monopoly Model

245

(8)

Demand and Revenue Curves for a Monopolist

245

(3)

The Monopolist's Profit-Maximizing Level of Output

248

(1)

Barriers to Entry

249

(2)

A Comparative Look at the Competitive and Monopoly Models

251

(1)

Price Discrimination

252

(1)

CON Regulations as Barriers to Entry into the Dialysis Industry

253

(3)

Imperfect Consumer Information

256

(4)

The Demand for Information

257

(1)

Consumer Information, Product Pricing, and Quality

258

(2)

Optometrist Advertising, Pricing, and Quality

260

(1)

Monopsony and the Market for Medical Services

260

(2)

The Monopsony Power of Blue Cross Plans in the Late 1970s

262

(2)

Product Differentiation

264

(4)

Spatial Differentiation

264

(1)

Quality Differentiation

265

(1)

Image Differentiation

265

(1)

Product Differentiation and Consumer Demand

266

(2)

Structure, Conduct, and Performance Paradigm

268

(3)

Summary

271

(1)

Review Questions and Problems

272

(1)

References

273

(1)

CEBS Questions

274

(3)

Non-for-Profit Objectives

277

(24)

Alternative Models of Firm Behavior

278

(10)

Quantity Maximization

278

(2)

Utility Maximization Models

280

(5)

The Physician Control Model

285

(2)

The Supplier-Induced Demand Theory

287

(1)

Physician Behavior and the Supplier-Induced Demand Theory: Evidence from Japan and the United States

288

(1)

A Theoretical Comparison of the Behavior of For-Profit and Not-for-Profit Health Care Providers

289

(2)

Why Are Not-for-Profit Health Care Providers So Prevalent?

290

(1)

Do Physicians Target Their Income?

291

(2)

The Economic Implications of Not-for-Profit Firms

291

(2)

Technical Efficiency and the Behavior of Not-for-Profit and For-Profit Nursing Homes

293

(1)

The Ownership Conversion of Not-for-Profit to For-Profit Health Care Providers

294

(2)

Summary

296

(1)

Review Questions and Problems

297

(1)

References

298

(1)

CEBS Questions

299

(2)

PART III Government and Health

301

(72)

Government, Health, and Medical Care

303

(40)

Reasons for Government Intervention

304

(3)

Types of Government Intervention

307

(2)

Public Goods

307

(1)

Externalities

308

(1)

Special Interest Group Antilegislation

309

(10)

Regulations

318

(1)

Alcohol Commercial Bans and Alcohol Abuse: An International Perspective

319

(2)

The Cost of waiting for Hospital Services in Canada

321

(14)

Government Regulations: A Summary

328

(1)

Antitrust Laws

328

(4)

Public Enterprise

332

(1)

The Redistribution Function of Government

333

(2)

Why Government Should Subsidize Medical Students' Education

335

(2)

Who Pays for Medical Services in the United States?

337

(1)

Summary

338

(1)

Review Questions and Problems

339

(1)

References

340

(1)

CEBS Questions

341

(2)

Government as Health Insurer

343

(30)

Why Does the Government Produce Health Insurance?

343

(2)

The Medicaid Program

345

(3)

The Financing and Cost of Medicaid

347

(1)

Interstate Differences in Medicaid Fees

348

(2)

The State Children's Health Insurance Program

349

(1)

The Cost Effectiveness of Recent Eligibility Changes in the Medicaid Program

350

(1)

The Medicare Program

351

(6)

The Financing and Cost of medicare

351

(3)

Recent Medicare Program Reforms

354

(3)

The Economics of DRG Creep

357

(11)

Medicare and Managed Care

366

(2)

Advertising of MCOs---Information or Persuasion?

368

(1)

Summary

368

(1)

Review Questions and Problems

369

(1)

References

370

(1)

CEBS Questions

371

(2)

PART IV Health Industry Studies

373

(211)

The Private Health Insurance Industry

375

(37)

A Brief History of the Private Health Insurance Industry

376

(1)

The Structure of the Private Health Insurance Industry

377

(6)

Number, Types, and Size Distribution of Health Insurers

378

(2)

Buyer Characteristics

380

(1)

Barriers to Entry

381

(1)

Consumer Information

382

(1)

The Conduct of the Private Health Insurance Industry

383

(2)

Price Competition among Health Insurers

383

(2)

Tracing the Profitability Cycle of Health Insurance

385

(5)

Managed-Care Organizations and Insurance Premiums

386

(2)

Cherry-Picking Behavior and Benefit Denial

388

(1)

Adverse Selection and Community versus Experience Rating

389

(1)

Adoption of Community Rating in New York State

390

(1)

The Performance of the Private Health Insurance Industry

391

(6)

Output of Private Health Insurance

391

(6)

Who Pays for Employer-Mandated Health Insurance?

397

(8)

The Price of Private Health Insurance

402

(2)

The Private Health Insurance Industry and Health Care Cost Containment Innovations

404

(1)

Summary

405

(1)

Review Questions and Problems

406

(2)

References

408

(2)

CEBS Questions

410

(2)

The Physician Services Industry

412

(43)

The Structure of the Physician Services Industry

413

(5)

The Number of Physicians in the United States

414

(1)

Specialty Distribution of Physicians in the United States

415

(3)

An Economic Analysis of Specialty Choice

418

(6)

Mode of Practice

419

(1)

Buyers of Physician Services and Methods of Remuneration

420

(1)

Reimbursement Practices of Managed-Care Buyers of Physician Services

421

(1)

Barriers to Entry

422

(2)

Should I Join the AMA?

424

(5)

Production, Costs, and Economies of Scale

426

(2)

Summary of the Structure of the Market for Physician Services

428

(1)

The Conduct of the Physician Services Industry

429

(9)

The Impact of Alternative Compensation Schemes on Physician Behavior

429

(2)

The Supplier-Induced Demand Hypothesis

431

(4)

Geographical Variations in the Utilization of Physician Services

435

(2)

The Impact of MCOs on the Physician Services Market

437

(1)

Does It Pay Physicians to Advertise?

438

(3)

Defensive Medicine and Medical Malpractice Reform

440

(1)

The Performance of the Physician Services Industry

441

(4)

Expenditures on Physician Services

441

(1)

The Physician Services Price Inflation Rate

442

(3)

The Economics of Hospital Admitting Privileges

445

(3)

The Utilization of Physician Services

446

(1)

Physician Income

447

(1)

Summary

448

(1)

Review Questions and Problems

449

(1)

References

450

(3)

CEBS Questions

453

(2)

The Hospital Services Industry

455

(53)

The Structure of the Hospital Services Industry

456

(5)

Number, Types, and Size Distribution of U. S. Hospitals

456

(3)

Defining the Relevant Product and Geographical Markets for Hospital Services

459

(2)

Determining the Number of Equally Sized Hospitals a Market Area Can Support Efficiently

461

(11)

Measuring the Structural Competitiveness of the Market

462

(1)

Barriers to Entry

463

(5)

Number, Types, and Size Distribution of the Buyers of Hospital Services

468

(3)

Type of Product

471

(1)

Informed Choices and Financial Incentives

472

(2)

Consumer (Mis)Information

473

(1)

Summary of the Structure of the Hospital Services Industry

473

(1)

The Conduct of the Hospital Services Industry

474

(7)

Market Structure and Hospital Behavior

475

(2)

Hospital Ownership and Hospital Behavior

477

(2)

Managed-Care Buyers and Hospital Behavior

479

(2)

Drive-Through Deliveries

481

(8)

Price Regulations and Hospital Behavior

482

(1)

Integrated Delivery Systems

483

(5)

Summary of the Conduct of the Hospital Services Market

488

(1)

The Performance of the Hospital Services Industry

489

(8)

The Growth in Hospital Expenditures

489

(2)

The Hospital Services Price Inflation Rate

491

(1)

Hospital Input Usage and Utilization

492

(5)

The Relative Performance of Hospitals in the United States and Canada

497

(1)

Summary

497

(1)

Review Questions and Problems

498

(2)

References

500

(6)

CEBS Questions

506

(2)

The Pharmaceutical Industry

508

(47)

The Structure of the Pharmaceutical Industry

509

(5)

Number and Size Distribution of Sellers

509

(3)

The Buyer Side of the Pharmaceutical Market

512

(2)

Orphan Drugs and the Salami-Slicing Problem

514

(2)

What Factors Influence the Drug Substitution Practices of Pharmacists?

516

(7)

Barriers to Entry

518

(3)

Consumer Information and the Role of the FDA

521

(2)

The Switch from Rx to OTC

523

(1)

The Structure of the Pharmaceutical Industry: A Summary

524

(1)

The Conduct of the Pharmaceutical Industry

524

(5)

Pricing Behavior

524

(4)

Promotion of Pharmaceutical Products

528

(1)

Can Physician Drug Recommendations Be Bought?

529

(7)

Product Innovation

530

(6)

The Conduct of the Pharmaceutical Industry: A Summary

536

(1)

The Performance of the Pharmaceutical Industry

536

(3)

The Relative Price Inflation Rate of Pharmaceutical Products

537

(2)

Pharmaceutical Price Differences in the United States and Canada

539

(5)

Output of New Pharmaceutical Products

541

(2)

Profits in the Pharmaceutical Industry

543

(1)

Has the United States Remained the World Leader in Pharmaceutical Innovation?

544

(2)

An International Comparison of Pharmaceutical Profits

546

(3)

The Performance of the Pharmaceutical Industry: A Summary

548

(1)

Summary

549

(1)

Review Questions and Problems

549

(1)

References

550

(3)

CEBS Questions

553

(2)

An Overview of Health Care Reform

555

(29)

The Performance of the U. S. Health Care System: A Summary and an International Comparison

557

(7)

Summarizing the Structure, Conduct, and Performance of the Various Medical Care Markets

557

(4)

The U. S. Health Care Economy: An International Comparison

561

(3)

An Overview of Health Care Reform in the United States

564

(1)

Health Care Reform at the Federal Level

565

(7)

Medical Savings Accounts

565

(4)

Individual Mandates

569

(1)

Managed Competition

570

(1)

National Health Insurance

571

(1)

Health Care Reform at the State Level

572

(6)

Hawaii: The Case of Employer Mandates

573

(1)

Maryland: The Case of Regulation

574

(1)

Minnesota: The Case of Regulated Competition

575

(1)

Oregon: The Case of Rationing Medicaid Services

576

(1)

What Can Be Gained from State Attempts at Health Care Reform?

577

(1)

An Overview of the Clinton Health Care Plan

578

(2)

The Collapse of the Clinton Health Care Plan

579

(1)

Summary

580

(1)

Review Questions and Problems

581

(1)

References

582

(2)

Appendix-A Brief Exposure to Econometrics

584

(29)

Glossary

613

(14)

Index

627

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Health Economics Theories, Insights, and Industry Studies, Revised Edition

Summary

Table of Contents

Supplemental Materials