Health Economics and Policy

HealtH economics anDPolicy James W. Henderson

seventH edition

To register or access your online learning solution or purchase materials for your course, visit www.cengagebrain.com.

HealtH economics

anDPolicy James W. Henderson

seventH edition

06757_cvr_ptg01_hires.indd 1 7/27/17 4:58 PM

Health Economics and Policy

7TH EDITION

James W. Henderson

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

06757_fm_ptg01_i-xviii.indd 1 04/08/17 5:31 PM

Printed in the United States of America Print Number: 01 Print Year: 2017

Unless otherwise noted, all content is © Cengage

ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced or distributed in any form or by any means, except as permitted by U.S. copyright law, without the prior written permission of the copyright owner.

Library of Congress Control Number: 2017947973

ISBN-13: 978-1-337-10675-7

Cengage Learning 20 Channel Center Street Boston, MA 02210 USA

Cengage Learning is a leading provider of customized learning solutions with employees residing in nearly 40 different countries and sales in more than 125 countries around the world. Find your local representative at www.cengage.com.

Cengage Learning products are represented in Canada by Nelson Education, Ltd.

To learn more about Cengage Learning Solutions, visit www.cengage.com

Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com

Health Economics and Policy, Seventh Edition James W. Henderson

Senior Vice President: Erin Joyner

Product Director: Jason Fremder

Product Manager: Christopher Rader

Senior Project Manager: Julie Dierig

Content Developer: Kayci Wyatt, MPS

Executive Assistant: Denisse Zavala-Rosales

Associate Marketing Manager: John Carey

Manufacturing Planner: Kevin Kluck

Production Management and Composition: Lumina Datamatics, Inc.

Sr. Art Director: Michelle Kunkler

Cover Image: lenetstan/Shutterstock.com

Intellectual Property

Analyst: Jennifer Bowes

Project Manager: Reba Frederics

For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706

For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions

Further permissions questions can be emailed to permissionrequest@cengage.com

06757_fm_ptg01_i-xviii.indd 2 04/08/17 5:31 PM

iii

Brief Contents

Preface xv

PART 1 The Relevance of Economics in Health and Medical Care CHAPTER 1 U.S. Medical Care: An Uncertain Future 1

CHAPTER 2 Using Economics to Study Health Issues 25

CHAPTER 3 Analyzing Medical Care Markets 65

CHAPTER 4 Economic Evaluation in Health Care 115

PART 2 Demand-Side Consideration CHAPTER 5 Demand for Health and Medical Care 151

CHAPTER 6 Population Health 180

PART 3 Supply-Side Consideration CHAPTER 7 The Market for Health Insurance 208

CHAPTER 8 Managed Care 245

CHAPTER 9 The Physicians’ Services Market 265

CHAPTER 10 The Hospital Services Market 305

CHAPTER 11 The Market for Pharmaceuticals 340

PART 4 Public Policy in Medical Care Delivery CHAPTER 12 Medicare 366

CHAPTER 13 Medicaid 390

CHAPTER 14 Medical Care Systems Worldwide 409

CHAPTER 15 Medical Care Reform in the United States 453

CHAPTER 16 Lessons for Public Policy 474

Glossary 480 Index 488

06757_fm_ptg01_i-xviii.indd 3 04/08/17 5:31 PM

06757_fm_ptg01_i-xviii.indd 4 04/08/17 5:31 PM

Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

PART 1 The Relevance of Economics in Health and Medical Care

C H A P T E R 1 U.S. Medical Care: An Uncertain Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Historical Developments in the Delivery of Medical Care 2 Postwar Experience 2 Concern over High and Rising Spending 4 Changes in Medical Care Delivery 7

Health Economics Defined 12

Ten Key Economic Concepts 14

Summary and Conclusion 15

Questions and Problems 17

References 18

Appendix 1A The Medical Care Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Measuring Price Changes with Index Numbers 20

Medical Care Price Index 20

Problems with Using a Fixed-Weight Index as a Measure of Inflation 21

Measuring Inputs Instead of Outcomes 22

Measuring Quality Changes 22

Accounting for New Products 22

Other Problems 23

Alternative Methods to Measure Medical Care Inflation 23

Summary and Conclusions 24

References 24

C H A P T E R 2 Using Economics to Study Health Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

The Relevance of Economics in Health Care 26

Critical Assumptions in Economics 27

The Scientific Method 28

Model Building 28

Problem Solving 30 Economic Optimization 30 Supply and Demand 33 The Law of Demand 33

Price Elasticity of Demand 35 The Law of Supply 38

06757_fm_ptg01_i-xviii.indd 5 04/08/17 5:31 PM

vi Contents

Equilibrium 41

The Competitive Model 42

The Theory of Firm Behavior 42

The Economics of Price Controls 43 The Impact of an Excise Tax 45

Welfare Implications 48

Imperfect Competition 49

Summary and Conclusion 51

Questions and Problems 52

References 53

Appendix 2A Graphing Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Some Basics of Graphing 54

Functional Relationships 55

Time-Series Graphs 56

Cross-Section Graphs 57

Appendix 2B Statistical Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Descriptive Statistics 59

Measures of Central Tendency 59

Measures of Dispersion 60

Correlation 61

Regression 61

Least Squares Methodology 62

Measures of Significance 64

Summary and Conclusions 64

C H A P T E R 3 Analyzing Medical Care Markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Should Medical Care Markets Exist? 67

The Medical Care Marketplace 69

Health Care Spending 69 Access to Care 73 Medical Outcomes 73 Underlying Factors that Drive Spending 74

The Competitive Market Model 74 Market Failure 80 Market Power 81 Externalities 83 Public Goods 84

Market Failure in Medical Markets 86 Traditional Sources of Market Failure 88

Imperfections in Medical Markets 90 Imperfect Information 90

Government Intervention in Medical Markets 93 Regulation 94

06757_fm_ptg01_i-xviii.indd 6 04/08/17 5:31 PM

Contents vii

Tax Policy 95

Government Failure 97

Summary and Conclusions 98

Questions and Problems 100

References 100

Appendix 3A The Economics of Consumer Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102

Consumer Preferences: Indifference Curves 102

Consumer Constraints: The Budget Line 103

Consumer Choice: The Concept of Equilibrium 104

Implications of the Model 105

Conclusion 105

Appendix 3B Production and Cost in the For-Profit Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106

Production with Two Variable Inputs 106

Production Isoquants 106

Production in the Short Run 108

Optimal Input Use 109

Extensions of the Model 111

Estimating Production Functions 111

Production to Cost 112

Long-Run Costs 113

Conclusion 114

C H A P T E R 4 Economic Evaluation in Health Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115

Importance of Economic Evaluation 118

Meaning of Economic Efficiency 118

Types of Economic Evaluation 119 Cost-of-Illness Studies 119 Cost-Benefit Analysis 119 Cost-Effectiveness Analysis 124

Steps in Performing a Cost-Effectiveness Analysis 130

Approaches to Modeling in Economic Evaluation 132

Decision Trees 132

Markov Models 134

Markov Decision Models 135

Sensitivity Analysis 136

Economic Evaluation in Practice 138

Case Studies 140 Lung Cancer Screening 140 Cervical Cancer Screening 140 HPV Vaccination for Preadolescent Girls 141 Drug Treatment for Alzheimer’s Disease 141 Mammography Screening 142

06757_fm_ptg01_i-xviii.indd 7 04/08/17 5:31 PM

viii Contents

Summary and Conclusions 143

Questions and Problems 145

References 147

Appendix 4A Checklist for Assessing Economic Evaluations. . . . . . . . . . . . . . . . . . . . . . . . . . . 149

PART 2 Demand-Side Consideration

C H A P T E R 5 Demand for Health and Medical Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

The Demand for Health 152

The Production of Health 153

Measures of Health Status 155

Determinants of Health Status 159

The Role of Public Health and Nutrition 161

The Demand for Medical Care 163

Medical Care as an Investment 163

Factors Influencing Demand 164

Measuring Demand 171

Summary and Conclusions 175

Questions and Problems 176

References 177

C H A P T E R 6 Population Health. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

Health Outcomes 182

The Relationship between Social Class and Health 184

International Comparisons 191

Health Outcomes 192

Other Factors 196

Tobacco Use 197

Alcohol Use 200

Obesity and Its Consequences 201

Summary and Conclusions 204

Questions and Problems 205

References 205

PART 3 Supply-Side Consideration

C H A P T E R 7 The Market for Health Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

The Market for Health Insurance 209

Historical Setting 209

Types of Insurance 210

Health Insurance Providers 211

Private Insurance Demand 212

06757_fm_ptg01_i-xviii.indd 8 04/08/17 5:31 PM

Contents ix

The Theory of Risk and Insurance 212

Health Insurance and Market Failure 215

Information Problems 217

The Optimal Insurance Plan 223

State-Level Insurance Regulation 228

The Economics of Mandates 228

The Practice of Self-Insurance 231

Medical Care for the Uninsured 232

Counting the Uninsured 233

The Duration of Uninsurance 233

Demographics of the Uninsured 234

Small Group Factors 234

The Relationship between Insurance and Health 236

The Safety Net for the Uninsured 238

Summary and Conclusions 241

Questions and Problems 242

References 242

C H A P T E R 8 Managed Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

History of Managed Care 246

Types of Managed Care Plans 247

Types of Managed Care Organizations 248

The Theory of Managed Care Savings 250 Selective Contracting 250 Risk-Sharing Arrangements 250 Utilization Review 252

Managed Care Strategies 253

Market Alternatives 253

Consumer-Directed Health Plans 254

Innovative Delivery Concepts 256

Evidence of Managed Care Savings 257

Evidence of Quality Differences between Managed Care and Fee-for-Service Care 259

Managed Care and Its Public Image 259

The Future of Managed Care 261

Summary and Conclusions 262

Questions and Problems 263

References 263

C H A P T E R 9 The Physicians’ Services Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

The Theory of Labor Markets 266

Input Pricing 266

Demand for Inputs 267

Human Capital Investment 268

The Market for Physicians’ Services 271

06757_fm_ptg01_i-xviii.indd 9 04/08/17 5:31 PM

x Contents

Specialty Distribution 272

Geographic Distribution 273

Physician Compensation 274

Alternative Payment Practices 275

Pricing Physicians’ Services 278

Organization of Physicians’ Practices 282

Models of Physician Behavior 285

The Physician as Monopolistic Competitor 285

The Physician as Imperfect Agent 287

Influencing Physician Behavior 288

Do Physicians Respond to Incentives? 288

The Market for Nursing Services 291

The Market for Dental Services 294

Summary and Conclusions 296

Questions and Problems 298

References 298

Appendix 9A Medical Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

The Purpose and Function of Tort Law 300

International Differences 301

References 304

C H A P T E R 1 0 The Hospital Services Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

A Brief History of American Hospitals 306

The U.S. Institutional Setting 309 Hospital Classification 309

Hospital Spending 311 Cost Shifting: Theory and Practice 312 The Theory of Cost Shifting 312 The Practice of Cost Shifting 314

Structure of the Hospital Market 316

Cost-Containment Strategies in the United States 319

Diagnosis-Related Groups 319

Pricing Hospital Services 323

The Role of the Not-for-Profit Organization in the Hospital Industry 325

The Not-for-Profit Organizational Form 325

Nature of Competition in the Not-for-Profit Sector 327

Alternative Models of Hospital Behavior 328 Utility-Maximizing Models 328 Physician-Control Models 330

The Trend Toward Multihospital Systems 332

The Theory of Consolidation 333

The Empirical Evidence on Consolidation 334

Summary and Conclusions 335

06757_fm_ptg01_i-xviii.indd 10 04/08/17 5:31 PM

Contents xi

Questions and Problems 337

References 337

C H A P T E R 11 The Market for Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340

The Structure of the Industry 342

The Role of Research in the Age of Technology 342

The Impact of Patents on Drug Prices 351

Pharmaceutical Pricing Issues 353

Advertising and Promotion 356

The Role of Government 357

Future Directions for the Industry 358

International Issues 361

Summary and Conclusions 362

Questions and Problems 363

References 363

PART 4 Public Policy in Medical Care Delivery

C H A P T E R 1 2 Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366

Medical Care for the Elderly 368

Institutional Features 368

Who Pays? 373

Who Benefits? 373

Economic Consequences 376

The Future of Medicare 376

Reform Options 378

Summary and Conclusions 380

Questions and Problems 382

References 382

Appendix 12A Changing Demographics: The Aging of America. . . . . . . . . . . . . . . . . . . . . . . . . 384

The Aging Population 384

Medical Care Costs for the Elderly 385

The Challenge of Treating Chronic Diseases 387

The Cost of Long-Term Care 387

Comments on Aging 388

References 389

Questions and Problems 389

C H A P T E R 1 3 Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390

Medicaid: Medical Care for the Poor 391

Institutional Features 391

06757_fm_ptg01_i-xviii.indd 11 04/08/17 5:31 PM

xii Contents

State Children’s Health Insurance Program 393

Economic Consequences 393

Medicaid Expansion under the ACA 396

Medicaid’s Impact on Enrollees 399 Health Outcomes 399 Enrollment in Private Insurance 400 Labor Supply 400 Family Structure 400 Savings 401

The Future of Medicaid 402

Summary and Conclusions 403

Questions and Problems 404

References 405

Appendix 13A A Note on “Projections” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407

References 408

C H A P T E R 1 4 Medical Care Systems Worldwide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409

International Comparisons 410

Expenditures across OECD Countries 412

Cost Containment Strategies 414 Mandated Fee Schedules 414 Global Budgeting 415 Resource Rationing 417

Health System Classification 418

Canadian National Health Insurance: Medicare 422

France: Equality, Liberty, Fraternity 427

Germany: Sickness Funds 431

Japan: The Company Is People 436

Switzerland: Individual Responsibility in a Federalist Framework 440

United Kingdom: National Health Service 442

Summary and Conclusions 446

Questions and Problems 449

References 450

C H A P T E R 1 5 Medical Care Reform in the United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453

The Push for Reform 454

The Moral Issues: Is Medical Care a “Right”? 455

The Goals of Reform 456

Who Is Covered? 456

What Is Covered? 457

Who Pays and How Much? 457

Policy Options 458

06757_fm_ptg01_i-xviii.indd 12 04/08/17 5:31 PM

Contents xiii

Single-Payer National Health Insurance 458

Mandated Insurance Coverage 459 Employer-Mandated Insurance 459 Individual Mandates 459

Market-Based Alternatives 460 The Market Approach 460 Consumer-Directed Health Plans 461

Managed Competition 462

The Patient Protection and Affordable Care Act 463

Key Elements of the ACA 464

Major Accomplishments and Their Unintended Consequences 465

A Sustainable Market-Based Alternative 467

A System at the Crossroads 469

Summary and Conclusions 470

Questions and Problems 472

References 472

C H A P T E R 1 6 Lessons for Public Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .474

Scarcity and Choice 474

Opportunity Cost 474

Marginal Analysis 475

Self-Interest 475

Markets and Pricing 476

Supply and Demand 477

Competition 477

Efficiency 478

Market Failure 478

Comparative Advantage 479

Final Reflections 479

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488

06757_fm_ptg01_i-xviii.indd 13 04/08/17 5:31 PM

06757_fm_ptg01_i-xviii.indd 14 04/08/17 5:31 PM

Preface

On January 20, 2017, Donald Trump took the oath of office and became the 45th president of the United States. One of his campaign promises was to repeal the Affordable Care Act and replace it with a plan more compatible with the market orientation of rest of the U.S. economy. Initial attempts to pass legislation failed to gain enough support in the House of Representatives to reach the floor for a vote. Undeterred, Republicans are confident they can pass a bill that will improve the way health care is delivered and financed.

A firm understanding of the impact of health care policy on the costs and consequences of health care delivery and finance is essential for a clear understanding of the impact of the proposed changes in health care policy. My purpose in writing this text is to provide the reader with the economic background to understand and analyze the national dialogue on health care issues. The text’s primary goals are to enable readers to:

■■ recognize the relevance of economics to health care issues. ■■ apply economic reasoning to understand the challenges of delivering health care in

a cost-effective way. ■■ understand the mechanisms of health care delivery in the United States within

broad social, political, and economic contexts. ■■ explore the changing nature of health and medical care and its implications for

medical practice, medical education and research, and health policy. ■■ analyze public policy in health and medical care from an economic perspective.

To accomplish these goals, the book’s 16 chapters are organized into four parts.

Part One: The Relevance of Economics in Health and Medical Care The text begins with a basic overview of the health care industry with emphasis on the eco- nomic issues that affect medical care delivery and finance. Chapter 1 examines the nature of the economic problem as it pertains to health care. Chapter 2 demonstrates the useful- ness of economics in understanding medical care issues—including matters of life, death, disability, and suffering. Chapter 3 examines problems encountered in applying standard economic models to the study of health care markets. Chapter 4 introduces the readers to the tools of economic evaluation and their application to medical care with special empha- sis on cost-effectiveness analysis, the preferred technique among most health economists.

Technical appendices, intended for use by more advanced students, appear at the end of each of the first three chapters. Appendix 1A provides an overview of the challenges of measuring medical price inflation using the medical care price index. Appendix 2A serves as a primer on graphing, while 2B introduces important statistical tools used in empirical studies. The two appendices at the end of Chapter 3 present the neoclassical models of con- sumer choice and production.

Part Two: Demand-Side Considerations Part 2 examines the demand side of the market. Chapter 5 identifies and describes vari- ous factors that influence the demands for health and health care. It explores and explains observed patterns in the quality and price of medical care. Chapter 6 discusses the basic dimensions of population health and the risk factors leading the differences in health

06757_fm_ptg01_i-xviii.indd 15 04/08/17 5:31 PM

xvi Preface

outcomes across demographic groups. Chapter 7 assesses the market for health insurance, comparing and contrasting the private and social insurance models. Chapter 8 evaluates the efficiency of alternative health care delivery systems in containing medical care costs. It also describes an increasingly popular coverage option, the consumer-directed health plan that combines a high-deductible health insurance policy accompanied by a health savings account to cover out-of-pocket expenses.

Part Three: Supply-Side Considerations Part 3 addresses the supply side of the health care market. Chapter 9 describes the market for health care practitioners and the effect of recent changes in the health care sector on their behavior. Brief discussions of the markets for nurses and for dentists are also included. Chapter 10 summarizes major theories of hospital behavior and describes the role of not- for-profit hospitals in the U.S. health care industry. The U.S. pharmaceutical industry and the challenges facing drug and device innovators and their target markets are the focus of Chapter 11.

Part Four: Public Policy in Medical Care Delivery The text’s final chapters squarely address health policy and its economic implications. Chapter 12 formally introduces Medicare and examines its economic impact on medical care delivery. The appendix to that chapter addresses the implications of an aging pop- ulation. Chapter 13 examines the other major health care entitlement program, Medic- aid. The appendix to Chapter 13 provides a brief discussion of the challenges of making projections with economic data. Chapter 14 summarizes important characteristics of medical care delivery systems in six major developed nations—Canada, France, Germany, Japan, Switzerland, and the United Kingdom. Chapter 15 summarizes major features of the Affordable Care Act and describes the current health care reform initiatives being considered by Congress. Finally, Chapter 16 restates the major lessons we can learn from the economic approach to public policy.

Pedagogical Features This text’s ultimate focus is on public policy. The technical tools of economics are import- ant, but they are not ends to themselves. Instead, the approach uses theory as a way of preparing students to address policy questions.

Each chapter begins with a brief policy issue related to the chapter’s focus. Also included are a number of special features called “Issues in Medical Care Delivery.” They summarize important studies in medical research, epidemiology, public health, and other fields as they relate to the economics of health care delivery. Another feature found at the conclusion of each chapter is a “Profile” of an individual who has made a significant contribution to the field of health economics. Many profiled individuals are economists; some are physi- cians; all have had a profound impact on how we view health, health economics, and health policy.

The “Back of the Envelope” features show the economic way of thinking, using graphs. These and similar graphical presentations are frequently used by economists in informal settings. They might represent scribbles on the back of an old envelope used to make a point during lunch with colleagues. Topics include: the valuation of a life, how to calculate a rate of return, the notion of elasticity, the welfare implications of subsidies, the impact of employer mandates, cost-benefit calculations, and the cost-effectiveness of disease preven- tion, among many others. Developing the ability to use models in this way is an important goal of this book.

06757_fm_ptg01_i-xviii.indd 16 04/08/17 5:31 PM

Preface xvii

Chapter 1 introduces 10 key economic concepts that serve as unifying themes through- out the book. As you read, you will notice the key icon in the margin reminding you that the adjacent material is related to that key concept. Other marginal notations include defi- nitions of key words and phrases, recommended websites where you can go for additional information, and policy issues related to the reading.

New in the Seventh Edition The most notable change to the seventh edition is the addition of Applied Micro Methods in each chapter. One of the major challenges in using observational data in social science and medical research is how to interpret empirical results. Are linkages between variables causal or merely correlational? It is important to know the difference when reading empir- ical research. Most chapters have at least one extended abstract of a paper that uses one of the identification strategies popular in the literature: propensity score matching, synthetic control, difference-in-differences, and instrumental variables.

New discussions on Arrow’s critique of health care markets in Chapter 1 and a more formal presentation of Baumol’s cost disease in Chapter 3 set the tone for future discus- sions of market relevance. Chapter 6 provides a new discussion of the basic dimensions of population health.

The chapters in Part 4 have been reorganized to focus on the environment as it exists under the Affordable Care Act and the uncertainty introduced by attempts to repeal and replace it. Medicare reform and Medicaid expansion are discussed more fully. The health systems discussion in Chapter 14 expands on the metrics used to distinguish the character- istics and quality indicators across countries.

The biggest challenge manifests itself in Chapter 15. Focusing on the features, costs, and consequences of the Affordable Care Act and the attempt to repeal and replace it is a daunting task—the target is constantly moving and evolving. By the time you read this chapter there will be additional changes. At some risk, I include my predictions on what the changes will look like. As you read the book, develop your own list of predictions. When it is all over, we can compare notes.

Level Health Economics and Policy is written with the non-economics major in mind but contains enough economic content to challenge economics majors. My undergraduate class at Baylor University is composed of both economics majors and premedical students, most of whom have little or no economics background. There are usually a number of other business majors, many of whom are interested in studying health care administration in the future. I also use this text in a required graduate course for MBA students who are concentrating in health care administration. All these students are good thinkers and most have done well despite having had no previous economics coursework.

The text is appropriate for an introductory health economics course offered in an economics department, in a health care administration graduate program, or in a school of public health, college of medicine, or school of nursing or pharmacy.

Supplementary Items An Instructor’s Manual provides support to instructors who adopt Health Economics and Policy, 7th edition. The manual includes suggested answers to the end-of-chapter ques- tions, lecture suggestions, and test questions. In my teachings of health economics I have improved student engagement and comprehension of concepts by providing television and movie clips to introduce discussion topics in my class. I’ve had great success with this and

06757_fm_ptg01_i-xviii.indd 17 04/08/17 5:31 PM

xviii Preface

have included a chapter break out of what I use from both TV and movie clips in my class- room. These are only suggestions and we are NOT offering any video or movie clips to accompany the text. If you are interested in possibly implementing these in your class, I have provided clear instructions on using these clips.

The text’s website contains resources for both students and instructors. You can access the website using www.cengagebrain.com. The site also provides access to Economic Applications, a feature that includes EconNews articles, EconData links, and EconDebates. Students may access MindTap, a platform that enables professors to use preloaded and organized MindTap materials or provide custom content. Additionally, imbedded content may include Open Educational Resources and YouTube.

Acknowledgments As the sole author of this book, I take full responsibility for its contents. Nevertheless, a single individual could not complete a project of this magnitude. I owe a great deal to my Baylor University colleagues who have sharpened my focus and challenged my inconsis- tencies. A number of capable research assistants have contributed to my efforts. Most nota- bly, I would like to thank past graduate assistants who have worked on this project in one of its editions. Most recently, Meiqing Ren has provided invaluable assistance in preparing tables and artwork for the PowerPoint slides that accompany the text.

Instructors from across the country have reviewed the manuscript for this and previous editions. Their comments and suggestions have been important to me, and the book is better because of their efforts.

I am also grateful to the hundreds of Baylor University students who used this book in its first six editions and even earlier in manuscript form. Their comments have proven invaluable in developing an integrated framework for discussing health care issues.

Of course, I could never have completed the project without the support of my wife and family. Thank you, Betsy for your support and understanding over the past 20 years since the publication of the first edition. As my extended family grows, it does not get easier. Three grandchildren and the promise of more to come merely increases the pressures on my time. However, they provide me with a renewed interest in reevaluating my position of health care policy. Thanks to you all.

James W. Henderson

06757_fm_ptg01_i-xviii.indd 18 04/08/17 5:31 PM

Get Professional Assignment Help Cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Our essay writers are graduates with diplomas, bachelor’s, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.

Why Choose Our Academic Writing Service?

Plagiarism free papers
Timely delivery
Any deadline
Skilled, Experienced Native English Writers
Subject-relevant academic writer
Adherence to paper instructions
Ability to tackle bulk assignments
Reasonable prices
24/7 Customer Support
Get superb grades consistently

How It Works

1. Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2. Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3. Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4. Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Our essay writers are graduates with diplomas, bachelor’s, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.
Why Choose Our Academic Writing Service?

How It Works
1.      Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2.      Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3.      Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4.      Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

PLACE THIS ORDER OR A SIMILAR ORDER WITH Essay fount TODAY AND GET AN AMAZING DISCOUNT

The post Health Economics and Policy appeared first on Essay fount.

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but you proved you are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 11***| Rating: ⭐⭐⭐⭐⭐
"This company is the best there is. They saved me so many times, I cannot even keep count. Now I recommend it to all my friends, and none of them have complained about it. The writers here are excellent."

Health Economics and Policy

What Students Are Saying About Us

"Order a custom Paper on Similar Assignment at essayfount.com! No Plagiarism! Enjoy 20% Discount!"

About us

Quick Links

Our Policies

Contact Us

What Students Are Saying About Us

"Order a custom Paper on Similar Assignment at essayfount.com! No Plagiarism! Enjoy 20% Discount!"

Related posts:

About us

Quick Links

Our Policies

Contact Us

Cookie and Privacy Settings